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Subcontractor is employer directly liable to pay compensation and entitled to pension offset under §204(a), claimant voluntarily withdrew from workforce, entitled subcontractor to suspension of wage loss benefits.

Thomas A. England v. Merion Construction, M. Schnoll & Sons, Schnoll Painting, Seabright Insurance and New Hampshire Insurance (WCAB); No. 304 C.D. 2021, No. 305 C.D. 2021; filed August 7, 2024; Judge Wallace

September 1, 2024

by Francis X. Wickersham

This case involved multiple petitions, two separate decisions from a workers’ compensation judge, and appeals to the Workers’ Compensation Appeal Board and the Commonwealth Court. The claimant suffered a work injury to his left knee in 2010 while working as a union painter for M. Schnoll & Sons. The general contractor was Merion Construction. Schnoll issued a Notice of Compensation Payable (NCP), accepting liability for a torn meniscus, and the claimant began receiving total disability benefits. Later, the judge expanded the knee injury by granting the claimant’s review petition.
    
Schnoll then filed a modification petition, alleging the claimant had an earning power of $520.00 per week based on a Labor Market Survey (LMS). The claimant filed a review petition, seeking to expand the injury to the low back and groin. The judge granted the modification petition, and the claimant’s compensation was reduced to a partial rate. The judge also partially granted the claimant’s review petition, finding that he had a lumbar sprain and strain as a result of his altered gait from the left knee injury. Both Schnoll and the claimant appealed to the Board. The Board affirmed, but remanded to the judge to award costs limited to the claimant’s partially successful review petition.

Meanwhile, Schnoll filed another modification/suspension petition based on the claimant’s receipt of a union disability pension. The claimant contested the petition, maintaining that the employer directly liable for payment of compensation was not Schnoll but Merion, since they agreed to serve as the statutory employer. Schnoll also filed a modification petition, alleging an earning power of $1,346.00 per week based on an LMS, and a suspension petition, alleging the claimant voluntarily removed himself from the workforce based on prior deposition testimony he gave that he did not intend to return to work. The claimant filed a petition joining Merion and New Hampshire Insurance into the litigation. The judge issued a decision granting Schnoll’s petitions and finding that Schnoll was entitled to a pension offset, the claimant had an earning power of $1,346.00 per week, and the claimant voluntarily withdrew from the workforce as of January 9, 2018, (the date of claimant’s prior deposition), entitling Schnoll to a suspension of wage loss benefits. The claimant appealed to the Appeal Board, which affirmed, and the claimant then appealed to the Commonwealth Court. 

The claimant argued to the Commonwealth Court that Merion, not Schnoll, was the employer directly liable for payment of compensation; therefore, Schnoll was not entitled to an offset under Section 204(a) of the Act. The claimant further argued that the amount of the pension offset found by the judge was wrong. According to the claimant, he did not voluntarily remove himself from the workforce, noting he received Social Security Disability Benefits and a disability pension, and he was stranded into disability by his work injury. He further maintained he did not have an earning power as found by the judge because he was unable to perform the jobs listed in the LMS due to physical limitations and a past felony conviction. 

The Commonwealth Court dismissed the claimant’s appeal and affirmed the judge and the Board on all counts. According to the court, the record supported the conclusion that Schnoll, not Merion, was the employer directly liable for the payment of compensation due to Schnoll’s purchase of workers’ compensation insurance per the terms of the subcontract. The court further rejected the claimant’s argument that the pension contribution made by Schnoll of $54,860.99 was not accurate since he worked for two entities, Schnoll and Schnoll Painting, both of which contributed to his pension. The court affirmed the workers’ compensation judge’s finding as to the amount of the pension contribution made by Schnoll, and Schnoll was entitled to a pension offset. 

Concerning the voluntary withdrawal from the workforce issue, the court held the record supported the judge’s findings that there was a lack of medical evidence the claimant was totally disabled and that the claimant had a lack of effort in returning to work, despite having the ability to do so. Further, the record supported the judge’s finding that there was no evidence that returning to work would endanger the claimant’s union benefits, so long as he did not work for a business competing with the union. The court also said the record supported the judge’s finding that the claimant was capable of performing the jobs listed in the LMS and agreed with the judge that it appeared the claimant was sabotaging his job search by calling potential employers and telling them he was a “convicted felon,” with no indication the crimes were in the past and he has had a clean record. 


 

What’s Hot in Workers’ Comp, Vol. 28, No. 9, September 2024, is prepared by Marshall Dennehey to provide information on recent legal developments of interest to our readers. This publication is not intended to provide legal advice for a specific situation or to create an attorney-client relationship. We would be pleased to provide such legal assistance as you require on these and other subjects when called upon. ATTORNEY ADVERTISING pursuant to New York RPC 7.1 Copyright © 2024 Marshall Dennehey, all rights reserved. No part of this publication may be reprinted without the express written permission of our firm. For reprints or inquiries, or if you wish to be removed from this mailing list, contact tamontemuro@mdwcg.com.

Firm Highlights

Thought Leadership

U.S. Supreme Court Decides Key Issue Regarding Interstate Freight Broker Liability

Freight brokers are intermediaries.  They connect shippers of goods with trucking companies that transport those goods.  Freight brokers match a load of freight with a trucking company and oversee the logistics of the transportation. For a number of years there has been a division among the Federal Circuits regarding the potential liability of freight brokers when the trucking companies that they retain for interstate loads are involved in accidents.  At the center of this division was the Federal Aviation Administration Authorization Act of 1994 (FAAAA).  Some Federal Circuit Courts have held that state law negligent hiring claims against freight brokers were preempted by the FAAAA .  Other Federal Circuits Courts have held that even if preemption applied, the “safety exception” in the FAAAA saved state law negligent hiring claims from federal preemption.  On May 14, 2026, the U.S. Supreme Court addressed the conflict in Montgomery v. Caribe Transport II, LLC, et al, No24-1238. In that case freight broker C.H. Robinson selected Caribe Transport to haul an interstate load. The commercial truck driver employed by Caribe Transport allegedly caused an accident and the plaintiff, Montgomery, was seriously injured. Montgomery brought an action against the driver, Caribe Transport and C.H. Robinson. The allegation against C.H. Robinson was that it negligently retained Caribe Transport when it knew, or should have known, that it was an unsafe company. The Seventh Circuit Court of Appeals held that Montgomery’s claims against C.H. Robinson were preempted by the FAAAA. The plaintiff appealed to the U.S. Supreme Court.  The U.S. Supreme Court’s decision focused primarily on the safety exception in the FAAAA.  That provision provides that the FAAAA preemption “…shall not restrict the safety regulatory authority of a State with respect to motor vehicles.” C.H. Robinson argued, as freight brokers historically have, that their function was not “with respect to motor vehicles” because they do not own trucks or employ drivers. They are merely intermediaries, connecting entities who need freight moved with entities who can do that job. Therefore, C.H. Robinson argued that preemption applied, not the safety exception. The U.S. Supreme Court did not accept that argument. The Court focused on the meaning of the phrase “with respect to” in the safety exception. The Court held that it means “referring to”, “concerning” or “regarding”. Therefore, writing for a unanimous Court, Justice Barrett concluded that “[r]equiring C.H. Robinson to exercise ordinary care in selecting a carrier therefore “concerns” motor vehicles—most obviously, the trucks that will transport the goods. So, Montgomery’s negligent-hiring claim falls within the FAAAA’s safety exception, which saves it from preemption.” Justice Kavanaugh, in his concurring opinion, noted the effect this ruling may have on freight brokers and their insurers throughout the country: Importantly, the Court's decision today should not be read to mean that brokers will routinely be subject to state tort liability in the wake of truck accidents. As even plaintiff's counsel stressed, brokers should be able to successfully defend against state tort suits if the brokers have acted reasonably and arranged transportation with reputable trucking companies. Tr. of Oral Arg. 27-29. In plaintiff's counsel's words, the brokers "just have to hire carriers that actually have a reasonable policy," and "the broker is not going to have a problem if it's asking the hard questions of the carrier." Id., at 42, 45. In addition, the proximate-cause requirement in typical state tort law should help protect brokers from excessive liability. Id., at 25. That said, the brokers rightly caution against naivete. In the real world, as the brokers forcefully respond, state tort law can be unpredictable, and the costs to brokers of litigation and insurance may be significant even when brokers prevail in lawsuits. Moreover, the costs of litigation and insurance, as well as the costs of brokers' conducting more substantial inquiries into trucking companies, will cascade through the economy and be paid in part by American consumers in the form of higher prices. The concerns expressed by the brokers are legitimate and weighty. The key point here is that freight brokers can no longer claim they are protected from negligent retention claims by the FAAAA (in cases involving interstate transportation). The challenge will be to determine what is considered ”reasonable efforts” used by brokers when retaining transportation companies. 

Thought Leadership

PA Middle District Dismisses Claims Against School District and its Superintendent, Principal, Special Education Director, and Classroom Teacher

A five-year-old special education student was enrolled in the Wyoming Valley West School District and attended the State Street Elementary School during the 2024-2025 school year. The student refused to clean up classroom toys at dismissal. When his teacher allegedly grabbed him by the wrist to walk him back to his seat, the student dropped to the floor and began crying. The teacher then allegedly grabbed the student by the ankle and dragged him across the floor. Following an investigation, criminal charges were not advanced by the county DA, and the school permitted the teacher to return to the classroom. The student’s parents sued, lodging thirteen legal counts under both state and federal law, which sought monetary damages from the teacher, the school district, the superintendent, the principal, and the director of special education. The plaintiff’s 42 USC 1983 claims were dismissed as to the school district for failure to allege a policy or custom violation, and the failure to alleged deliberate indifference in the failure-to-train context. As to the superintendent, building principal, and special education director, the Section 1983 claims were also dismissed for failure to allege personal involvement on the part of the individuals. Regarding an equal protection claim asserted against all defendants, the motion to dismiss was also granted for a failure to advance a plausible equal protection claim, holding that “plaintiffs' single-act allegations do not include a factual basis to even infer that the act was motivated by discriminatory animus rather than some other non-discriminatory impulse.” The court further dismissed the plaintiff’s negligence-based claims including negligence against the teacher and district administrators, NIED, and vicarious liability under the Political Subdivision Tort Claims Act (PSTCA). The federal claims under the IDEA, Section 504, and the ADA were also dismissed in various respects. The IDEA claim was dismissed against all defendants with prejudice for failure to exhaust administrative remedies. The Section 504 claims against the individual defendants were also dismissed with prejudice, as districts, not individuals, are the recipients of federal funds under Section 504. However, the Section 504 and ADA claims were dismissed without prejudice as to defendant Wyoming Valley West, and the plaintiff was permitted leave to amend.

Result

No-Cause Jury Verdict Secured in Wrongful Death Trial

We successfully obtained a no-cause jury verdict in a 13-day wrongful death trial. The decedent, a 59-year-old man, was admitted to the emergency room on February 15, 2019, with complaints of abdominal pain, decreased appetite, and constipation, despite the use of laxatives. The patient did not complain of any nausea, vomiting, or diarrhea. He had a significant medical history including diabetes, hypertension, prior coronary artery stenting, morbid obesity (with past gastric bypass surgery), longstanding ventral hernia, and back pain. A CT scan revealed multiple hernias and a potential closed-loop bowel obstruction, leading to a surgery consultation. Our client, an emergency general surgeon, interpreted that the patient did not have a closed loop or any significant obstruction and recommended non-surgical management. The patient was approved to have clear liquids, and had a vomiting incident shortly after, but our client was not notified. The patient was returned to NPO status, and after improving overnight, he was returned to “clears” and additional medical and renal consults were ordered. Our client did not receive any communications from the residents/nurses of any changes in the patient’s condition. On February 18, 2019, two rapid responses were called due to increased heart rate and vomiting. It is believed that the vomiting resulted in aspiration, causing sepsis, ultimately leading to the patient’s death. During the trial, the plaintiff’s sole medical expert highlighted imaging on the wrong hernia, which called into question all of his opinions in the case. We made key objections related to the expert testimony, limiting what the allegations were, and preventing new allegations from being made. After approximately two and a half hours of deliberating, the jury returned a no-cause verdict.