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Kramer v. Workers' Compensation Appeal Board9/28/2005
These cross-appeals raise two related issues: (1) whether Section 204(a) of the Pennsylvania Workers' Compensation Act (the "Act"), 77 P.S. ยง 71(a), allows all employers, or only self-insured employers, to take an offset against a claimant's workers' compensation benefits in the amount of a severance payment made by the employer to that claimant; and (2) whether, if such an offset is allowable, Section 204(a) violates equal protection considerations under the Pennsylvania and/or United States Constitutions. In this case, a Workers' Compensation Judge ("WCJ") found that appellant/cross-appellee Rite Aid Corporation, a privately insured employer (hereinafter "Employer"), properly took the offset and the Workers' Compensation Appeal Board ("the Board" or "WCAB") affirmed. The Commonwealth Court reversed, however, finding that the Section 204(a) offset was available only to self-insured employers. None of the tribunals below addressed the equal protection claim raised by appellee/cross-appellant Denise Kramer (hereinafter "Claimant"): the workers' compensation tribunals, because they lacked authority over a constitutional challenge claim, and the Commonwealth Court, because it ruled in Claimant's favor on non-constitutional grounds. For the reasons set forth below, we find that Section 204(a) allows all employers to offset workers' compensation benefits in the amount of a severance payment, and that, so construed, Section 204(a) does not violate equal protection. We therefore reverse the order of the Commonwealth Court and reinstate the underlying decision of the WCJ.
Claimant worked for Employer in its Shiremanstown, Pennsylvania facility when she sustained a work-related neck injury on February 20, 1998. Claimant received workers' compensation benefits for temporary total disability through June 28, 1998, when she returned to work with injury-related restrictions. On March 12, 1999, Employer relocated its Shiremanstown facility to Maryland, and as a consequence, Claimant was laid off. Following the layoff, Employer reinstated Claimant's workers' compensation benefits.
Subsequently, Claimant also received a check from Employer in the amount of $3,355.02, representing the net amount of severance pay due to Claimant as a result of Employer's relocation. The payment was part of a "Severance Agreement" contained in a January 7, 1998 Addendum ("Addendum") to the most recent collective bargaining agreement ("CBA") between Employer and Teamsters Local 776 ("Union"), the union for Employer's employees, which covered the period from July 27, 1997 through July 23, 2000. Before July 27, 1997, prior CBAs had required Employer to remain in Pennsylvania, but the most recent CBA allowed Employer to leave the state and relocate to Maryland. Under the Addendum, employees agreed not to engage in a strike, slowdown, or boycott, in exchange for severance payments at the time of their layoff. Nothing in the CBA or the Addendum addressed the prospect of offsetting these anticipated severance payments against workers' compensation benefits.
On May 14, 1999, Employer sent Claimant a Notice of Compensation Benefits Offset ("Offset Notice"), informing her that it was authorized under Section 204(a) of the Act to treat the severance payment as a credit against Claimant's workers' compensation benefits. Section 204(a) states, in relevant part:
The severance benefits paid by the employer directly liable for the payment of compensation and 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 employe shall also be credited against the amount of the award made under section 108 [occupational disease] and 3
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