An employer's eleventh hour refusal to proceed with a compromise and release agreement does not violate the Pennsylvania Workers' Compensation Act.

The claimant was injured while working for an employer that was under sub-contract with a general contractor, and the claimant was paid benefits. Later, the case was mediated, and an agreement was reached to settle the claim. At the mediation conference, the claimant agreed to resign from his position with the employer. Counsel for the employer, after executing a Compromise & Release Agreement (C&R) on behalf of the employer, spoke with a representative of the general contractor, who directed counsel not to proceed with the C&R unless the claimant agreed not to seek re-employment with the general contractor. Counsel informed the workers' compensation judge of this and indicated that, if the claimant did not agree to these terms, the employer would proceed with a modification petition that was previously filed. The Claimant did not agree and responded by filing a penalty petition. The workers' compensation judge granted the penalty petition, imposed a 50 percent penalty on the employer for unreasonably delaying the C&R hearing, and awarded counsel fees for an unreasonable contest of the penalty petition. On appeal, the Appeal Board reversed, and the Commonwealth Court affirmed the Appeal Board. The court held that the C&R Agreement, although executed, was not a final, conclusive and binding agreement under section 449 of the Act and that the employer did not violate section 449 by attempting to modify the agreement. The court also noted that section 449 does not prohibit an employer or insurer from withdrawing a Petition for Approval.

Case Law Alert, 1st Qtr 2011