Erie Insurance Co. and Powell Mechanical, Inc. v. WCAB (Comwlth of PA, Dept. of L&I, Bureau of WC)

IN THE COMMONWEALTH COURT OF PENNSYLVANIA
Erie Insurance Company and :
Powell Mechanical, Inc., :
Petitioners :
:
v. : No. 20 C.D. 2018
: Submitted: July 27, 2018
Workers’ Compensation Appeal :
Board (Commonwealth of :
Pennsylvania, Department of :
Labor and Industry, Bureau of :
Workers’ Compensation), :
Respondent :
BEFORE: HONORABLE P. KEVIN BROBSON, Judge
HONORABLE PATRICIA A. McCULLOUGH, Judge
HONORABLE MICHAEL H. WOJCIK, Judge
OPINION BY JUDGE BROBSON FILED: February 21, 2019
Petitioners Erie Insurance Company and Powell Mechanical, Inc.
(collectively, Employer) petition for review of an order of the Workers’
Compensation Appeal Board (Board), dated December 6, 2017. The Board reversed
an order of Workers’ Compensation Judge Eric Jones (WCJ Jones), which granted
Employer’s Application for Supersedeas Fund Reimbursement (Application). We
now affirm.
Robert Braithwaite (Claimant) worked for Employer as a Steam Fitter.
(Reproduced Record (R.R.) at 20a.) On April 11, 2003, Claimant was injured in a
vehicular accident while allegedly on his way home from delivering equipment for
Employer. (Id. at 22a.) Employer accepted liability for Claimant’s work-related
injury by issuing a notice of temporary compensation payable, which was
subsequently converted to a notice of compensation payable by operation of law.
(Id.) Employer, however, unilaterally stopped paying for Claimant’s medical
expenses “sometime around September of 2003” after Employer became aware that
Claimant may have been intoxicated at the time of the vehicular accident. (Id.
at 23a.) Specifically, Employer discovered that Claimant, after delivering
Employer’s equipment, went to a bar where he drank a number of beers. (Id. at 22a.)
After Claimant left the bar, he became involved in the subject vehicular accident and
was charged with driving under the influence. (Id.) Within the same time frame that
Employer ceased paying Claimant’s medical expenses, Employer also filed review
and termination petitions, alleging that Claimant was intoxicated at the time of the
accident and, therefore, was not entitled to workers’ compensation benefits. (Id.
at 19a.) Employer included a request for supersedeas in its petitions. (Certified
Record (C.R.), Item No. 11.) Claimant then filed a penalty petition,1 alleging that
Employer failed to pay for his medical expenses in violation of the Workers’
Compensation Act (Act).2 (R.R. at 19a.)
On March 8, 2004, Workers’ Compensation Judge Charles P. Lawton
(WCJ Lawton) issued an interlocutory order granting Employer’s request for
supersedeas.3 (C.R., Item No. 12.) Thereafter, on June 30, 2008, WCJ Lawton
1
Claimant also filed a review petition seeking specific loss benefits as a result of an alleged
disfigurement from the accident. Claimant’s review petition is not relevant to this appeal, and,
therefore, we will not address it in further detail.
2
Act of June 2, 1915, P.L. 736, as amended, 77 P.S. §§ 1-1041.4, 2501-2708.
3
Generally, an employer or insurer may seek reimbursement under Section 443 of the Act,
as amended, added by the Act of February 8, 1972, P.L. 25, 77 P.S. § 999, from the Workers’
Compensation Supersedeas Fund (Fund) for any overpayment of wage-loss compensation and
medical expenses ultimately determined to be ineligible for payment. Ins. Co. of N. Am. v.
2
entered a decision and order granting Employer’s termination and review petitions
and setting aside the notice of compensation payable but also granting Claimant’s
penalty petition. (R.R. at 19a-30a.) As to Employer’s termination and review
petitions, WCJ Lawton found that Claimant was not entitled to workers’
compensation benefits because his injury was not sustained during the course and
scope of his employment. (Id. at 28a.) According to WCJ Lawton, but for
Claimant’s intoxication while operating a motor vehicle, Claimant would not have
been involved in the accident or sustained the resulting injuries. (Id.) As to
Claimant’s penalty petition, WCJ Lawton also found that Employer improperly
withheld payments for Claimant’s medical expenses, because “[o]nce the notice of
compensation payable was issued, [E]mployer was under an obligation to pay
medical bills until a final order of a [WCJ] relieving it of this obligation was issued
or until a final receipt was executed.” (Id.) As a result, WCJ Lawton ordered
Employer to pay all of Claimant’s unpaid medical bills from the date Employer
issued the notice of compensation payable through the date WCJ Lawton issued his
decision. (Id.) Claimant and Employer appealed WCJ Lawton’s decision and order
to the Board, which affirmed for the same reasons WCJ Lawton discussed in his
decision and order. (C.R., Item No. 15.) Claimant then appealed the Board’s
Workmen’s Comp. Appeal Bd. (Kline & Packard Press), 586 A.2d 500, 501-03 (Pa.
Cmwlth. 1991), aff’d, 619 A.2d 1356 (Pa. 1993). Notwithstanding the availability of
reimbursement from the Fund, in ADIA Personnel Agency v. Workmen’s Compensation Appeal
Board (Coleman), 586 A.2d 507 (Pa. Cmwlth.), appeal denied, 597 A.2d 1154 (Pa. 1991), we
recognized that permitting a WCJ to grant an employer’s supersedeas request with respect to
medical expenses prior to an adjudication could detrimentally affect a claimant’s right to receive
immediate medical care, and we held that “no section within the Act authorizes a discretionary
supersedeas as to payment of medical expenses.” ADIA Pers. Agency, 586 A.2d at 508. WCJ
Lawton’s interlocutory order, therefore, could only grant Employer’s supersedeas request
concerning wage-loss benefits.
3
decision to this Court. (C.R., Item No. 16.) In a memorandum opinion, we affirmed
WCJ Lawton’s decision.4 (Id.)
Subsequently, on March 1, 2012, Employer filed its Application
seeking reimbursement from the Fund for an overpayment of wage-loss benefits and
medical expenses. (C.R., Item No. 17.) By decision and order dated
January 13, 2016, WCJ Jones granted Employer’s Application. (R.R. at 7a.) In so
doing, WCJ Jones reasoned that, even though Employer failed to make wage-loss
and medical expense payments while the notice of compensation payable was in
effect, to deny Employer’s Application “only compounds the error that it never
should have been liable for wage-loss and medical benefits, since the notice of
compensation payable was set aside.” (Id. at 5a.) The Bureau of Workers’
Compensation (Bureau) appealed WCJ Jones’s decision—only with respect to the
reimbursement of medical expenses—to the Board, which reversed. (Id. at 11a.) In
so doing, the Board reasoned that WCJ Lawton had no authority to grant supersedeas
for medical expenses under the Act, and, therefore, his supersedeas order, while
silent on the issue, effectively denied supersedeas with respect to the payment of
Claimant’s medical bills. (Id. at 13a.) The Board further reasoned that, as a result
of the implied denial of supersedeas, Employer remained liable for the payment of
medical expenses. (Id.) The Board also reasoned that Employer’s payment of
Claimant’s medical expenses following WCJ Lawton’s decision was not due to the
denial of supersedeas, but rather, to its failure to pay for Claimant’s medical
expenses during the pendency of this litigation. (Id.) In other words, Employer paid
Claimant’s medical expenses in this case because it was ordered to do so by WCJ
4
Braithwaite v. Workers’ Comp. Appeal Bd. (D. Powell, Inc.) (Pa. Cmwlth.,
No. 1301 C.D. 2011, filed Dec. 9, 2011).
4
Lawton’s order granting Claimant’s penalty petition, not because WCJ Lawton
denied its request for supersedeas. (Id. at 12a-13a.) For these reasons, the Board
concluded that WCJ Jones erred in granting Employer’s Application with respect to
the reimbursement of medical benefits. (Id. at 13a.) Employer now petitions this
Court for review.
On appeal,5 Employer essentially argues that the Board erred by
reversing WCJ Jones’s order with respect to the reimbursement of medical expenses,
because Employer paid Claimant’s medical expenses as a result of what Employer
characterizes as WCJ Lawton’s denial of supersedeas.6 Specifically, Employer takes
the position that, because a WCJ may grant supersedeas only as to wage-loss benefits
and not as to medical expenses, WCJ Lawton’s interlocutory order granting
supersedeas only applied to wage-loss benefits and, therefore, the order impliedly
denied Employer’s supersedeas request as it related to medical expenses. Employer
maintains that it paid Claimant’s medical expenses because of WCJ Lawton’s denial
of supersedeas (not because of WCJ Lawton’s grant of the penalty petition), and
Employer focuses on the implied denial of supersedeas for medical expenses as the
basis for reimbursement from the Fund under Section 443(a) of the Act. Employer
further maintains that it is irrelevant under Section 443(a) of the Act whether it paid
the medical expenses prior to or after WCJ Lawton’s interlocutory order granting
Claimant’s penalty petition. Employer argues that WCJ Lawton’s ruling on
5
This Court’s review is limited to a determination of whether an error of law was
committed, whether necessary findings of fact are supported by substantial evidence, or whether
constitutional rights were violated. Vinglinsky v. Workmen’s Comp. Appeal Bd. (Penn
Installation), 589 A.2d 291, 293 (Pa. Cmwlth. 1991).
6
Employer has divided its argument into three separate, but related, issues. In order to
avoid repetition and for the sake of clarity, we have condensed Employer’s arguments into one
argument.
5
Claimant’s penalty petition did not create a legal obligation for Employer to pay for
Claimant’s medical expenses in light of the implied denial of supersedeas. In
response, the Bureau argues that the Board properly reversed WCJ Jones’s decision
and order with respect to the reimbursement of Claimant’s medical expenses because
Employer’s payment of such medical expenses was prompted by WCJ Lawton’s
order granting Claimant’s penalty petition, not by the prior denial of supersedeas.
Both parties appear to focus on the reason for the payment of medical expenses;
nevertheless, it is Employer’s cessation of the payment of medical expenses in
violation of the Act that is dispositive of the outcome in this matter.
The General Assembly created the Fund for the purpose of reimbursing,
under prescribed circumstances, an employer that has been ordered to pay workers’
compensation benefits that are later determined not to be owed. In so doing, “[t]he
Legislature recognized that recoupment from the claimant was impractical and
would undermine the benevolent purpose of the Act.” Bureau of Workers’ Comp.
v. Workmen’s Comp. Appeal Bd. (Allstate Ins. Co.), 508 A.2d 388, 390 (Pa.
Cmwlth. 1986), appeal denied, 522 A.2d 560 (Pa. 1987). The “Fund injects fairness
into a system that requires an employer to pay disputed benefits while they are
appealed.” Dep’t of Labor & Indus. v. Workers’ Comp. Appeal Bd. (US Food Serv.),
932 A.2d 309, 312 (Pa. Cmwlth. 2007).
With regard to reimbursement, Section 443(a) of the Act provides, in
relevant part:
If, in any case in which a supersedeas has been requested
and denied under the provisions of section 413[7] or
section 430,[8] payments of compensation are made as a
result thereof and upon the final outcome of the
7
Section 413 of the Act, 77 P.S. §§ 771-74.3.
8
Section 430 of the Act, 77 P.S. § 971.
6
proceedings, it is determined that such compensation was
not, in fact, payable, the insurer who has made such
payments shall be reimbursed therefor.
(Emphasis added.) An employer cannot, however, unilaterally suspend the payment
of benefits after filing a petition seeking termination or modification; absent a
supersedeas order, an employer is required to continue paying benefits. Robb,
Leonard and Mulvihill v. Workers’ Comp. Appeal Bd. (Hooper), 746 A.2d 1175,
1181-83 (Pa. Cmwlth. 2000); Winkelmann v. Workmen’s Comp. Appeal Bd. (Estate
of O’Neill), 646 A.2d 58, 60 (Pa. Cmwlth. 1994), appeal denied, 655 A.2d 996 (Pa.
1995). Rather, an employer may only lawfully stop paying benefits when one of the
following conditions is met:
(1) a supplemental agreement is submitted pursuant to
Section 408 of the Act, [as amended, added by the Act of
June 26, 1919, P.L. 642,] 77 P.S. § 732;
(2) a final receipt is submitted, signed by the claimant
pursuant to Section 434 of the Act, [as amended, added by
the Act of June 26, 1919, P.L. 642,] 77 P.S. § 1001;
(3) an interlocutory order is secured from a WCJ granting
a discretionary supersedeas pursuant to Section 413(a.1)
and 413(a.2) of the Act, 77 P.S. § 774;
(4) a petition to suspend compensation is filed with an
accompanying affidavit from the insurer that the claimant
has returned to work at wages greater than or equal to his
pre-injury wage pursuant to Section 413(c) of the Act, [as
amended, added by the Act of July 1, 1978, P.L. 692,]
77 P.S. § 774.2; or
(5) a final order is secured from a WCJ terminating a
claimant’s benefits.
Hooper, 746 A.2d at 1182. “Until one of the above events occurs, an employer
carries the burden of paying compensation during the entire litigation period.” Id.Accordingly, “the granting of a supersedeas request cannot erase the employer’s
obligation to pay benefits for a time during which a supersedeas was not in effect.”
7
Id. at 1183. In fact, where an employer unilaterally stops making payments, “the
subsequent granting of a supersedeas request does not excuse an earlier violation of
the Act,” and an employer can be penalized for such a violation of the Act. Id.In Estate of O’Neill, the employer refused to pay the workers’
compensation benefits following its appeal of the WCJ’s decision, even though the
Board denied its request for supersedeas through a deemed denial—i.e., failure to
act within 30 days. The employer’s unilateral act prompted the claimant to file a
penalty petition, which the referee9 granted. The employer appealed the penalty
award to the Board (and filed another request for supersedeas, this time from the
payment of the penalty award) and the Board reversed the referee’s penalty award.
On appeal to this Court, we reversed the Board and reinstated the penalty award. In
doing so, we held that, although the employer prevailed on the merits, its earlier
violations of the Act—i.e., unilateral withholding of the claimant’s benefits despite
a denial of supersedeas—were not excused. Estate of O’Neill, 646 A.2d at 60.
Similarly, in Hooper, the employer unilaterally suspended the payment
of the claimant’s benefits following the claimant’s refusal to return to work in her
pre-injury position after a full release. Approximately six months later, Employer
filed a petition to modify or suspend the claimant’s benefits and requested
supersedeas. The WCJ granted the supersedeas request but ordered the employer to
pay to the claimant all of the benefits the employer unilaterally withheld from the
six months before the employer filed its petition through the date of the WCJ’s order.
The employer, thereafter, filed an application for reimbursement from the Fund,
which the WCJ granted for the entire period for which the employer paid benefits,
9
Prior to the 1993 amendments to the Act, WCJs were referred to as referees. See King v.
Workmen’s Comp. Appeal Bd. (K-Mart Corp.), 664 A.2d 1087, 1088 n.1 (Pa. Cmwlth. 1995),
rev’d, 700 A.2d 431 (Pa. 1997).
8
including the period during which the employer unilaterally withheld payment of
benefits. The Bureau appealed the WCJ’s decision to the Board. The Board
amended the WCJ’s order to rescind reimbursement for the payments that the
employer unilaterally withheld prior to its request for supersedeas. This Court
affirmed the Board’s decision, declining to permit reimbursement of funds for the
period of time during which the employer unilaterally withheld payment. In doing
so, we recognized that holding otherwise would encourage employers to
continuously violate the Act by unlawfully withholding payments. Hooper,
746 A.2d at 1183. We, therefore, determined that an employer is not entitled to
reimbursement when the withheld benefits were paid retroactively pursuant to a
penalty award. Id.In this case, Employer has not established that it was entitled to
reimbursement for the medical expenses it paid in connection with WCJ Lawton’s
order granting Claimant’s penalty petition. Similarly to the employers’ actions in
Estate of O’Neill and Hooper, Employer unilaterally withheld payment of medical
expenses in violation of the Act and may not be reimbursed for those payments. It
is irrelevant that Employer subsequently prevailed on the termination petition
because earlier violations of the Act may not be excused. See Estate of O’Neill,
646 A.2d at 60. Based on the above discussion, we conclude that the Board did not
err in reversing WCJ Jones’s decision, which granted Employer’s Application with
respect to reimbursement for medical expenses.
Accordingly, we affirm the order of the Board.
P. KEVIN BROBSON, Judge
9
IN THE COMMONWEALTH COURT OF PENNSYLVANIA
Erie Insurance Company and :
Powell Mechanical, Inc., :
Petitioners :
:
v. : No. 20 C.D. 2018
:
Workers’ Compensation Appeal :
Board (Commonwealth of :
Pennsylvania, Department of :
Labor and Industry, Bureau of :
Workers’ Compensation), :
Respondent :
ORDER
AND NOW, this 21st day of February 2019, the order of the Workers’
Compensation Appeal Board is hereby AFFIRMED.
P. KEVIN BROBSON, Judge