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A Recent Pennsylvania Commonwealth Court Case is Instructive Concerning the Use of the Employee's Report of Benefits Form


June 3, 2011

Background Facts of Case

Claimant sustained a work injury in 2000.  A Notice of Compensation Payable indicated her weekly indemnity benefits rate was $611 based upon an average weekly pre-injury wage figure of $1,045.58.  Five years later, claimant was still receiving indemnity benefits payments on this basis.  The employer sent her an LIBC-756 form, Employee's Report of Benefits, which she completed August 8, 2005.  At that time, she was receiving Social Security Administration (SSA) disability benefits, which are not subject to offset against the workers' compensation benefits she also collected.  In 2007, the employer sent her another LIBC-756 form.  She completed this form on June 26, 2007, indicating she had been receiving old-age SSA benefits beginning October 28, 2006, at the rate of $1,376.90 monthly.  As a result, the employer filed a Notice of Workers' Compensation Offset, form LIBC-761, indicating it was entitled to a credit of $6,884.50 for past overpaid workers' compensation benefits, a credit which was intended to be applied against future indemnity benefits payable to claimant.  Claimant would therefore be paid nothing weekly in wage loss benefits until the entire credit was absorbed.  Thereafter, her indemnity benefits rate would be reduced to $452.37 weekly, reflecting a credit for one-half of the old-age SSA benefits she received weekly, against her weekly indemnity benefits payable, under Section 204 of the Workers' Compensation Act, as amended (the Act).  Claimant filed a Penalty Petition alleging that the employer took an illegal retroactive Suspension.  This petition was litigated with several other petitions for this case.

In regard to the Penalty Petition, the Workers' Compensation Judge (WCJ) found that claimant had failed to establish the employer had violated any terms for payment, or for stopping payment, of indemnity benefits under the Act.  The WCJ held that claimant was aware in at least August, 2005 [when the employer sent the first LIBC-756 form to her] of the reporting requirements regarding her receipt of old-age SSA benefits, but that she did not report obtaining those benefits until she completed the second such form, which employer sent to her in June, 2007.  Therefore, the Judge held that the employer was entitled to the retrospective offset, and no penalties were awarded.  Claimant appealed this holding to the Workers' Compensation Appeal Board.  The Board concluded that the employer was not entitled to the retrospective credit dating back to October, 2006.  The Board held that claimant had:

. . . . completed an LIBC-756 form previous to her receipt of Social Security old-age benefits.  The regulations placed a duty on her to report these benefits within 30 days of receipt or within 30 days of any change in the receipt of such benefits, and at least every six months. . . . Nevertheless, the regulations also imposed a duty on Defendant [Employer] to notify her of the reporting requirement and to provide her with the forms required to fulfill this reporting requirement. . . .

 

. . . . The problem here lies solely in the duty to provide her with the forms.  One possible reading of the regulations is that an employer only needs to supply the claimant with an LIBC-756 form on one occasion, and it becomes Claimant's duty to duplicate the form or request a new form, if or when there is a change in her receipt of benefits subject to credit under Section 204(a) of the Act.  Another interpretation is that the employer should be supplying the claimant with a new LIBC-756 form every six months to remind and require her to update her recording of benefits subject to offset.

 

We are guided by the principle that the Act must be liberally construed to effectuate its humanitarian purposes, and borderline interpretations are to be resolved in favor of injured employees. . . . Therefore, we are compelled to follow the latter interpretation; i.e., the employer should be supplying the claimant with a new LIBC-756 form every six months.  Otherwise, claimants could be subjected to rather large retrospective offsets if several years have past [sic] since they last received an LIBC-756 form from the employer.  Indeed, it might be unrealistic to expect unsophisticated claimants to file LIBC-756 forms entirely on their own volition at least every six months, which is why the regulations place a duty on the insurer to provide them with the forms.

 

. . . . Treating the penalty petition as including a petition to review the offset, we reverse the WCJ's order to the extent she approved Defendant's [Employer] reduction of Claimant's workers['] compensation benefits to $0 for 11 1/7 weeks from August 28, 2007 - November 13, 2007.  Rather, Claimant's benefits should only have been reduced to $452.37 for those weeks, consistent with the unchallenged perspective [sic] offset claimed by Defendant [Employer].

 

Notwithstanding our conclusion that Defendant [Employer] is not entitled to a retrospective credit or offset under the circumstances of this case, we agree that a penalty is not appropriate, albeit under different grounds than the WCJ.  Instead, we believe that the Act and, more particularly, its regulations did not specifically or unambiguously address the issue, as indicated by our foregoing discussion. . . .

The employer appealed this holding to the Pennsylvania Commonwealth Court.

Commonwealth Court Holding

The Act's Section 123.3 implementing regulation addresses the means by which a claimant informs an employer of the receipt of old-age SSA benefits: 

(a) Employes shall report to the insurer amounts received in unemployment compensation, Social Security (old-age), severance and pension benefits on form LIBC-756, "Employee's Report of Benefits." . . .

 

(b) Form LIBC-756 shall be completed and forwarded to the insurer within 30 days of the employe's receipt of any of the benefits specified in (a) or within 30 days of any change in the receipt of the benefits specified in (a), but at least every 6 months.

Further, "An insurer shall notify the employe of the reporting requirements under sections 204 . . .  of the act . . . In addition, the insurer shall provide the employe with the forms required to fulfill the employe's reporting and verification requirements under Section 311.1(d) of the act."  Section 123.501.

The Commonwealth Court ultimately held, based upon this regulatory criteria, that an offset under these circumstances can only be taken from the date a claimant receives a blank LIBC-756 form to complete.  The Court also held that there is no absolute right to a retrospective offset in this situation.  The Court indicated that, while a claimant does owe a duty to report receipt of old-age SSA benefits, the regulations place the initial duty upon the employer or insurer to notify the employee of the reporting requirement and to provide the employee with the proper form with which to do so.  In other words, the employer has the obligation to notify the claimant of the reporting requirements under the Act in order to secure any right to an offset. 

The Commonwealth Court agreed with the Board that under these types of circumstances, where a claimant receives indemnity benefits payments on a long-term basis, an LIBC-756 form should be forwarded to that claimant every six months as a reminder, and to request an updated report of receipt of any benefits that may be subject to such an offset under the Act.  The Court cited the Board's reasoning with approval, that this procedure would prevent a claimant from being subjected to a large retrospective offset, especially if several years had passed since he last received an LIBC-756 form from an employer, and that it would be unrealistic to expect unsophisticated claimants to file a new LIBC-756 form every six months on their own, in view of the Act's humanitarian objectives.

However, the Court also stated that the Act and its regulations did not specifically or unambiguously address this issue, and therefore, penalties were not awarded in this case.

Lesson

Send a claimant receiving indemnity benefits an LIBC-756 form every six months!

If you would like a copy of Muir v. Workers' Compensation Appeal Board (Visteon Systems LLC), issued by the Commonwealth Court on October 1, 2010, or if you would like to further discuss this case and its ramifications, please do not hesitate to contact any of us.