No Credit For Pension Benefits Against PA Workers’ Compensation Benefits Post-Retirement

The Pennsylvania Workers’ Compensation Act (“Act”) has several “offsets,” which provide a workers’ comp insurer with a credit for other types of benefits received by an injured worker, such as unemployment compensation, Social Security Retirement (“SSR”), severance and pension benefits. These offsets were created to avoid a perceived “double dipping” by an injured worker, getting paid (in theory) twice for one injury.

These offsets are set forth in Section 204(a) of the Act. Each of the benefits is treated differently. For example, with SSR, the workers’ compensation insurer is entitled to a credit of fifty percent of the SSR benefit, “Provided, however, [t]hat the Social Security offset shall not apply if old age Social Security benefits were received prior to the compensable injury.” On the other hand, “benefits from a pension plan to the extent funded by the employer directly liable for the payment of compensation which are received by an employe shall also be credited against the amount of the award.” Notably, there is no mention of a difference whether the pension benefits were received prior to the work injury. So, what happens if an individual retires, starts getting a pension and then is injured?

This situation was recently addressed by the Commonwealth Court of Pennsylvania in the case of Bradford County and PCOMP v. Pasko (Workers’ Compensation Appeal Board). Here, the injured worker (“Claimant”) was employed by Bradford County for 25 years, when he retired in 1993. Upon his retirement, Claimant began to receive an employer-funded pension.

After retiring, the Claimant worker went back to work for Bradford County in a part-time position (while collecting the pension). While performing this work, in June 2020, Claimant hurt his back. As a result of this work injury, Claimant was disabled from employment for almost a year. After that time, Claimant returned to the part-time work at no loss in earnings. During the period he was out of work, Claimant continued to receive the pension benefits.

A Claim Petition was filed, and litigated, seeking workers’ comp benefits for the period Claimant was out of work. This was contested by the insurance carrier. While the insurer did not dispute responsibility for medical treatment for this injury, the insurer alleged that the pension credit ate up any wage loss benefits which would otherwise have been payable.

A decision was rendered by the Workers’ Compensation Judge (“WCJ”), granting the credit for the pension benefits, as requested by the insurance carrier. While sympathizing with the argument raised by counsel for Claimant, that this was an inequitable result, the WCJ felt constrained by the language of the Act. The WCJ observed that the SSR aspect specifically noted that there would be no credit if SSR benefits were received prior to the work injury; however, the pension portion of the paragraph contained no such language. The WCJ felt this could only mean that language was intentionally omitted by the legislature.

On appeal to the Workers’ Compensation Appeal Board (“WCAB”), the decision of the WCJ was reversed. The WCAB simply could not allow an injured worker to be disabled, but receive no disability benefits. It was felt by the WCAB that the language missing from the Act, about benefits starting prior to the injury, did not necessarily mean the legislature intended this result. Indeed, the WCAB quoted language from prior case law, noting that such a result would be “at odds with the otherwise logical and consistent slant of the legislation and its humanitarian purpose.” This post-retirement position was, in essence, a new part-time job. As the WCAB pointed out, there would clearly be no credit if the injured worker had chosen to seek post-retirement work with a different employer. The intention of Section 204(a) is to avoid “double dipping,” which is not present on these facts. In closing, the WCAB observed that the “spirit of the law and its humanitarian purpose (is) to make [such claimants] financially whole following an injury.”

Upon further appeal, to the Commonwealth Court of Pennsylvania, the decision of the WCAB was affirmed. The Court reviewed the structure and history of Section 204(a) and determined that the clear intent of the legislature was to make the injured worker whole, and nothing more. As the Court explained:

“Read together, then, the pension offset’s neighboring credits all work roughly to ensure that a claimant is made whole by receiving wage loss benefits in an amount no greater than that the claimant could reasonably have expected had the claimant not been injured, relatedly preventing any double payment on the part of an employer . . . Against that context, we find a literal reading of the pension offset to not meet the stated goals of the provision in this case because it would not eliminate double recovery for Claimant’s wage loss, rather, it would eliminate any recovery for his current wage loss.”

The Court observed that, literally, the pension employer and the post-pension employer are the same entity, yet, there are two distinct relationships. The receipt of the pension had nothing to do with the work injury. By working after he began receiving his pension, and earning money on top of that pension, the injured worker showed a clear intent (and expectation) of earning money in addition to the pension. To allow the credit here would not make the injured worker whole, but would simply be a financial windfall for the Employer. Giving the Employer a credit on these facts would be an absurd result, and the Court was not willing to assign that intent to the legislature.