PA DOC v. WCAB (Clapper)
1997 C.D. 2016
| Pa. Commw. Ct. | Sep 8, 2017Background
- Claimant (Clapper) sustained a work injury in 2012 and received weekly workers’ compensation benefits of $805.77.
- Claimant had an actuarial Maximum Single Life Annuity (MSLA) valued at $307,481.91, producing a $2,503.59 monthly MSLA.
- Claimant elected actuarially-equivalent pension options (Option 3 joint & 50% survivor; Option 4 withdrawal of contributions) that reduced his gross monthly pension to $2,077.45 and, after withholding (taxes, health insurance), his net monthly payment to $1,807.34.
- Employer calculated a workers’ compensation offset using the percentage of the pension funded by Employer (56.1386%) applied to the MSLA, yielding the contested offset amount; Claimant argued the offset should instead be based on his net monthly pension actually received.
- A WCJ upheld Employer’s MSLA-based offset; the Workers’ Compensation Appeal Board reversed and directed recalculation based on Claimant’s net pension; Employer appealed to this Court.
- The Court reversed the Board, holding the offset must be calculated using the MSLA (employer-funded amount), not Claimant’s reduced monthly or after‑tax net pension; tax withholding and health-premium withholding do not change Employer’s funding share.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Proper base for employer-funded pension offset (MSLA vs. actual net pension) | Claimant: offset must be based on net pension actually received after elections/withholdings | Employer: offset should be based on MSLA/actuarial value funded by employer regardless of claimant's optional elections | Held for Employer: offset based on MSLA (employer’s funded share) because employer’s funding obligation is unchanged by Claimant’s elections |
| Whether election of survivor/withdrawal options changes employer funding | Claimant: elections reduce benefit and thus reduce offset | Employer: elections are actuarially equivalent; employer still funds same present value so offset unaffected | Held for Employer: elections do not change actuarial funding; offset uses MSLA funding percentage |
| Whether health-premium withholding reduces "net" pension for offset purposes | Claimant: after health-premium withholding, offset must be reduced accordingly | Employer: health-premium withholding directed to SERS is irrelevant to employer-funded share and offset calculation | Held for Employer: health-premium withholding does not reduce the employer-funded base for offset |
| Whether offset may be calculated on pre-tax (gross) pension | Claimant: offset should be based on after-tax amounts | Employer: regulation permits use of gross amount; administrative difficulty with annual tax liability supports gross calculation | Held for Employer: employer may calculate offset on gross/pre-tax amount; employee can seek reimbursement if taxes were paid and not refunded |
Key Cases Cited
- Department of Public Welfare v. Workers’ Compensation Appeal Board (Harvey), 993 A.2d 270 (Pa. 2010) (statutory focus on extent benefits are funded by employer)
- Philadelphia Gas Works v. Workers’ Compensation Appeal Board (Amodei), 964 A.2d 963 (Pa. Cmwlth. 2009) (employer may calculate offset on gross benefit; employee can seek tax reimbursement)
- City of Pittsburgh v. Workers’ Compensation Appeal Board (Wright), 90 A.3d 801 (Pa. Cmwlth. 2014) (standards of appellate review for workers’ compensation matters)