ALLOCATUR WATCH

The state Supreme Court has declined to review a case in which a divided Commonwealth Court allowed General Motors to unilaterally suspend an injured worker’s benefits without the required paperwork because the man had taken a voluntary retirement package.

When the split en banc panel Commonwealth Court decided the case in October 2012, one workers’ compensation attorney who represents injured workers, but is not involved in the case, called the decision "dangerous precedent."

But five out of seven Commonwealth Court judges agreed the workers’ compensation judge had the authority to suspend the man’s benefits, absent a formal termination petition, because he was not prejudiced as a result of the suspension. In other words, the claimant was put on sufficient notice of the change and would have had little to quibble with if the right paperwork had been filed, the court held.

In this case, when General Motors unilaterally stopped the benefits of Thomas Krushauskas because he opted into a retirement package, Krushauskas filed a penalty petition. GM denied it.

On review, a workers’ compensation judge treated GM’s denial of that penalty position as a request for suspension, denied the petition and suspended the man’s workers’ compensation in turn.

The Workers’ Compensation Appeal Board affirmed and, in an opinion by Judge Bonnie Brigance Leadbetter, the Commonwealth Court followed suit.

The ruling, however, came over choice words from the court’s president judge in a dissenting opinion.

In President Judge Dan Pellegrini’s words, the employer’s position in Krushauskas v. Workers’ Compensation Appeal Board (General Motors) is "a defense akin by a murderer that the victim deserved to die."

As for the majority’s take, "the net result of the majority holding that the general rule that an employer must file a petition specifically requesting the relief sought is no more — the employer or anyone in any old proceeding can ask for anything they want without filing anything," said Pellegrini, joined by Judge Patricia A. McCullough.

For the majority of the panel, though, the WCJ got it right. There was a small faction of cases that, while not squarely matching the apparent issue of first impression in Krushauskas, still stood for the proposition that a suspension petition (or other benefits-stopping paperwork) can be eschewed in certain situations.

The "key import" of those cases, Leadbetter said, was that a WCJ may suspend or end a claimant’s benefits absent a formal petition as long as it would not prejudice the claimant.

No Petition? No Problem

In one such case, Hutter v. Workmen’s Compensation Appeal Board (Pittsburgh Aluminum), the claimant had filed a petition to set aside a final receipt, claiming she had not fully recovered from her underlying work-related injury at the time she signed the final receipt. A referee agreed and reinstated her benefits for a closed period, up until the point at which her employer’s medical expert determined she had recovered.

The woman appealed, but the Commonwealth Court ultimately ruled she had been given notice and a chance to defend against termination.

In another case, Frontini v. Workers’ Compensation Appeal Board (Parks Moving & Storage), the claimant unknowingly signed a final receipt when he had not fully recovered from his injury. A WCJ reinstated benefits for a closed period and then terminated them once the employer’s medical expert cleared the claimant. He appealed and the Commonwealth Court eventually dismissed his claim.

According to Leadbetter, the Frontini court went on to reason that because the benefits had been terminated by the final receipt, albeit mistakenly, it would have been "counterintuitive" for the employer to file a petition for termination in the first place.

In the case of Krushauskas, the claimant "clearly had a notice suspension was possible," the majority said, and was afforded the chance to defend against it. After all, his penalty petition was based on GM’s unilateral suspension of benefits based on the retirement option, which was a lump sum of $35,000.

"Like Frontini, because [the] employer already ceased paying claimant’s benefits, albeit improperly, and because [the] employer denied the material allegations of [Krushauskas'] penalty petition, it was clear that [GM] was seeking a continuation of that suspension," Leadbetter said. "Furthermore, [the] employer questioned claimant extensively at the December 8, 2008, WCJ hearing regarding his voluntary retirement from the workforce."

"Although claimant objected, he objected on the basis of relevance, not surprise," Leadbetter added.

Leadbetter said the workers’ compensation judge did not close the case after that hearing, allowing the employer time to depose two employees to establish that Krushauskas voluntarily entered into the retirement program. Though it had been made clear the employer sought to end benefits after the retirement option, Krushauskas did not submit any more evidence.

For the majority, all signs pointed to a closed door on workers’ comp.

"This is not a situation where the WCJ sua sponte suspended [Krushauskas'] benefits after the close of the record," Leadbetter said. "Accordingly, the WCJ did not err in treating [GM's] response to claimant’s penalty petition as a request for suspension. Because strictness of pleadings is not required in workers’ compensation cases, and in the interest of judicial economy, the WCJ was empowered to take appropriate action based on the evidence presented."

That analysis, 13 pages of Leadbetter’s 16-page opinion, led to the conclusion that the workers’ compensation judge had the authority to suspend benefits. In the remaining pages, Leadbetter concluded the judge had properly exercised that power.

First, the court determined the judge properly suspended benefits because Krushauskas had, indeed, accepted a retirement package, complete with a pension.

Secondly, where Krushauskas had argued GM took an "illegal pension offset" against his benefits without having filed the proper form, the judge found he simply was not entitled to benefits after retiring.

The judge did, in fact, find GM had violated the act by failing to file a supplemental agreement or final receipt, or obtaining a judicial order. But he reasoned there was simply no penalty to be computed where no benefits were due, and the majority of the appellate panel agreed.

If the case had been overturned, it would have been a hearty bill for GM.

Krushauskas hasn’t received a check for workers’ compensation since July 1, 2006, according to the opinion, before which he had been receiving $711. Calculated to the date of the court’s October 11, 2012, opinion, Krushauskas would be owed more than $233,000.

His attorney, who noted his petition to the Supreme Court after the Commonwealth Court ruled, then called the ruling a bad decision that allows an employer to stop workers’ compensation checks and only later come up with an argument as to why.

"This case can be cited for the proposition as basically a tactic by the employer [under which they say], ‘We’re going to stop the check and then see what the judge says,’" said Martin LLC attorney Alfred J. Carlson.

Michele R. Punturi, of Marshall Dennehey Warner Coleman & Goggin, represented General Motors and did not return a call requesting comment.

Vincent J. Quatrini Jr., of Quatrini Rafferty in Pittsburgh, who specializes in workers’ compensation, said the court "glossed over case law" in incorrectly deciding the case.

"This decision reflects a very conservative big-business approach to the injured worker," Quatrini said.

The workers’ compensation attorney noted the proposition that accepting a retirement package isn’t even a fully concrete path to slashing benefits. The state Supreme Court has yet to decide the issue, he said. Throw in the issue of the missing petition and the case becomes "dangerous precedent," he said.

Quatrini crafted a hypothetical under which an injured worker retires and the employer files the required petition for suspension or termination. Then that case takes a year to get before a workers’ compensation judge.

"During that year, [the worker] is entitled to receive his benefit," Quatrini said. "Here, where they unilaterally stopped his checks, they’ve cheated [him] a year’s worth of benefits."

If the judge did rule in his favor — deciding that benefits were still due — that would have been a year without compensation, he said.

Ben Present can be contacted at 215-557-2315 or bpresent@alm.com. Follow him on Twitter @BPresentTLI.