Seeley v. Galeton Lumber Co.

Opinion by

Judge Mencer,

In this appeal from a decision of the Workmen’s Compensation Appeal Board (Board), we are faced with the question of whether a lump-sum compromise settlement of the workmen’s compensation claim of Beatrice Marie Seeley (claimant) is null and void because it violates Section 407 of The Pennsylvania Workmen’s Compensation Act (Act).¹ Both the referee and the Board concluded as a matter of law that the agreement was prohibited.² We are somewhat reluctantly constrained to affirm.

Section 407 of the Act provides, in relevant part: On or after the seventh day after any injury shall have occurred, the employer or insurer and employe or his dependents may agree upon the compensation payable to the employe or his dependents under this act; but any agreement made prior to the seventh day after the injury shall have occurred, or permitting a commutation of payments contrary to the provisions of this act, or varying the amount to be paid or the period during which compensation shall be payable as provided in this act, shall be wholly null and void. (Emphasis added.)

It is clear from our reading of the statute that Section 407 establishes three separate types of agreement which are null and void: (1) those entered into before the seventh day following an injury, (2) those permitting a commutation of payments contrary to the provisions of the Act, and (3) those varying the amount to be paid or the period during which compensation shall be payable.³ The presence of these conditions, either singly or in combination, renders any purported agreement null and void.

While some doubt has been expressed as to whether the appellate courts of Pennsylvania have passed directly on the issue before us,⁴ we find ample case authority for the interpretation adopted here. In Bair v. Susquehanna Collieries Co., 335 Pa. 266, 6 A.2d 779 (1939), an employee was prevented from enforcing a contract whereby the employer promised to employ him for life if the employee would agree to accept 75 weeks of compensation rather than the 150 weeks to which he ivas entitled. The Pennsylvania Supreme Court held that such an agreement violated Section 407⁵ and denied recovery in assumpsit.

The Supreme Court, relying on Bair, supra, assumed, without deciding, in American Casualty Co. v. Kligerman, 365 Pa. 168, 74 A.2d 169 (1950), that Section 407 voided agreements permitting commutation of payments contrary to the provisions of the Act or varying the amount of benefits to be paid. Most recently, Justice Babbieri, in Temple v. Pennsylvania Department of Highways, 445 Pa. 539, 285 A.2d 137 (1971), relied on Section 407 to nullify an agreement by which an employee agreed to take sick-leave pay in lieu of benefits under the Act.

Claimant, however, urges us to read the word “or,” italicized above, as if it were conjunctive rather than disjunctive. Claimant would thus construe Section 407 as invalidating only those agreements which were both entered into before the seventh day following an injury and which permitted either a commutation of payments contrary to the provisions of the Act or varied the amount to be paid or the period during which compensation is payable. This proposed reading, though plausible, would, we believe, lead to the erroneous conclusion that the legislature did not disapprove of all agreements entered into before the seventh day following the injury. We conclude that the first words of Section 407 “On or after the seventh day after any injury shall have occurred” show a clear intent to prohibit all agreements entered into during this period. Clearly then, claimant’s proposed construction cannot stand.

In the case at bar, the settlement obtained by claimant’s attorney provided for a $29,000 lump-sum payment to claimant in return for a release from liability. Since there is a serious issue as to whether claimant was in the course of her employment at the time she was injured, the settlement here seems eminently fair and reasonable. Unfortunately, the agreement involves á lump-sum payment which is voided by Section 407.

Lump-sum payments under Section 317 of the Act (77 P.S. §603) and commutation of payments under Section 316 (77 P.S. §604) are only permitted under circumstances which do not yet exist in the case at bar. Both Sections 316 and 317 contemplate that either an agreement (Section 407) or an award (Section 410, 77 P.S. §751) has already been made. Such agreement or award must be made in accordance with the schedules found in Section 306(a)-(d) of the Act (77 P.S. §§511-13). Since no award or agreement pursuant to those schedules has yet been made, the lump-sum payment contemplated here violates Section 407 as an attempt to commute payments, contrary to the Act, and to vary the amount and period of payments, as provided in the schedules.

We have read with considerable interest the arguments presented on behalf of compromise settlements.⁶ However, since the legislature has reenacted Section 407 as recently as 1972⁷ without changes which would affect the interpretations in Bair, supra, and Temple, supra, we must assume that those interpretations have been approved by the legislature. Accordingly, it is not the function of the courts to interpret the statute differently. Therefore, we enter our

Order

Now, this 7th day of February, 1977, the order of the Workmen’s Compensation Appeal Board in the above captioned case is affirmed.

1 Act of June 2, 1915, P.L. 736, as amended, 77 P.S. §731.

2 Although neither the referee nor the Board specifically mentioned Section 407, it is clear that this is the basis for their rejection of the settlement. In addition, both parties have addressed themselves entirely to this issue in their briefs.

3 Accord, McGahen v. General Electric Co., 406 Pa. 57, 67, 177 A.2d 85, 90 (1962).

4 See, e.g., Stander, The “No Compromise” Mess in Pennsylvania Workmen’s Compensation, The Legal Intelligencer, Vol. 175, No. 49, September 9, 1976.

5 Section 407 was in all respects pertinent to this appeal the same as the present statute.

6 Many of these arguments were presented in the article by Referee Stander, supra, note 4.

7 Act of March 29, 1972, P.L. 159.