Defense Digest

Pennsylvania - Workers' Compensation
PA Commonwealth Court Recognizes The Supersedeas Fund Contains The Employer's Money

On March 10, 2006, the Pennsylvania Commonwealth Court resolved a split of authority in the pertinent case law involving Supersedeas Fund Reimbursement for employers. As it stood before this case came down, one line of cases held that employers could be reimbursed for payments made for periods of disability before supersedeas was requested. (Bureau of Workers' Comp. v. W.C.A.B (Consol. Freightways, Inc.), 876 A.2d 1069 (Pa. Cmwlth. 2005). The other line of cases held that employers could not. (Wausau Ins. Co. v. W.C.A.B (Cmwlth of Pa.), 826 A.2d 21 (Pa. Cmwlth. 2003)).

In Mark and Cincinnati Insurance Company v. W.C.A.B (McCurdy), 2006 Pa. Commw. LEXIS 126, the Commonwealth Court reiterated that employers can be reimbursed for payments made for periods of disability before supersedeas is requested. With this decision, the Commonwealth Court expressly overruled Wausau.

In Mark, the claimant filed a claim petition in October of 1993 alleging that she became ill with contact dermatitis. The employer contested the claim on the basis of causation, arguing that any disability was non-work-related. In May of 1997, the Workers' Compensation Judge granted the claimant ongoing benefits retroactive to early September 1993. In June of 1997, the employer filed a timely appeal along with a supersedeas request to the Workers' Compensation Appeal Board. The Appeal Board denied the supersedeas request, and the employer paid a lump sum of $29,779.97 for indemnity payments for time periods prior to the supersedeas request. The Board determined that the claimant did not meet her burden of showing ongoing disability, and the matter was remanded to a second Workers' Compensation Judge.

In August 1998, the Workers' Compensation Judge found that the claimant had fully recovered from an aggravation of her pre-existing condition as of August 1995. The employer appealed, and the Appeal Board affirmed. Since supersedeas was again denied, benefits were paid between August 1995 through August 1998. These were ultimately found not to be payable.

The employer filed an application for supersedeas reimbursement, and the Bureau determined that the employer could only be reimbursed for amounts representing payments for disability after June 1997. The employer filed a petition with a Workers' Compensation Judge, who agreed with the Bureau. The Appeal Board affirmed. Subsequently, the employer appealed to the Commonwealth Court.

The court found that the plain language of the Act does not focus on the period of disability but, rather, on payments of compensation made as a result of a denied supersedeas request. This is an important distinction since the Act does not specifically mention that retroactive benefits paid after a supersedeas denial cannot be reimbursed. In this case, the court found that in a Claim Petition setting there is no way that the employer could have requested supersedeas any sooner than it did. There was no determination of liability until the first Workers' Compensation Judge made an award. The employer paid these retroactive benefits after the supersedeas request was denied. The court found that, if the Legislature intended to preclude Fund reimbursement for all retroactive benefits, it would have said so.

Practically speaking, Mark clears up the confusion that previous decisions in this area created. This decision emphasizes that the Supersedeas Fund is for the benefit of employers. Prior to now, when a claimant prevailed in a Claim Petition and the employer appealed, the employer ran the risk of not being able to obtain reimbursement for the money it paid to the claimant prior to the supersedeas request on appeal. In some cases, this could have been years of benefits. Now, the court has clarified that the employer is entitled to reimbursed for payment of benefits that are eventually found not to be payable.

The Mark case does not specifically address reimbursement for payment of medical bills, but the rationale used by the court could also apply. In a Claim Petition setting, an employer may be paying medical bills during the entire course of the litigation, despite contesting ongoing disability. Since there is no opportunity to request supersedeas until an appeal is taken, the employer is forced to make payment for medical bills from the date of disability. If the employer ultimately prevails, these medical bills are also reimbursable, even if they were made prior to the supersedeas request.

Employers should also utilize this line of cases when requesting supersedeas reimbursement after successfully litigating a termination, modification or suspension petition. Reimbursement for the indemnity paid will not be an issue, but an argument can certainly be made that medical payments that were incorrectly made should also be reimbursed. Furthermore, an argument can be made that medical treatment on dates of service before the supersedeas request was made, but paid subsequent to the supersedeas request, are reimbursable. Payment of medical bills in this situation is no different than making indemnity payments to a claimant that turn out to not be payable.

Additionally, it can be argued that this case applies when an employer prevails at the first level of the Utilization Review process and the claimant files a Petition to Review the Utilization Review determination. The employer did not make payment for those bills since they were found to be unreasonable and unnecessary. If the Workers' Compensation Judge grants the claimant's Petition to Review the Utilization Review determination, and the employer decides to appeal, supersedeas should be requested. If it is ultimately determined that these bills are not reasonable and necessary, the employer should file a Supersedeas Reimbursement request, requesting reimbursement for these bills since they were ultimately found not to be payable.

*Andrea is an associate in our Philadelphia, PA office and can be reached at (215) 575-2756 or ancicero@mdwcg.com.