In 1996 the Pennsylvania Workers Compensation Act was amended to allow a credit for pension benefits funded by Employers against workers compensation payable for wage loss. See: Section 204 (a). This amendment applied to injuries on and after June 24, 1996.
Prior to 1996, a Pension Credit was recognized for disability pension payments, under certain circumstances.
Today, as Workers Compensation Insurers and Employers review their "old" claims, this question often arises regarding the availability of a pension credit.
What are the circumstances allowing for assertion of a disability pension credit?
The case defining this disability pension credit remedy is Murhon v. WCAB (Kawecki Berylco, Inc.) 618 A.2d 1178, (Pa. Cmwlth. 1992). Murhon interpreted and applied existing caselaw regarding the availability of credit to an employer. Generally this credit issue arose when an Employer contested work comp liability and another benefit plan was paid to employee during this timeframe. When Employer's work comp obligation was determined, the Employer was entitled to a credit for these payments, "made in relief of the employee's incapacity to labor". citing Creighton (Pa. Super. 1944).
In Murhon, the Commonwealth Court applied this general principle regarding credits, to the payment of a disability pension benefit.
The Pension Credit Rules:
1. The employer seeking credit must be the party responsible for work comp benefits.
2. The disability pension plan does not permit/require employee contributions.
3.The pension plan is not "limited", ie., benefits continue for the duration of the disability.
4. Employee is not depleting any benefit, to which he would otherwise be entitled.
5. If employee were to return to work at a future date, the pension would still be available to him for
non-work related disability. Murhon, 618 A.2d at 1182.
The General Rules regarding Credits
Several early credit cases address the employer payment of sick leave, holiday pay, vacation pay or disability pensions. These General rules emerged:
An Employer IS ENTITLED to a credit against work comp obligations for payments made to an employee in relief of employee's inability to work, such as Sickness & Accident benefits.
An Employer IS NOT ENTITLED to a credit against work comp obligations for payments which are an accrued entitlement, which the employee has built up by the performance of services for employer, such as sick leave or vacation pay.
If Employee would be entitled to the pension regardless of whether he had suffered a compensible injury, the Employer is NOT entitled to a credit for those payments.
Appellate Case Decisions
In Bethlehem Steel Corporation v. WCAB (Gounaris) 714 A.2d 550 (Pa. Cmwlth. 1998) a disability pension credit was denied to the employer. This permanent incapacity pension was an accrued entitlement built up as a result of claimant's services for the employer, therefore there is no credit available to employer. Only payments made in relief of claimant's inability to labor, as a result of his work injury, are payments "in lieu of compensation", for which a credit is available.
In Oleksa v. WCAB (Keystone Coal Mining Corp.), 734 A.2d 79, (Pa. Cmwlth. 1999), the employer was granted a disability pension credit. Employee did not contribute to the plan. These benefits were only available as he suffered a work-related injury. These benefits would be available (not exhausted) if he returned to work and suffered another work-related disability. On this basis, these disability pension benefits were considered payments in lieu of compensation, such that Employer was entitled to a credit against its work comp obligations.
In City of Philadelphia v. WCAB (Grevy) 968 A.2d 830 (Pa. CMwlth. 2009), a pension credit was allowed to employer for a service-connected disability pension paid to employee, but only to the extent ((73.149%) funded by the employer.
NOTE: In Murhon and Oleksa a disability pension credit was granted, even though the applicable collective bargaining agreement did not provide for any offset or credit for disability benefits.
1. REVIEW open work comp cases for Disability Pension status (as well as retirement pension status).
2. MEET with the Employer representatives and discuss the disability pension plan language.
3. FILE a Petition for Review and/or Modification to assert a disability pension credit.
QUERY: Can you use the LIBC 761 form "Notice of Workers' Compensation Benefit Offset" to assert your disability pension credit ?
LIBC 761 specifically references pension benefits and work comp benefits payable for injuries occurring after June 24, 1996.
The assertion of a credit for disability pension benefits may reduce the future workers' compensation benefit liability. A reduced benefit rate may place the estimated future benefit liability in a range of attractive settlement figures. The Employer and Insurer may consider their options, including discussions of a negotiated settlement and file closure.