Submitted, May 22, 2015
Appealed from No. A13-0568. State Agency: Workers' Compensation Appeal Board.
Kenneth M. Kapner, Philadelphia, for petitioner.
John E. Kawczynski, South Amboy, NJ, for respondent.
BEFORE: HONORABLE RENÉ E COHN JUBELIRER,
Judge, HONORABLE ROBERT SIMPSON, Judge, HONORABLE ANNE E. COVEY, Judge.
ROBERT SIMPSON, J.
James Tobler (Claimant) petitions for review of an order of the Workers' Compensation Appeal Board (Board) that affirmed a decision of Workers' Compensation Judge Tina Marie Rago (WCJ Rago) denying Claimant's penalty petition. In so doing, the WCJ determined Verizon Pennsylvania, Inc. (Employer) did not violate the Workers' Compensation Act (Act) by paying simple rather than compound interest on a 2012 award by WCJ David Slom (WCJ Slom) that reinstated Claimant's benefits effective November 2002. Claimant contends interest on his award of past due indemnity benefits should have been calculated on a compound basis, which most accurately reflects his actual loss of use of the unpaid funds over time and serves the humanitarian and remedial purposes of the Act. For the reasons that follow, we affirm.
In October 1998, Employer filed a notice of compensation payable (NCP) acknowledging a work injury to Claimant's left hand in the nature of carpal tunnel syndrome. Claimant's injury occurred as a result of splicing activities. Pursuant to the NCP, Claimant began receiving compensation benefits in the amount of $561.00 based on an average weekly wage of $1,314.18.
In February 2012, following a 2011 remand by this Court, WCJ Slom circulated a decision reinstating Claimant's compensation benefits as of November 21, 2002. In May 2012, Employer issued a payment to Claimant in the amount of $117,278.74, representing the compensation due and owing Claimant pursuant to WCJ's Slom's order.
Thereafter, Claimant filed a penalty petition alleging Employer violated the Act by incorrectly using simple rather than compound interest in calculating the interest due on WCJ Slom's award. The
Workers' Compensation Bureau assigned the penalty petition to WCJ Rago.
WCJ Rago noted the sole issue before her was whether simple or compounded interest should have been paid on WCJ Slom's award. At the hearing, the parties agreed Employer paid Claimant $117,278.74, which would be the appropriate amount due and owing based on 10 percent simple interest. The parties also agreed that if Claimant was entitled to 10 percent compound interest, the amount due would be $139,929.39.
Ultimately, WCJ Rago determined Claimant is entitled to simple interest under Section 406.1(a) of the Act, 77 P.S. § 717.1(a). Section 406.1(a) provides in relevant part: " Interest shall accrue on all due and unpaid compensation at the rate of ten percentum per annum." Id. As support for her decision, WCJ Rago cited several pre-Section 406.1 cases from the Superior Court stating that a workers' compensation claimant was entitled to simple interest at the rate of six percent per annum. See WCJ Rago Op., 4/8/13, Finding of Fact No. 10.
Notably, in Kessler v. North Side Packing Co., 122 Pa.Super. 565, 186 A. 404, 409 (Pa. Super. 1936), the Superior Court reasoned " [t]here is no authority under the statute for 'compounding interest' in a compensation case." In Kessler, the Court explained that prior to a 1927 amendment to Section 410 of the Act, 77 P.S. § 751, the Act did not provide for interest on past due compensation. Citing its decision in Petrulo v. O'Herron Co., 122 Pa.Super. 163, 186 A. 397 (Pa. Super. 1936), the Superior Court determined that even for work injuries occurring prior to the 1927 amendment to the Act, the Commonwealth's general interest statute applied, which entitled the claimant to simple interest at six percent. Similarly, in Graham v. Hillman Coal and Coke Co., 122 Pa.Super. 579, 186 A. 400 (Pa. Super. 1936), the Superior Court held the claimant was entitled under the 1927 amendment to six percent simple interest upon each of the installments of compensation due him from the date that particular installment should have been paid.
Consequently, WCJ Rago denied Claimant's penalty petition. Claimant timely appealed.
In support of his position, Claimant asserted to the Board that interest under the Act is considered additional compensation to the worker, not a penalty against the employer. B.P. Oil Co v. Workmen's Comp. Appeal Bd. (Patrone); Lastoka v. Workmen's Comp. Appeal Bd. (Wheeling-Pittsburgh Steel Corp.), 51 Pa.Cmwlth. 310, 413 A.2d 481 (Pa.Cmwlth. 1980); Mathies Coal Co. v. Workmen's Comp. Appeal Bd. (Kozlevchar), 40 Pa.Cmwlth. 120, 399 A.2d 790 (Pa.Cmwlth. 1979). Claimant also cited the language in Section 406.1(a) of the Act, which requires that interest " shall accrue on all due and unpaid compensation." 77 P.S. § 717.1(a). Thus, Claimant reasoned, interest
gained is unpaid compensation which should therefore accrue interest. Consequently, Claimant argued he should have been awarded compound interest from ...