An employer may take an offset against workers’ compensation benefits under Section 204(a) for pension benefits funded by its wholly owned subsidiary.

While the claimant was working for Company “A,” it was acquired by Company “B” as a wholly owned subsidiary. All employees of Company “B”‘s subsidiaries were covered by the same workers’ compensation policy as Company “A.” The claimant sustained a work-related injury in 2008 and had been receiving workers’ compensation benefits until he retired in 2010. After the claimant began receiving pension payments, Company “B” filed a notice of workers’ compensation offset. The claimant filed a petition to review the offset, alleging that, because Company “A” funded the pension plan, Company “B” was not entitled to an offset.

The Workers’ Compensation Judge granted Company “B”‘s petition, holding that Company “B” was entitled to a modification of the claimant’s benefits based on the modified-duty work it made available to the claimant. The judge also denied the claimant’s petition to review the offset. The judge found that, for purposes of determining whether benefits were subject to an offset, Company “B” and Company “A” were the same entity. The Workers’ Compensation Appeal Board affirmed.

On appeal to the Commonwealth Court, the claimant argued that Company “B” was not entitled to an offset for a pension plan funded by a different, but still existing, corporation, which was Company “A.” The court rejected the claimant’s argument and dismissed his appeal. According to the court, when Company “B” assumed responsibility for the claimant’s work injury, it did so on behalf of Company “A,” which remained the claimant’s employer. The court held that Company “A,” the claimant’s employer, was entitled to the offset and that how Companies “B” and “A” performed the accounting for the offset was irrelevant to their right to the offset.

Case Law Alerts, 1st Quarter, January 2015