Beware! If We Snooze, We May Lose! A Closer Look at LIBC-756 as Interpreted in Muir v. Workers’ Compensation Appeal Board (Visteon Systems, LLC)

The Pennsylvania Workers’ Compensation Act, the Regulations and the governing case law guide the legal community on the proper use of Bureau forms. For example, a Bureau form was created to enable employers to obtain information pertaining to the receipt of other benefits, such as Unemployment Compensation, Social Security (old age), severance, pension and/or other employment/wages. This form is LIBC-756--Employee’s Report Of Benefits (Unemployment Compensation, Social Security (Old Age), Severance and Pension Benefits). Reporting under LIBC-756 is important because an employer is entitled to a credit for unemployment compensation, Social Security (Old Age), severance and pension benefits against workers' compensation disability benefits, as set forth in 77 P.S. § 71.

The Bureau of Workers' Compensation regulation, 34 Pa. Code § 123.3, addresses the means by which a claimant must inform an employer of the receipt of the benefits set forth in 77 P.S. § 71:

(a)       Employees shall report to the insurer amounts received in unemployment compensation, Social Security (old age), severance and pension benefits on form LIBC-756 'Employee’s Report of Benefits.'

(b)       The form LIBC-756 shall be completed and forwarded to the insurer within 30 days of the employee’s receipt of any benefits specified in subsection (a) within 30 days of any change in receipt of benefits specified in subsection (a) but at least every six months.

The Commonwealth Court addressed the use of Form LIBC-756 in Maxim Crane Works v. WCAB (Solano), 931 A.2d 816 (Pa. Cmwlth. 2007). In Maxim, the claimant suffered a work injury on October 10, 2000, and was terminated in December of 2000. In January 2003, he applied for “old age” Social Security benefits. On June 6, 2005, the claimant received the form LIBC-756 upon which he acknowledged that he had received “old age” Social Security benefits. On August 3, 2005, the claimant received a Notice of Work Compensation Offset, which informed him that the employer was taking a credit that would offset his weekly benefits and an additional credit for 14 months of prior “old age” Social Security benefits, thus reducing his workers’ compensation benefits to “0” for a period of 25.75 weeks.

The claimant filed a Petition to Review and alleged that the offset was in error. The claimant testified before the Workers' Compensation Judge that, prior to June 6, 2005, he had never received a LIBC-756 form to report his "old age" Social Security benefits. Upon receipt, he reported his benefit amount. The Judge determined that the employer was entitled to a 50 percent offset only from June 6, 2005, but no retrospective offset.

On appeal, the Commonwealth Court found no support in the Act or Regulations to support the employer’s assertion of an absolute right to retrospective offset. Even though the claimant had received “old age” Social Security benefits starting in January 2003, the facts revealed the claimant did not receive the LIBC-756 until June 6, 2005. The court determined that, while a claimant owes a duty to report the receipt of “old age” Social Security benefits, the Regulations place the initial duty upon the employer/insurer to notify the employee of the reporting requirements and provide the employee with the proper forms. As such, the Commonwealth Court affirmed the Workers' Compensation Judge because the employer had failed to act with due diligence by not notifying the claimant of his duty to report the benefits.

In October 2010, the Commonwealth Court in Muir v. WCAB (Visteon Systems, LLC), 5 A.3d 847 (Pa. Cmwlth 2010) again addressed Bureau form LIBC-756. The main issue in Muir was whether the employer was required to supply the claimant with a new LIBC-756 form every six months to remind him to update the report of benefits subject to possible offset.

In Muir, the claimant sustained a work injury in October 2000. The employer issued a Notice of Compensation Payable acknowledging a neck sprain/strain which entitled the claimant to total disability benefits of $611 per week based upon a pre-injury average weekly wage of $1,045.58. On August 8, 2005, the claimant completed a LIBC-756 form sent by her employer and indicated she was receiving Social Security disability benefits. At the employer’s request, on June 26, 2007, the claimant completed another LIBC-756 form, wherein she indicated that she began to receive “old age” Social Security benefits on October 28, 2006, in the amount of $1,376.90 per month. On July 31, 2007, the employer filed a Notice of Workers’ Compensation Offset that sought 50 percent of the “old age” Social Security benefits received, to be deducted from her weekly compensation benefits beginning on August 28, 2007, and continuing through November 14, 2007. The claimant received zero in workers’ compensation benefits during that time and, thereafter, would have received reduced benefits in the amount of only $452.37 per week.

In November of 2007, the claimant filed a Penalty Petition alleging that, pursuant to Maxim, supra, the employer had illegally suspended benefits. The claimant contended that he was under severe financial difficulty and sought a 50 percent penalty, along with unreasonable contest attorney’s fees. The Workers' Compensation Judge ruled that the claimant failed to establish a violation of the Act, noting that the claimant was aware, at least as early as August of 2005, of the reporting requirements regarding “old age” Social Security benefits, and that the claimant did not report receipt of those benefits until completing the LIBC-756 form on June 26, 2007. The Judge, thus, distinguished the facts from Maxim and determined that the employer was entitled to an offset of previously received Social Security “old age” benefits. Consequently, the Judge awarded no penalties.

The claimant appealed to the Appeal Board contending the Judge erred because the employer and insurer had the initial duty to provide her with the proper forms to report the receipt of Social Security benefits. The Board reversed and modified the offset, but determined the Judge did not err when he denied penalties. The Appeal Board decided, based on Maxim, that the employer was not entitled to a retrospective credit for the claimant’s “old age” Social Security benefits dating back to October of 2006.

The Board emphasized that the issue before it concerned the duty of the employer to provide the claimant with LIBC-756 forms. The Board’s analysis focused on two possible interpretations of the Regulations: (1) one in which the employer needs to supply the claimant with the LIBC-756 form on only one occasion and (2) one in which the employer should be supplying the claimant with a new LIBC-756 form every six months as a reminder to the claimant to update the reporting of benefits subject to the offset. Relying upon the well-established humanitarian intent of the Act, the Board was compelled to follow the latter interpretation that the employer should be supplying the claimant with a new LIBC-756 form every six months. Otherwise, claimants could be subjected to large retrospective offsets if several years were to have passed since they last received such a form from the employer. Further, the Board suggested it might be unrealistic to expect unsophisticated claimants to file the LIBC-756 form on their own volition every six months.

The employer’s Petition to Review before the Commonwealth Court alleged that the Board erred when it modified the Judge’s decision regarding the appropriateness of the retrospective credit. Following the reasoning in Maxim, the Commonwealth Court addressed the two readings of the Regulation, as outlined by the Appeal Board, and held that the employer needed to supply the claimant with a new form every six months to remind the claimant to update the reporting of benefits subject to the possible offset. The court wrote that this interpretation would prevent a claimant from being subjected to large retrospective offsets. Therefore, the Commonwealth Court found no err in the Board’s interpretation in light of the humanitarian objective of the Act.

In summary, from an employer's/insurer’s perspective, the best approach is to send the LIBC-756 form to the claimant and his/her attorney, if known, every six months. Related forms LIBC-750 and LIBC-760 should also be sent to claimants in a timely manner so offsets can be properly calculated and taken by the employer/insurer. Since interpretations of the Act and Regulations are often varied, and given the fact-specific nature of each case, employers/insurers should carefully consider this form and utilize it on a regular basis as a way of keeping communication open with the employee and supporting any potential credit/offset.

*Michele, a shareholder in our Philadelphia, Pennsylvania office, can be reached at 215.575.2724 or mrpunturi@mdwcg.com.

Defense Digest, Vol. 18, No. 4, December 2012