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Various changes to the Pennsylvania Workers’ Compensation Act occurred with the passage of Act 57 of 1996. As with any legislation, these changes are still being bantered about in the courts as the issues become ripe. One of the key provisions of Act 57 from an employer’s perspective was the amendments to Section 204(a) of the act which provided for offsets against compensation for certain pension or severance payments as well as old age Social Security payments and unemployment compensation benefits. It is precisely those amendments that recently came before the Commonwealth Court in Maxim Crane Works v. WCAB (Solan). While pursuant to the act, an employee is under an obligation to report the receipt of various benefits, a bureau form (Employee Report of Benefits – LIBC-756) was created for the purpose of making the disclosure. Given that employers were given the power to unilaterally alter the receipt of indemnity benefits through the issuance of a notice of workers’ compensation benefit offset form (LIBC-761), the circumstances surrounding the issuance of the various forms and the subsequent cessation or reduction of benefits often have became a source of litigation. One such situation manifested itself on Aug. 3, 2005, when injured worker Richard Solano received a notice of workers’ compensation benefit offset form from his employer, notifying him that it was taking a credit that would offset his weekly workers’ compensation benefits, and that a credit from 14 months of prior old age Social Security benefits would also be recouped, reducing his weekly workers’ compensation benefits to zero for a period of 25.75 weeks. Needless to say, this was not a pleasant surprise for Solano. Therefore, on Aug. 16, 2005, the claimant filed a petition to review benefits offset, alleging that the offset was calculated in error. The majority of the evidence presented came from the claimant, who testified that he had never received an employee report of benefits form with which to report his old-age Social Security benefits prior to June 6, 2005. Solano further testified that he did, in fact, complete and returned the form he received on June 6, 2005, only to receive the notice of workers’ compensation benefit offset, which he challenged, shortly thereafter. Based upon the testimony and other evidence presented, the WCJ determined that the employer was only entitled to an offset beginning on June 6, 2005, which was the date Solano first received the employee report of benefits form. On Dec. 29, 2005, the WCJ granted the claimant’s petition to review benefits offset and ordered that the old-age Social Security benefit offset be recalculated, affording the employer a 50 percent offset beginning June 6, 2005. More importantly, the WCJ ruled that the employer was not entitled to recoup any benefits that Solano had received prior to that date. The WCJ further ordered that claimant was entitled to ongoing workers’ compensation benefits at a reduced rate from June 6, 2005, into the future. The case was appealed and the Workers’ Compensation Appeal Board affirmed with a minor clerical amendment. Following the board’s decision, the employer petitioned for review to the Commonwealth Court, asserting, inter alia, that the board erred in denying it a credit for old-age Social Security benefits received by the claimant prior to his receipt of the employee report of benefits form on June 6, 2005. The Commonwealth Court disagreed with the employer and affirmed the board’s decision. The court based much of its reasoning on the special rules of practice and procedure, otherwise known as the regulations. The court noted that Section 204(a) of the act provides that 50 percent of Social Security “old-age” benefits shall be credited against the amount of the workers’ compensation payments and that it is the employee’s responsibility to report the receipt of such benefits. However, the court parsed the manner in which an employee was required to meet this responsibility. The court pointed out that an employee must report receipt of these benefits to the insurer on the LIBC-756 form, which must be completed and forwarded to the insurer within 30 days of the employee’s receipt of any of the benefits. More importantly, the court found that the insurer is required to notify employees of their reporting requirements through providing the very LIBC-756 form prior to an employee’s obligation under Section 311.1(d) of the act to commence. In addition to the court’s interpretation of the regulations in putting an employer’s obligation to provider a claimant with the LIBC form ahead of the claimant’s reporting obligations, the court further based its decision on the regulation’s use of the word “may” as it pertains to the offset. Specifically, the court quoted 34 Pa. Code sections 123.4 and 123.5, which state that an insurer may be entitled to an offset to workers’ compensation benefits after receipt of form LIBC-756. Therefore, the court makes it clear that while a claimant does owe a duty to report receipt of old age Social Security benefits, the regulations place the initial duty upon the employer or insurer to notify the employee of the reporting requirements and provide the employee with the LIBC forms. Given the holding in Maxim Crane Works, I can think of a handful of my own cases where notice of benefits offset forms were improperly utilized. While litigating penalties and improper calculations have been routine, given the unilateral nature of the forms, Maxim Crane Works provides a real opportunity for the claimant’s bar to right prior wrongs. It is strongly suggested that you review your caseload to determine whether any unilaterally taken benefit offsets violate the principles of Maxim Crane Works. Your clients will thank you. CHRISTIAN PETRUCCI is a solo practitioner and past co-chairman of the Philadelphia Bar Association’s Workers’ Compensation Section. He concentrates his practice in workers’ compensation litigation and Social Security disability. He can be reached at 215-545-0330 or via e-mail [email protected] .

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