Tuesday, July 2, 2013

The Art of Securing a Pennsylvania Supersedeas Fund Reimbursement

The Art of the Supersedeas Fund Reimbursement.
An Employer or Insurer may seek payment from the Supersedeas Fund, where workers' compensation benefits are paid and it is later determined that compensation was not payable to the Employee. There are several restrictions upon this remedy.

Department of Labor & Industry, BWC v. WCAB (Dollar General Corp. LLC), No. 473 C.D. 2012, an unreported memorandum opinion of a panel of the Commonwealth Court, authored by Judge McCullough on July 1, 2013, addressed several Supersedeas Fund reimbursement issues.

As a general background, a review of the basic rules is appropriate.
  • First, there must be a "supersedeas request" in the petition filed by the Employer.
  • Second, payments must be made after the denial of the supersedeas request.
  • Third, payments must be made as a result of an order denying supersedeas.
  • Fourth, the supersedeas request may include indemnity and medical expense payments.

A Supersedas Fund reimbursement is not allowed when there is a voluntary payment or the absence of a supersedeas request in Employer's petition.  In the disputed claim petition the supersedeas request must be made on appeal.

The Bureau of Workers' Compensation, as conservator of the fund, will contest one's entitlement to reimbursement where there is a settlement of all disputed factual and legal issues. For example, the Employer files a Termination petition and then settles the case. Even if the Employer has substantial credible evidence in support of the termination, the Employer will not be entitled to reimbursement of benefits paid after the petition was filed.  

An "exception" has developed and reimbursement may be allowed where there is an issue which was not settled but was preserved for decision by the Workers' Compensation Judge. 
For example, the parties reach a settlement figure based upon "suspension" of benefits  but request the WCJ rule on the Employer  right to an order of Termination of all future liability.
In this instance the WCJ may rule on the Termination petition. If termination is granted, the Employer may file for supersedes fund reimbursement for the benefits paid since the filing date of the Termination petition. The effect is to "reduce" the amount of overall benefit payout. This practice is discouraged as it is seen as an inappropriate use of the Fund to "finance" a portion of the settlement.

"Where an Employer has settled some or all of a claimant's benefits by way of agreement, the availability of supersedeas reimbursement generally turns on: (1) whether the funds to be reimbursed were paid for past due or future benefits; (2) whether the employer paid them pursuant to the agreement; and (3) whether the agreement reserves the employer's right to seek future supersedeas reimbursement or to continue contesting liability for the benefits for which it seeks reimbursement. Department of Labor & Industry, BWC v. WCAB (Ethan-Allen Eldridge Division) 972 A.2d 1268 (Pa. Cmwlth. 2009). slip opinion at page 3.

Factual & Procedural Background

In Dollar General, the parties entered into a Compromise & Release settlement agreement whereby employee would receive a lump sum for past benefits and a lump sum for future benefits. Employee would withdraw a penalty petition and Employer would withdraw its suspension petition. The parties stipulated that the C&R settlement would not affect Employer's pending appeal from the WCJ prior decision which denied  the termination petition or the Employer's right to seek Supersedeas reimbursement, in the event of a reversal of that WCJ decision. On appeal the WCAB reversed and remanded the case. On remand, the WCJ found there was sufficient competent and credible evidence for a termination of benefits. This "victory" created a sum of "overpaid" benefits which formed the basis for the underlying supersedeas fund reimbursement request.

Practice Pointers:
1. This decision highlights the necessity to have experienced workers' compensation counsel to compose a settlement proposal which incorporates the elements necessary to preserve any supersedeas reimbursement rights and reduce the "net" benefit payout on settlement.
2. In your settlement evaluation, review the options, with a supersedeas fund reimbursement and without reimbursement. The amount of your supersedeas fund recovery may be the difference between a "good deal" and an average case closure.


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