A Retroactive Offset of WC Benefits is Allowed When an Injured Worker has been Timely Reminded of the Duty to Report Other Benefits by Means of Employee Report of Benefits Form (LIBC-756)

07.23.15

Category: Pennsylvania

In Gelvin v. WCAB (Pennsylvania State Police), No. 1503 C.D. 2014, filed July 13, 2015, the Commonwealth Court addressed the issue of whether an employer may unilaterally suspend ongoing workers’ compensation benefits by means of a Notice of Workers’ Compensation Benefit Offset Form (LIBC – 761) and concluded that it can be done, but only if the employer has met its obligation to remind the employee of his or her reporting obligations.

In this case, the injured worker on disability benefits received a disability pension from the state retirement system in February 2012 retroactive to February 2011. This was reported to the employer on March 16, 2012 on an Employee Report of Benefits Form (LIBC – 756). The injured worker had previously completed LIBC – 756 forms in December 2010 and December 2011. The employer sent the injured worker a Notice of Benefit Offset form in March 2012 suspending all workers’ compensation benefits from April 12, 2012 to March 5, 2013 to recoup an overpayment of $19,597.99 resulting from the retroactive offset. The injured worker then filed reinstatement and penalty petitions alleging a unilateral stoppage of disability benefits, an improper offset and financial hardship.

The Workers’ Compensation Judge (WJC) limited the retroactive credit only to the date the employee returned the LIBC – 756 acknowledging the receipt of the disability payment, March 16, 2012. The WCJ granted the reinstatement and penalty petitions and assessed unreasonable contest attorney fees against the employer. The Workers’ Compensation Appeal Board (WCAB) reversed and the Commonwealth Court agreed with the WCAB. The Court rejected the injured worker’s argument that the WCJ must engage in a hardship analysis when the overpayment of benefits exceeds six months and distinguished other decisions relied upon by the injured worker.

The Court explained its holding in Maxim Crane where the employer sought recoupment of workers’ compensation in light of 14 months of offsetable Social Security old age benefits by suspending workers’ compensation benefits for 27.75 weeks. The WCJ’s holding was affirmed that the retroactive recoupment could only begin as of the date the employer first sent the Employee Report of Benefits form (LIBC – 756) to the employee. The Court noted that while the employee has a duty to report, employers have an initial duty to notify employees of the reporting requirements.

However, the Court distinguished the factual situation in Gelvin and found that the employer had satisfied its duty to notify the injured worker of his reporting requirements by sending LIBC – 756 in December 2011 before the employee received his disability pension in February 2012. The Court determined that the employer was entitled to a retroactive offset as of February 2011, which could be realized by a unilateral suspension of disability benefits for over 13 months beginning in March 2013.

The Court also explained its decision in Muir where the employer met its initial duty of notifying the employee of her duty to report any new benefits but sent no additional LIBC – 756 for nearly two years. A retroactive offset was not allowed because the employer did not meet its ongoing obligation to remind the injured worker of her reporting obligation by sending LIBC – 756 forms every six months. The Court explained that the purpose of its holding in Muir, requiring employers to remind employees of their duty to report benefits every six months, was to avoid circumstances where the employers lack of due diligence subjected the employee to a large retroactive offset. The Commonwealth Court found that Muir did not apply in the Gelvin case because while the employee was subjected to a large retroactive offset, the amount the employer recouped was not related to any lack of diligence on the employer’s part.

Comment: These decisions strongly suggest that employers or their insurers should send Employee Report of Benefit Forms (LIBC – 756) to injured workers on disability benefits every six months to fully realize available offsets for other benefits received and to avoid losing potential offsets.

For more information, please contact Stephen T. Potako at spotako@wglaw.com or 267.765.4132.

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