PA DOC v. WCAB (Clapper)
1997 C.D. 2016
Pa. Commw. Ct.Sep 8, 2017Background
- Claimant (Clapper) suffered a work injury in 2012 and received weekly workers’ compensation benefits of $805.77.
- Claimant applied for and elected a reduced retirement annuity (Options 3 and 4) from SERS, withdrawing his contributions; his elected monthly benefit became $2,077.45 (gross) and $1,807.34 (after tax and health-premium withholdings).
- The actuarial present value of Claimant’s Maximum Single Life Annuity (MSLA) was $307,481.91; Claimant’s contributions totaled $134,865.88, so the Employer funded 56.1386% of the MSLA.
- Employer issued an offset notice deducting $323.84 weekly from Claimant’s compensation based on 56.1386% of the MSLA monthly amount ($2,503.59), not Claimant’s elected/net monthly payout.
- WCJ upheld Employer’s offset based on the MSLA; the Workers’ Compensation Appeal Board reversed, directing recalculation using Claimant’s net monthly pension of $1,807.34. Employer appealed to this Court.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Basis for pension-offset calculation | Offset must be based on net pension actually received by Claimant | Offset should be based on MSLA (maximum pension Employer funds) regardless of Claimant’s election | Court: Offset calculated on MSLA (Employer-funded amount) — Employer entitled to offset based on MSLA funding percentage |
| Effect of health-insurance withholdings on offset | Employer must offset only against amount Claimant actually receives after health-premium withholding | Withholding for health insurance (directed to SERS) is irrelevant to offset; regulation defines "net" only for taxes/FICA | Court: Health-premium withholding does not reduce Employer’s offset entitlement |
| Pre-tax vs. after-tax basis for offset | Board required offset on after-tax net amount | Employer may calculate offset on gross (pre-tax) pension; claimant can seek reimbursement if taxes paid | Court: Employer may use pre-tax (gross) pension to calculate offset; claimant may seek reimbursement under existing regulation |
Key Cases Cited
- City of Philadelphia v. Workers’ Compensation Appeal Board (Harvey), 994 A.2d 1 (Pa. Cmwlth. 2010) (addressed limits on double offset and Board’s authority)
- Department of Public Welfare v. Workers’ Compensation Appeal Board (Harvey), 993 A.2d 270 (Pa. 2010) (Section 204(a) focuses on extent employer funds the pension)
- Philadelphia Gas Works v. Workers’ Compensation Appeal Board (Amodei), 964 A.2d 963 (Pa. Cmwlth. 2009) (employer may calculate offset on gross pension; claimant can later seek tax reimbursement)
- City of Pittsburgh v. Workers’ Compensation Appeal Board (Wright), 90 A.3d 801 (Pa. Cmwlth. 2014) (standards for appellate review of WCAB decisions)