The Pennsylvania Workers’ Compensation Act (PA WC Act) has several “offsets,” which provide a workers’ compensation insurer with a credit for certain types of benefits received by an injured worker. These benefits include unemployment compensation, Social Security Old Age/Retirement, severance benefits and pension benefits. These offsets were created to avoid a “double recovery” by an injured worker who is also receiving workers’ compensation benefits for a work-related injury.
Section 204(a) of the PA WC Act sets forth the application of the offset credits. Interestingly, each of the benefits are treated very differently. For example, the Social Security Old Age/Retirement offset allows the insurer a credit of fifty percent (50%) of the Social Security Old Age/Retirement provided that the offset shall not apply if benefits were received prior to the work injury. The pension benefit offset allows that benefits from a pension plan, to the extent funded by the employer directly liable for the payment of compensation, which are received by an employee shall be credited against the amount of the workers’ compensation benefit award. Notably, there is no mention of a difference whether the pension benefits were received prior to the work injury.
The Commonwealth Court of Pennsylvania recently addressed the issue of what happens when an individual retires, starts getting a pension and then is injured at work in the case of Bradford County and PCOMP v. Pasko (Workers’ Compensation Appeal Board). In Pasko, the Claimant was employed by Bradford County for 25 years, when he retired in 1993. Upon his retirement, Claimant began to receive an employer-funded pension. After retiring, the Claimant went back to work for Bradford County in a part-time position, while still collecting his pension. In June 2020, Claimant injured his back. As a result of this injury, Claimant was disabled for almost a year. After that time, Claimant returned to the part-time work at no loss in earnings. During the period he was out of work, Claimant continued to receive the pension benefits. A Claim Petition was filed seeking workers’ compensation benefits for the period Claimant was out of work. During litigation, the insurer did not dispute responsibility for medical treatment for this work injury, but alleged that the pension credit offset any wage loss benefits which would otherwise have been payable to Claimant.
The Workers’ Compensation Judge (WCJ) granted the offset credit for the pension benefits received by Claimant, as requested by the insurer, based upon the language of Section 204(a) of the PA WC Act. On appeal to the Workers’ Compensation Appeals Board (WCAB), the WCJ’s Decision was reversed. The WCAB held that a disabled Claimant simply could not be allowed to receive no disability benefits in this situation. The WCAB noted that such a result would be at odds with the humanitarian purpose of the PA WC Act. On Appeal, the Commonwealth Court of Pennsylvania affirmed the WCAB Order. The Court reviewed the structure and history of Section 204(a) and determined that the clear intent of the legislature was to make the injured worker whole, and nothing more. As the Court explained:
“Read together, then, the pension offset’s neighboring credits all work roughly to ensure that a claimant is made whole by receiving wage loss benefits in an amount no greater than that the claimant could reasonably have expected had the claimant not been injured, relatedly preventing any double payment on the part of an employer . . . Against that context, we find a literal reading of the pension offset to not meet the stated goals of the provision in this case because it would not eliminate double recovery for Claimant’s wage loss, rather, it would eliminate any recovery for his current wage loss.”
The Court held that the pension employer and the post-pension employer are the same entity, but there are two distinct relationships. The Court found the receipt of the pension had nothing to do with the work injury. By working after Claimant began receiving his pension, and earning money on top of that pension, the Claimant showed a clear intent (and expectation) of earning money in addition to the pension. The Court indicated that to allow the pension offset credit here would cause a financial windfall for the Employer and be inconsistent with the intent of the legislature.
Zachary M. Rubinich is a partner in our Philadelphia office. He focuses his practice on the defense of insurance carriers, self-insured entities and third-party administrators against workers’ compensation claims in Pennsylvania. Based on his extensive experience, the Pennsylvania Bar Association Workers’ Compensation Law Section has certified him as Specialist in the practice of workers’ compensation law. Zach has handled all aspects of litigation before workers’ compensation judges, the Workers’ Compensation Appeal Board, the Commonwealth Court and the Pennsylvania Supreme Court. Zach has been appointed to the following American Bar Association Tort Trial and Insurance Practice (TIPS) leadership positions: Chair of the Litigation and Trial Practice Committee; Vice-Chair of the Appellate Advocacy Committee; member of the Ethics and Professionalism Standing Committee; and member of the CLE Board Committee. He is the Past Chair of the ABA TIPS Workers’ Compensation and Employers’ Liability Law Committee from 2018-2019. He has served as Vice-Chair of this committee from 2015 to present. In addition, Zach served as Vice-Chair of the 2017-2018 American Bar Association Standing Committee for Diversity and Inclusion. He is also a Committee Member of the ABA’s Legal Opportunity Scholarship Fund. Zach has been rated AV Preeminent by Martindale-Hubbell for the twelfth consecutive year for 2024. He has been selected as a 2019, 2020 and 2021 Pennsylvania Super Lawyer by Super Lawyers. He was selected as a Pennsylvania Rising Star by Super Lawyers from 2010 to 2014. He was selected as an International Advisory Experts (IAE) Award recipient in 2019 for his accomplishments as a workers’ compensation attorney in Pennsylvania. Zach has been selected as a Fellow of the College of Workers’ Compensation Lawyers Class of 2020. Mr. Rubinich was recognized as a Main Line Today 2023 and 2024 Top Lawyer.
Zach can be reached directly at: (215) 575-4340 • zrubinich@rawle.com
Workers’ Compensation Section
CHAIR: Claudio J. DiPaolo, Partner
PARTNERS: Zachary M. Rubinich; J. Brendan O’Brien; Jennifer F. Schwartz; Christian M. Stein; Anisha S. Abraham
OF COUNSEL: Edward J. Chiodo; James H. Curry; Karen Anne Hager; Daniel Spafford; Jennifer Chun Strawn
ASSOCIATES: Mary Bergmann, Iyanna C. Greene
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