CompCORNER

CompCORNER - October 2007

COMMONWEALTH COURT ADDRESSES RETROACTIVE CREDIT
FOR SOCIAL SECURITY RETIREMENT BENEFITS

      In Maxim Crane Works vs. WCAB (Solano), No. 2224 C.D. 2006, the Commonwealth Court addressed the issue of a retroactive offset for Social Security retirement benefits and concluded that the insurance carrier could not obtain such a credit.

      Claimant suffered a work-related injury on October 10, 2000. He began receiving Social Security retirement benefits in January 2003. On April 4, 2003, the parties entered into an Agreement for Compensation Benefits and subsequently a Supplemental Agreement dated September 12, 2003.

      The Claimant was sent by the carrier LIBC 756-Employee's Report of Benefits for Offset in June 2005. The Claimant filled it out accurately and returned the document. In August 2005, the carrier forwarded form LIBC 761-Notice of Workers' Compensation Benefit Offset to the Claimant taking 50 percent (50%) credit for 14 months of retirement benefits received to that point. The offset provided for elimination of benefits for 25.75 weeks. Claimant filed a Petition to Review Benefit Offset as a result of this action.

      Before the Workers' Compensation Judge, the parties established that the Claimant initially received Social Security benefits at the rate of $1,285.00 per month. By the time the hearing was held, it had increased to $1,314.00 per month. Claimant had not received the appropriate LIBC form prior to June 6, 2005.

      The Workers' Compensation Judge granted the Petition for Review, determining that the 50 percent (50%) offset should begin June 6, 2005 and ruled out the recoupment of benefits paid prior to that date. The Workers' Compensation Appeal Board affirmed.

      On appeal, the carrier argued that it was entitled to credit for 50 percent (50%) of retirement Social Security benefits received by the Claimant prior to June 6, 2005. It argued that the Workers' Compensation Appeal Board erred in applying the doctrine of laches to prevent recoupment of the earlier benefits.

      On appeal to the Commonwealth Court, Judge Kelley ruled for the Claimant. The Court noted that the regulations require the employer/insurer initially to notify the employee of his reporting requirements. Since the carrier did not comply with its responsibility to notify the Claimant of his reporting requirements until June 6, 2005, it could not receive credit before that date. The Court applied the doctrine of laches, noting that the carrier failed to notify the Claimant of his reporting requirements until nearly five years after his work-related injury and over two years after he began getting benefits. Therefore, the Court found that "employer failed to act with due diligence."

      Query: When will the constitutionality of the old age retirement Social Security benefit offset be dealt with at the appellate level? More than eleven years have passed since the enactment of Act 57. Yet, there still remains no reported appellate case where the offset as age discrimination has been a factor. There are numerous jurisdictions that have adopted a credit similar to that which applies in Pennsylvania. Those jurisdictions are split as to the constitutionality of the offset.