The Supreme Court holds that grace period payments made to the claimant are considered compensation and the employer is entitled to reimbursement of these payments from the Supersedeas Fund.

The employer filed a petition to modify a claimant's workers' compensation benefits, which it later amended to a suspension petition. In connection with the petition, the employer requested supersedeas. The employer's request was denied by a Workers’ Compensation Judge. After the supersedeas denial, the claimant settled a related third-party case and entered into a Third Party Settlement Agreement with the employer. As part of that agreement, the parties calculated the weekly pro-rata share of the expenses of recovery and determined that the employer would pay the claimant $164.42 per week during a grace period.

A few months after the Third Party Settlement Agreement, the judge granted the employer's petition suspending the claimant's benefits. The employer then filed an Application for Supersedeas Fund Reimbursement for the amounts paid to the claimant from the date the petition was filed through the date of the judge's decision, including the grace period payments. The Bureau challenged the application, arguing the payments made by the employer were not considered compensation under the Act but, rather, payments of counsel fees.

A judge granted the employer's application. The Appeal Board affirmed, as did the Commonwealth Court. The Bureau appealed to the Supreme Court of Pennsylvania.

The Supreme Court affirmed the decisions below, holding that the payments made by the employer to the claimant were considered compensation under the Act. In fact, the Court pointed out that the language of §319 is consistent with viewing grace period payments as compensation since it instructs that those payments "shall be treated as an advance payment by the employer on account of any future installments of compensation." According to the Court, the employer paid the funds as compensation to the claimant to satisfy the employer's obligation to the claimant, pending the judge's final decision on its petition. The Court held that the employer should be reimbursed for the full amount of compensation it paid as a result of the denial of supersedeas relief.

Case Law Alerts - 2nd Quarter 2013