Commonwealth Court Restricts Employer's Right to Offsets Based on Old-Age Social Security Benefits
In Maxim Crane Works v. WCAB (Solano), the Commonwealth Court handed down an decision which greatly restricts an employer's right to take a credit to offset workers' compensation benefits based on an injured worker's receipt of old-age Social Security benefits.
Under the Pennsylvania Workers' Compensation Act, an employer is entitled to an offset against workers' compensation in certain situations for pension and retirement benefits as well as Social Security retirement benefits. Act 57 of 1996 provided for the creation of forms by the Bureau of Workers' Compensation for an injured worker to report his or her recript of such benefits as well as for the employer to notify the worker of its right to an offset. Specifically, the Bureau created the Employee Report of Benefits (LIBC-756) form and the Notice of Workers' Compensation Benefit Offset (LIBC-761) form.
Typically, when an employer becomes aware of an employee's receipt of benefits that create an offset, the LIBC-761 form is sent to the employee, and the credit is unilaterally taken. That is what happened in the instant matter when Richard Solano received an LIBC-761 form advising that the employer was immediately taking a credit based on his receipt of old-age Social Security benefits. What's more, the employer also advised that it would recoup the overpayment to the claimant based on his receipt of the old-age Social Security benefits during the previous several months. Litigation ensued in which the employer asserted its right to modify Mr. Solano's benefits, and Mr. Solano disputed the extent of the employer's entitlement to an offset. The workers' compensation judge ruled that the employer was only entitled to an offset beginning June 6, 2005, the date Mr. Solano was provided with an LIBC-756 form by the employer. The judge held that the employer was not entitled to the offset for any period prior to June 6, 2005. The signficance of this is that the judge recognized a burden on the employer to provide the injured worker with the LIBC-756 form to report the receipt of benefits and, more importantly, held that there is no retrocactive entitlement to an offset once the LIBC-756 form is provided to the employee. This is contrary to previous common practice where the employer's retroactive entitlementwas generally accepted. Under Solano, it is now clear that although claimants must report their offseting benefits, there is an initial and prior duty on the employer to notify the employee of its right to an offset and to provide the appropriate form to report benefits.
The Workers' Compensation Appeal Board and the Commonwealth Court both upheld the judge's decision. This ruling opens up the possibility for a great number of injured workers whose workers' compensation benefits have been offset to review the circumstances of the employer taking that offset. It is a distinct possibility that some injured workers may be entitled to recoup some or all of the offset based on the Solano decision.
