The Commonwealth Court refuses pension credit for an employee who retires and then returns to the same employer part time.
Section 204(a) of the Workers Compensation Act states, in part, that:
The… 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 also be credited against the amount of the award made under Sections 108 and 306…
Accordingly, where an employee is injured (and receives workers’ compensation benefits) and then retires taking a pension from the employer responsible for payment of the employee’s workers’ compensation benefits, that employer receives a credit against the workers’ compensation benefit due, to the extent the pension is funded by the employer. In the recent case of Bradford County and PCOMP – The Pennsylvania Counties Workers’ Compensation trust v. Paul Pasko (W.C.A.B.), No. 926 C.D. 2022, filed August 14, 2024, the court was faced with the question of how Section 204(a) should be applied where the claimant returns to work part-time for the employer from whom he retired, and then suffers an injury. Mr. Pasko worked for Bradford County as a wastewater treatment plant operator for 25 years. He retired from that position and began receiving a $1,668.23 monthly pension benefit from the County. After his retirement he returned to work for the County on a part-time, per diem basis. While performing the part-time job he suffered an injury to his back and missed work from March 3, 2020, through February 18, 2021. He then returned to work in a light duty position. During his entire absence, the claimant’s pension benefits continued uninterrupted. His post-retirement average weekly wage was $277.41 per week which would entitle him to a disability rate of $249.67 per week. The claimant filed a claim for his lost wages and the employer asserted that it was eligible to take the credit against any wage loss benefits pursuant to Section 204(a) of the Act.
The Worker’s Compensation Judge assigned to the case applied a strict reading of Section 204(a) and found that the employer was entitled to the asserted credit. The Judge noted that the credit given to employers for Social Security old-age benefits in Section 204 specifically excluded the credit where the Social Security benefit was received prior to the injury. Since the language in Section 204 regarding the pension credit did not include that specific exclusion, the Judge concluded that the legislature did not intend for such an exclusion to apply. The credit, of course, eliminated any payment due to the claimant for his lost wages as the pension far exceeded the claimant’s part-time wages. The Worker’s Compensation Appeal Board reversed the decision of the Judge stating that it could not sanction leaving the claimant with a work-related injury but no disability benefit. The Board held that there is a gap in the language of the statute making it ambiguous and subject to varied interpretations. Citing Hannaberry HVAC v. WCAB (Snyder, Jr.), 834 A.2d 524 (Pa. 2003), the Board held that it was not to assume that a gap in the statutory text meant that “by silence” the General Assembly “intended a result ‘at odds with the otherwise logical and consistent slant of the legislation and its humanitarian purpose.’” In essence, the Board ruled that the humanitarian purpose of the Act required that the claimant in this case be made financially whole.
On appeal the Commonwealth Court agreed with the Board that the language of Section 204(a) was ambiguous, and that the employer was not entitled to the pension credit. The Court pointed out that, if you read Section 204(a) in its entirety, rather than parts thereof in a vacuum, it is clear that the intention of the legislature was to make certain that the claimant did not receive a double recovery from the employer, where the employer was paying a pension and was responsible for workers’ compensation benefits as well. However, the court noted that in this situation, similar to the credit language pertaining to Social Security benefits, there would be no double recovery as both parties in this scenario would expect that the claimant would continue to receive the pension benefit, and upon return to the part-time work, also receive wages for that work. The Court noted that while the employer directly liable for payment of compensation in this case was, in the literal sense, the same employer who funded the pension plan, from a legal standpoint, the pension benefit and the Worker’s Compensation benefit flowed from two distinctly different employment relationships.