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Employers can’t be hit with penalties for choosing to hold off paying a workers’ compensation award while applying for supersedeas, the Pennsylvania Supreme Court has ruled. The justices ruled 5-1 in Snizaski v. Workers’ Compensation Appeal Board that there is no tension between �428 of the Workers’ Compensation Act — which deals with employers who default on compensation awards — and the Workers’ Compensation Appeal Board’s own rules governing application for supersedeas. “When the act and the board’s supersedeas regulations are read in pari material, the logical conclusion is that an employer can be deemed in default only if it fails to seek supersedeas while pursuing additional review or refuses to make a compensation payment after its supersedeas request is denied,” Justice Ronald Castille wrote for the majority. “To hold otherwise would render the board’s supersedeas regulations and authority a nullity. “Moreover, we agree with the Commonwealth Court below that it is absurd and unreasonable to construe the act as if it intended that the prospect of a penalty assessment should depend upon the unpredictable fortuity of the outcome of the supersedeas request. Penalties should be tied to some discernible and avoidable wrongful conduct.” The attorney for the employer said the decision would give employers and carriers a comfort level about when they have to pay awards and make it easier for attorneys to advise their clients on what to do when requesting supersedeas. The claimant had argued Section 428 requires employers to pay awards within 30 days of judgment. Under the board’s regulations, parties can apply for supersedeas within 20 days of a workers’ compensation judge’s decision, and 30 days within a decision from the board; a decision on the request would come in either 50 or 60 days. In her dissent, Justice Sandra Schultz Newman agreed with the claimant, saying Section 428 was clear: The employer is in violation of the act if it fails to pay the award within 30 days of the judgment. She said the board’s regulations were “merely procedural in nature” and that �428 “operates independently of the application for supersedeas.” “There is no exception contained in the statute that would toll the limitations period,” Newman wrote. “Nothing in the regulations states that a request for supersedeas tolls the time constraints of Section 428. Nothing in Section 428 indicates that its provisions may be tolled by filing a request for supersedeas.” The case arose when Renee Snizaski’s husband was killed in a car accident on his way to work at the Rox Coal Co. in 1996. According to the opinion, Snizaski filed a fatal claim petition, arguing that her husband’s death was compensable under the act. The workers’ compensation judge denied the claim. The board reversed and remanded for the award and computation of benefits. After the board denied the employer’s petition for reconsideration, it ordered Rox Coal to pay Snizaski and her children $527 weekly on June 13, 2000. According to the opinion, Rox Coal filed an application for supersedeas on July 6, 2000. Snizaski’s lawyer demanded payment of the award after 30 days had passed since the board awarded benefits. Rox Coal countered by saying it wasn’t required to pay the award while its supersedeas request was pending, the opinion said. However, Rox Coal did pay Snizaski in full — more than $147,000, according to the opinion — six days before the board denied its petition for supersedeas, and 42 days after the board awarded Snizaski. Snizaski filed a penalty petition in November 2000, arguing Rox Coal was in default under �428 when it failed to pay the award within 30 days of the board’s order. Rox Coal countered that its obligation to pay was stayed by the board’s regulations that allow it to seek supersedeas. The workers’ compensation judge granted the penalty petition and awarded Snizaski $14,771 and $2,810 in attorney fees, the opinion said, ruling that Rox Coal was late with its payment “as a matter of law” and that the request for supersedeas was “irrelevant” on the issue of penalties. On appeal, the board reversed, and the Commonwealth Court ruled 6-1 to affirm, overruling an earlier Commonwealth Court decision. Snizaski appealed, arguing that Rox Coal was clearly in default under Section 428 and that the act trumps any “contrary suggestion” from the board’s regulations. In his opinion, Castille referred often to the board’s brief. The board argued that �428 is silent as to when the obligation to pay an award begins or when a default occurs. Since the employer relied upon the board’s regulations, there was no violation of the act that would warrant penalties, the board asserted. “We are persuaded by the board’s argument on the proper interplay of its regulations and the provisions of the act,” Castille said. “Section 428, which is titled ‘Final judgment on default in payments; entry in common pleas, lien of judgment and execution thereon,’ does not separately address or authorize penalties. “Instead, that section grants a claimant the right to secure a judgment by default if the employer is in ‘default of compensation payments for 30 days or more.’ However, Section 428 does not address what amounts to a ‘default’ such that the period for measuring the 30-day default period may be ascertained.” Other sections of the act, he said, make employers subject to penalties “without addressing a grace period.” Castille said that, in theory, a penalty could be available the day the default occurs. “In short, it is apparent that Section 428 does not set forth the 30-day, penalty free supersedeas construct advanced by [Snizaski] (and accepted by the Commonwealth Court),” he said. While the act is silent when the default occurs, Castille said, it does recognize the right of employers or insurers to petition for supersedeas. “In the absence of the act setting forth a procedure or timeframe for considering a request for supersedeas, we perceive no tension between the board’s regulations and the statute,” he said. “The board’s regulations governing supersedeas practice are both necessary and complementary to the act and this delegation of authority, as they filled the statutory void by adopting a procedure which would ensure the timely resolution of supersedeas requests.” Given the board’s regulations, the whole process from the time a supersedeas is requested until a ruling is made will take no more than 50 to 60 days, Castille said. In her dissent, Newman focused on the majority’s reliance on the lack of a definition of “default” in �428. “The majority reasons that, because Section 428 does not define when ‘default’ occurs, the regulations of the board rather than the provisions of the act should be utilized to define the point in time at which the employer has an obligation to pay benefits,” she said. “This reasoning is critically flawed and does not comport with the plain language provisions of the act. “Moreover, even if ‘default’ were an ambiguous term, resort to a definition is preferable to the wholesale adoption of the board regulations, which themselves do not define ‘default.’” Rox Coal’s attorney, Pamela Cochenour of Pietragallo Bosick & Gordon of Pittsburgh, said the court’s decision will clear up any confusion employers or claimants might have with regard to the payment of awards and applying for supersedeas. “I think the true effect of the opinion is that now employers can rely on the roadmap provided by the board’s regulations,” she said. “It provides employers and carriers with a comfort level with when an award has to be paid.” Prior to the court’s decision, Cochenour said, attorneys “had a hard time advising with any certainty” when awards would have to paid and what effect applying for supersedeas would have. Snizaski’s attorney, Fred Jug of Pittsburgh, said the practical effect of the decision was that it established “a period of 60 days from when the payment can begin,” giving employers a grace period. “I think the fact that the appeal board advocated the insurance carrier’s position was significant,” Jug said. Cochenour said she thought the board’s position — laid out in its brief — was a “great help” to her client’s argument. Jug said that while he understood the majority’s decision, he thought it would have a harmful impact on some claimants. “The real inequity here is that the insurance carrier always has the supersedeas fund to rely on,” he said. “A delay in paying the award will be a real financial burden on people who are injured and out of work and don’t have an income.”

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