Harrison v. Workers' Compensation Appeal Board (Commonwealth of Pennsylvania)
2017 Pa. Commw. LEXIS 414
| Pa. Commw. Ct. | 2017Background
- Claimant (David C. Harrison) was injured at work in June 2010; Employer (Commonwealth) paid workers’ compensation and later learned Claimant retired and began receiving SERS pension benefits.
- Employer issued a notice of pension-offset based on SERS’s calculation that the employer-funded portion of Claimant’s monthly Maximum Single Life Annuity (MSLA) was $1,885.03; dividing by 4.34 produced a weekly offset of $434.34, reducing weekly WC benefits from $845.00 to $410.66.
- Claimant had elected a joint-and-survivor (reduced) annuity that pays him a lower monthly amount (net ~$3,053.11) than the MSLA ($3,742.51) to preserve survivor benefits for his spouse.
- Claimant filed petitions seeking review of the offset calculation, reinstatement, and penalties for alleged improper over-offset/recoupment; WCJ accepted Employer’s evidence (SERS actuary and administrators) and denied Claimant’s petitions; Board affirmed.
- The Commonwealth Court majority held Employer properly based the offset on the employer-funded portion of the MSLA because joint-and-survivor options are actuarially equivalent to MSLA and Employer funds the MSLA-equivalent obligation; taxes can be reclaimed under regulation if Employer used gross amounts.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether pension offset must be calculated on the pension amount Claimant actually receives (reduced joint-and-survivor annuity) or on the MSLA | Harrison: Offset must be based on the net amount he actually receives; statute/regulation refer to amounts "received" and prohibit offset for benefits the employee is not receiving | Employer/SERS: Offset measures the extent employer funded the pension; SERS calculates employer funding using the MSLA and actuarial equivalence; joint-and-survivor is actuarially equivalent so funding (and offset) is based on MSLA | Held: Offset may be based on employer-funded portion of MSLA; joint-and-survivor option is actuarially equivalent and Employer is entitled to offset based on MSLA-funded amount. |
| Whether offset must use net (after‑tax) pension amounts or gross amounts | Harrison/Amicus: Using gross reduces claimant’s non‑taxable WC entitlement; offset should be based on net actually received | Employer: Regulations allow use of gross for administrative ease, with obligation to reimburse worker if taxes were included in the offset | Held: Employer may calculate offset on gross MSLA but must reimburse claimant under 34 Pa. Code § 123.4(f) if taxes were included. |
| Whether Employer could recoup pension benefits paid before notice of offset (retroactive recoupment/overpayment) | Harrison: Employer improperly took credit for pension benefits received prior to notice | Employer: Regulations and Section 204(a) permit retrospective offsets to recover overpayments | Held: WCJ correctly allowed retroactive recoupment and denial of penalties; retroactive offset authorized. |
| Evidentiary burden to justify offset amount | Harrison: Employer must prove offset matches amounts actually received | Employer: As proponent of offset, Employer bears burden but credible actuarial evidence suffices to show extent of employer funding | Held: Employer met burden with unchallenged SERS actuarial and administrative testimony; Claimant offered no contrary expert evidence. |
Key Cases Cited
- City of Philadelphia Gas Works v. Workers’ Compensation Appeal Board (Amodei), 964 A.2d 963 (Pa. Cmwlth. 2009) (offset normally based on net amount received; regulations govern gross/net treatment)
- City of Philadelphia v. Workers’ Compensation Appeal Board (Harvey), 994 A.2d 1 (Pa. Cmwlth. 2010) (interpreting offset where pension was reduced by municipal code; offset limited to amounts actually received after reductions)
- Dep’t of Public Welfare v. Workers’ Compensation Appeal Board (Harvey), 993 A.2d 270 (Pa. 2010) (credibility of actuarial evidence sufficient to establish employer-funded portion in defined‑benefit plans)
- Hannaberry HVAC v. Workers’ Compensation Appeal Board (Snyder, Jr.), 834 A.2d 524 (Pa. 2003) (workers’ compensation statute to be liberally construed in injured worker’s favor)
- Hoffman v. State Employees’ Retirement Board, 915 A.2d 674 (Pa. Cmwlth. 2006) (retiree may choose MSLA or actuarially equivalent reduced options under Retirement Code)