Kraeuter v. Workers' Compensation Appeal Board
82 A.3d 513
| Pa. Commw. Ct. | 2013Background
- Claimant Celeste Kraeuter sustained a right-shoulder work injury (9/24/2004), received benefits from 1/13/2005; SWIF issued a Notice of Compensation Payable in Feb. 2005.
- On May 15, 2006 SWIF mailed a Notification of Suspension (Form LIBC-751) asserting Claimant returned to work May 12, 2006; Claimant signed a Final Receipt (Form LIBC-340) on May 18, 2006 and SWIF filed it June 5, 2006.
- Claimant later sued (7/2011) to set aside the Final Receipt, challenged the suspension notification, and sought penalties and attorney’s fees, alleging she never returned to work and remained under medical care.
- The WCJ credited Claimant, found SWIF/adjuster Gallagher prepared and filed the suspension notice and final receipt without verifying medical status, concluded those filings were materially incorrect and fraudulent, set aside the suspension and final receipt, reinstated benefits (with interest), imposed a 50% penalty and awarded litigation costs and attorney’s fees.
- The Board reversed, holding Claimant failed to timely challenge the suspension (20-day rule) and failed to act within the three-year limit to set aside the final receipt, and that fraud was not proven; employer appealed to this Court.
- The Commonwealth Court reversed the Board (in part): it reinstated the WCJ’s rulings setting aside the final receipt and suspension notice and imposing penalties and costs, but affirmed the Board’s reversal of the WCJ’s award of unreasonable-contest attorney’s fees.
Issues
| Issue | Plaintiff's Argument (Kraeuter) | Defendant's Argument (Ajax/SWIF) | Held |
|---|---|---|---|
| Whether the Final Receipt may be set aside beyond the 3-year Section 434 period due to fraud/improper conduct | Final receipt obtained by insurer without medical basis; claimant still under treatment—constitutes fraud or improper action | Challenge barred by Section 434 statute of limitations; no adequate proof of fraud | Court: WCJ supported by record; insurer’s preparation/filing without verifying medical status was fraudulent/improper — final receipt set aside beyond 3 years |
| Whether the suspension notification is voidable despite failure to challenge within 20 days under Section 413(c) | Suspension was materially incorrect (claimant did not return to work); can be set aside under §413(a) as corrective amendment | Claimant’s failure to timely challenge deemed admission; suspension binding | Court: suspension materially incorrect and issued without basis; under corrective-amendment authority WCJ properly set aside suspension and reinstated benefits |
| Whether penalties (up to 50%) are warranted for employer/insurer conduct | Employer violated Act by suspending benefits and filing final receipt without basis; 50% penalty for unreasonable/excessive delay appropriate | Employer contends it had factual basis to contest; argues penalty improper | Court: record supports WCJ’s discretion to impose 50% penalty for unreasonable/excessive delay — penalty affirmed |
| Whether claimant is entitled to unreasonable-contest attorney’s fees (quantum meruit) | Employer’s contests were baseless; fees should be awarded | Employer had reasonable basis to contest (timeliness defenses); contest not merely harassment | Court: employer had reasonable basis to contest; award of unreasonable-contest attorney’s fees reversed |
Key Cases Cited
- Cooney v. Workers' Comp. Appeal Bd. (St. Joseph's Ctr.), 776 A.2d 1046 (Pa. Cmwlth.) (insurer’s presentation of a final receipt while claimant is receiving treatment can constitute fraud permitting setting aside beyond §434 limitations)
- Canavan v. Workers' Comp. Appeal Bd. (B & D Mining Co.), 769 A.2d 1250 (Pa. Cmwlth.) (claimant must show lack of full recovery at signing to set aside final receipt)
- Johnson v. Workers' Comp. Appeal Bd. (Abington Mem'l Hosp.), 816 A.2d 1262 (Pa. Cmwlth.) (presentation of a final receipt to a claimant known to receive ongoing medical treatment can be equivalent to fraud)
- Crawford v. Workmen's Comp. Appeal Bd. (Peugot Contracting), 577 A.2d 966 (Pa. Cmwlth.) (insurer preparing a final receipt knowing claimant is disabled may constitute fraud if claimant signs without understanding significance)
- Furmanek v. Workmen's Comp. Appeal Bd., 439 A.2d 1359 (Pa. Cmwlth.) (a supplemental agreement may be set aside for a relevant and significant inaccuracy even absent fraud)
- Donahue v. Workers' Comp. Appeal Bd. (Philadelphia Gas Works), 856 A.2d 230 (Pa. Cmwlth.) (no fraud where employer did not intend deception and claimant actually returned to work; factually distinguishable)