Posted On: March 15, 2012 by Glenn Neiman

Pension offset in PA Workers Comp May Apply Even Without Evidence to Prove Amount

We have discussed Section 204(a), part of the 1996 amendments to the Pennsylvania Workers’ Compensation Act, previously on our blog. This Section gives the workers’ comp insurance carrier a right to a credit, or offset, on other types of benefits, including Social Security Retirement, unemployment compensation, severance and pension benefits.

The offset regarding a pension is available to an employer only “to the extent funded by the employer directly liable for the payment of compensation.” In many situations, this can be a complicated calculation. There are generally two types of pension plans – “defined contribution” and “defined benefit.” In a defined contribution plan, the employee contributes a specific percentage of his earnings to the plan, as does the employer. In those cases, calculations are generally less confusing. The problem comes more with defined benefit plans, where the employee is paid a set amount from a pool of money.

Since payments in defined benefit plans are made from a pool of money, rather than individual accounts, it is virtually impossible for an employer to identify how much it contributed to any one individual’s pension. The Courts have addressed this issue and made clear that “an employer can meet its burden of proving the extent of its contribution to a claimant’s defined-benefit pension by credible actuarial evidence; it need not identify actual contributions to the claimant’s pension.”

With all of this in mind, we turn to Glaze v. Workers’ Compensation Appeal Board (City of Pittsburgh), which is actually a consolidation of many similarly-situated cases involving firemen with a defined benefit plan. Here, the employer sought a credit against the pension being received by injured workers, which was challenged by the injured workers. Before a Workers’ Compensation Judge (WCJ), both sides presented expert testimony regarding the contributions made by the employer to the pensions of the injured workers. The WCJ found the expert offered by the injured worker more credible than the expert presented by the employer. In explaining the determination of credibility, the WCJ gave around seven reasons, though the first was the inability to identify the contribution to each specific pension by employer’s expert. Though the WCJ agreed employer was entitled to some credit, the WCJ denied the offset since the employer failed to meet its burden of proof. On appeal to the Workers’ Compensation Appeal Board (WCAB), there was a split of the WCAB Commissioners. By law, this affirmed the decision of the WCJ.

The Commonwealth Court of Pennsylvania, however, remanded back to the WCJ for additional findings. Though the Court acknowledged that the WCJ is the ultimate finder of fact, and determiner of credibility, the Court said the first basis used by WCJ was so fundamentally flawed that the WCJ should reconsider the determination of credibility with the proper state of the law in mind (that the employer need not prove the amount contributed to any specific pension). To an untrained (or even trained) eye, this would appear as if the Court is trying to reweigh the WCJ’s determination of credibility.

Moreover, the Court found that since the WCJ agreed some offset should be due, since employer must have funded some portion of the pension, the WCJ erred in granting no offset. Upon remand, the WCJ was instructed to decide on a percentage of offset, since it cannot be zero. The Court noted that in civil law, one need not show exact damages in order to prevail. What the Court appears to forget is that the Pennsylvania Workers’ Compensation Act is NOT ordinary civil law. This Act is “remedial legislation” intended to benefit the injured worker. Remember that pain and suffering, and non-economic damages, are not permitted in PA workers’ compensation.

It is a completely foreign concept to me that a party to a workers’ compensation case can fail to meet its burden of proof, and still have the Commonwealth Court of Pennsylvania tell a WCJ that this was “close enough” and the employer should get some relief. The reliability of the entire system rests with core concepts being upheld. One of those core concepts is that a party must meet its burden of proof to win. The workers’ comp insurance carrier failed to meet its burden of proof, plain and simple, and the offset should have been denied. The efforts of the Court simply undermine the reliability of the system.