PA Court Condones Blatant Violation of Pennsylvania Workers’ Compensation Act

Once workers’ compensation benefits in PA are started, usually by issuance of a Notice of Compensation Payable (NCP), under the Pennsylvania Workers’ Compensation Act, generally a workers’ comp insurance carrier cannot stop the payment of such benefits without a Supplemental Agreement, a Notice of Benefits Offset or a judicial order. Typically, if a workers’ comp insurance carrier uses “self help” and stops the payment of benefits in this situation, without proper basis, penalties will be assessed.

In a recent decision by the Commonwealth Court of Pennsylvania, however, the majority of the judges permitted such an unlawful stoppage of benefits with no consequences. The injured worker in Krushauskas v. Workers’ Compensation Appeal Board (General Motors) hurt his shoulder and an NCP was issued. While receiving workers’ compensation benefits, the injured worker accepted a retirement pension. We already know from prior case law that acceptance of a retirement pension can lead to a suspension of workers’ compensation wage loss benefits (a switching of burdens which continues to annoy and confuse us, but that is another blog entry for another day).

Rather than file a Petition for Suspension, which would almost certainly have been successful, the workers’ comp insurance carrier simply stopped paying the workers’ compensation benefits without any legal basis to do so. The injured worker then filed a Petition for Penalties.

The workers’ comp insurance carrier defended the Petition for Penalties by arguing that the injured worker had voluntarily retired, and that a suspension of benefits should be approved. Logically, however, that defense has nothing to do with the petition pending, which involves a question of solely whether the insurance carrier violated the Pennsylvania Workers’ Compensation Act (a finding that is not even in dispute).

The Workers’ Compensation Judge (WCJ) found that the insurance carrier did violate the Pennsylvania Workers’ Compensation Act by stopping the benefits without a legal basis. However, the WCJ went on to note that since the injured worker did voluntarily retire, no benefits would be payable after the insurance carrier stopped making payments. Thus, the WCJ concluded that a suspension (without even a Suspension Petition being filed) should be granted. This was affirmed by the Workers’ Compensation Appeal Board (WCAB).

Upon further appeal, the Commonwealth Court of PA affirmed. The Court noted that, in the PA workers’ comp system, the form of the pleading is not absolute and that a WCJ can conform a decision to the evidence presented, as long as there is not prejudice or unfair surprise. Since the injured worker was aware, though the evidence presented by the insurance carrier, that a suspension was being sought, the granting of a suspension, even without a Suspension Petition, was proper. The Court further noted that the evidence presented, primarily the acceptance of a retirement pension, did support a finding that the injured worker had voluntarily retired.

As a strong two-judge dissent noted, the defense offered by the workers’ comp insurance carrier is “a defense akin by a murderer that the victim deserved to die.” The dissent observed that none of the evidence presented about retirement was relevant to the Petition for Penalties. The dissent would have granted the Petition for Penalties, since the insurance carrier obviously violated the Act, and ordered payment retroactive to when the payments were stopped, plus penalties and interest.

We obviously support the position beautifully stated by the dissenting judges. It seems absurd that an insurance carrier can blatantly violate the Act and stop paying benefits, then have a Court absolve them of any blame and condone such action. The law requires steps be taken by a workers’ compensation insurance carrier when it believes it is entitled to a suspension. Almost always, benefits continue to be paid to the injured worker during the litigation (part of the process called “Supersedeas”). It is inconceivable that the Petition for Penalties did not result in an order to immediately reinstate compensation benefits retroactively to when they were unlawfully stopped, with penalties and interest. Such a decision will, no doubt, lead to more insurance carriers becoming emboldened and taking the law into their own hands. When we think of Courts as the forum to protect us, the people, we can only shake our heads in sadness at the miscarriage of justice in this case.