Credit for Short Term Disability Benefit must be established before WCJ

An employee may receive Short Term Disability (STD) benefits from an Employer-funded program when the "compensibility" of a medical condition is disputed. If that medical condition is determined to be a compensible work-related injury under the Pa. Workers' Compensation Act, the STD payments may be the subject of a subrogation lien of the STD insurer or a credit against the Employer/Insurer work comp benefit liability.

Regardless of whether there is a subrogation right or a credit offset, one thing is certain, the Employer/Insurer must timely assert it's right before the Workers' Compensation Judge to successfully recover these payments or to avoid a "double" payment.

Sheetz, Inc. v. WCAB (Brown), No. 1547 C.D. 2011 is an unreported memorandum opinion of a panel of the Commonwealth Court of Pennsylvania, authored by Judge Brobson on April 18, 2013, which addressed this problem.

Procedural History

October 8, 2007 Employee injured her neck.
Employee received STD benefits of $944.00 per month from Hartford.
November 3, 2008, Employee files a claim petition for total disability.
May 24, 2010, WCJ decision granted claim petition.
WCJ did not grant a credit or subrogation lien for the STD Hartford payments.
Employer appeal.

Commonwealth Court Reasoning:

The denial of a credit or subrogation lien recovery for the STD benefit payments of Hartford to Employee was affirmed.

Although the topic of a credit or subrogation lien was raised by the WCJ and asserted by Employer counsel, the Employer/Insurer did not produce any evidence that:
1. the nature of the benefits met the criteria for a credit,
2. there was no evidence of the duration of the benefits.

To assert a claim for a credit for STD benefits against a work comp award, the Employer must prove that the payments were:
(1) made by the employer or its insurer,
(2) for an injury and/or subsequent disability arising in the course of employment, and
(3) that the payments are not wages for employment.
citing Humphery v. WCAB (Supermarket Service) 514 A.2d 246, 249 (Pa. Cmwlth. 1986).

Payments that Claimants receive "in relief of their incapacity to labor" may be subject to credit so long as the claim to credit is timely raised. The employer is required to raise the credit at the earliest possible stage , so that the claimant has the opportunity to contest the amount of credit claimed and to have a hearing where there is a disagreement on the amount.

Practice Pointers:

A. Credit or Subrogation lien must be documented by a printout of the benefits paid to claimant.
Make these payment documents an exhibit.

B. Present testimony if the nature of the benefits is contested. Make the benefit plan documents and exhibit, as the plan will often reflect a coordination with work comp benefits.

C. Seek a stipulation from claimant regarding the availability of a credit/subrogation lien (nature of the benefit) and the amount of the credit/lien.