Bush v. Workers' Compensation Appeal Board

802 A.2d 679, 2002 Pa. Commw. LEXIS 524

• Court: Commonwealth Court of Pennsylvania
• Decided: June 21, 2002
• Status: Published

Opinions

OPINION BY

Senior Judge DOYLE.

Gary R. Bush (Claimant) petitions for review of an order of the Workers’ Compensation Appeal Board (Board) reversing the decision of a Workers’ Compensation Judge (WCJ), which had granted Claimant’s petition for commutation of benefits pursuant to the provisions of Section 316 of the Workers’ Compensation Act (Act), Act of June 2, 1915, P.L. 736, as amended, 77 P.S. § 604.

An issue of first impression is presented: whether a claimant, who is receiving total disability benefits, may commute 360 weeks of future benefits into one lump sum commuted payment, while retaining a right to collect additional future weekly benefits at the expiration of the commuted segment of 360 weeks. We hold that he cannot.

The pertinent factual information is not in dispute. Claimant sustained serious injuries in 1976 while in the employ of Swa-tara Coal Company (Employer), for which he has been receiving weekly total disability benefits in the amount of $187.00 ever since. In addition to his total disability benefits, Claimant has a back-up award for the specific loss of a lower leg (350 weeks) and for facial disfigurement (10 weeks), both arising out of the same 1976 accident.

In December of 1996, Claimant filed a commutation petition seeking to obtain a lump sum payment of a portion of his total disability benefits. Claimant proposed the payment of $67,320.00 in one lump sum, which constitutes 360 weeks, or seven years, of his total disability benefits, and further proposed that he would resume his weekly benefits of $187.00 at the expiration of the seven-year commuted period. Employer opposed the petition, and a hearing was scheduled before a WCJ. Oral testimony at the hearing established that Claimant was receiving social security disability payments, augmented by similar payments to his wife on her own account and on account of their minor children, in the amount of $2,372.00 per month. Claimant also testified that he needed the funds from the commutation of his workers’ compensation to pay off his home mortgage, replace the roof on his home, and install a heating plant to replace his wood burner.

On April 30, 1997, the WCJ granted the commutation petition. On appeal by Employer, the Board vacated the award and remanded the case to the WCJ for the purpose of making more specific findings on the question of whether the commutation was in the best interest of Claimant. Following an additional hearing, the WCJ issued another decision with specific findings on that issue and again approved the commutation. Employer again appealed, and the Board then reversed the WCJ’s decision, holding that a commutation of a segment of total disability benefits violated the Act. The Board reasoned that a commutation must provide for the payment of all future benefits and end the relationship between the parties and settle all of their obligations to each other. This appeal by Claimant followed.

On appeal,² Claimant contends that the Board erred in ruling that a commutation of a portion of total disability benefits violates Section 316 of the Act, by arguing that the Act contains no such limitation, and that cases relied on by the Board are not dispositive of this issue. Employer argues, on the other hand, that implicit in the Act is the requirement that a commutation of benefits must include the entire future amount due, not just a portion, and that prior eases of this Court have held that such a requirement exists.

Commutations of benefits are permitted under Section 316 of the Act, 77 P.S. § 604, which provides, in pertinent part, as follows:

The compensation contemplated by this article may at any time be commuted by the board, at its then value when discounted at five per centum interest, with annual rests, upon application of either party, with due notice to the other, if it appear that such commutation will be for the best interest of the employe or the dependents of the deceased employe, and that it will avoid undue expense or undue hardship to either party.... Nothing in this section shall prohibit, restrict or impair the right of the parties to enter into a compromise and release by stipulation in accord with section 449[, 77 P.S. § 1000.5, added by the Act of June 24, 1996, P.L. 350, commonly referred to as Act 57 (relating to compromise and release of an employer from liability for a claim due to a work-related injury or death) ].

“Commutation” has been defined as the present payment of future benefits in one lump sum, instead of payment in periodic installments. 1 Alexander F. Barbieri, Pennsylvania Workmen’s Compensation and Occupational Disease § 5.43 (1996). The question that remains is whether a claimant may obtain a commutation of only a portion of his or her total disability benefits pursuant to Section 316 of the Act.³ A cursory reading of Section 316 of the Act does not specifically indicate whether such a partial commutation is permitted. It merely provides that “compensation contemplated by this article may ... be commuted.... ” 77 P.S. § 604. It is Employer’s position that, had the General Assembly intended to allow such a right to what may be dubbed a “temporary” partial commutation, it would have explicitly drafted such a provision. Claimant, of course, disagrees with Employer and argues that the language of Section 316 is broad enough to include such a partial commutation. Because the statute does not provide a clear-cut answer, an analysis of prior case law is necessary and will be beneficial in resolving this issue.

At the outset, we note that this Court has never specifically addressed the permissibility of partial commutation in this context. As we delve through a historical analysis of relevant case law cited to us by both parties, it is important to understand that, although we have addressed a great variety of issues relating to commutation in some manner, we have never expressly ruled on the important issue presented in this appeal.⁴

We begin our analysis with the 1932 decision of the Superior Court of Pennsylvania in Shaftic v. Commonwealth Coal & Coke Co., 106 Pa.Super. 406, 161 A. 773 (1932). In Shaftic, the claimant was injured at work and began receiving total compensation benefits in the amount of $12.00 per week for a defined period of 400 weeks. The claimant died before the expiration of the 400-week period, leaving his widow and two minor children. During the claimant’s lifetime, the Board, upon his petition, ordered commutations of a percentage of his weekly compensation payments.⁵ Of course, when Shaftic was decided in 1932, the Workers’ Compensation Act provided that, even for total disability, a claimant was only entitled to a limited fixed period of disability benefits.⁶

The commutations in Shaftic, however, were never contested by the employer and were not the central issue in that case. At issue was the amount of compensation to which the widow was entitled due to the death of her husband. In holding that the widow was only entitled to the weekly rates which her husband would have received had he lived, the Superior Court stated that, “[c]ommutation is merely [the] present payment at a reduced rate of sums successively payable; when the commutations ordered in this ease were made, that much of the liability of the employer was satisfied.” Id. at 775. In essence, the Superior Court merely held that, because the employer paid a portion or percentage of the claimant’s weekly benefit for 311 weeks in one lump sum, the employer was no longer liable to pay that amount to the claimant’s dependents. The Court did not, however, address the propriety of the partial commutation, as that issue was not raised. In addition, Shaftic is also factually different from the present appeal because the partial payments in Shaftic represented the sum of payments that the claimant was entitled to receive for the entire benefit period (ie., 400 weeks), while the commutation requested in this case would only include seven years of an indefinite and unknown benefit period.

We next turn to this Court’s more recent decision in Green v. Workmen’s Compensation Appeal Board (Roadway Express, Inc.), 43 Pa.Cmwlth. 143, 401 A.2d 1243 (1979), which relies on the Shaftic case. In Green, the essential issue was whether the commutation sought by the claimant was actually a commutation of benefits, or a settlement of his compensation claim. This Court concluded that “the agreement between [the claimant] and Roadway is a settlement which is contrary to the Act and which alters the amount of compensation.... Therefore, it is null and void.”⁷ Id. at 1245. Central to our holding in Green that the agreement between the claimant and the employer, Roadway, was a settlement rather than a commutation was our reliance on Shaftic. We stated the following:

Finally, we note that had Green and Roadway intended a commutation of benefits rather than a settlement, no release would have been necessary because once a commuted amount is paid the relationship between employer and employee is settled and all obligations are satisfied.

Id. at 1246 (emphasis added) (citing Shaftic). Again, we did not address the permissibility of a temporary partial commutation, but, instead, embraced the proposition that central to the character of a commutation is that the relationship between the employee and the employer would be settled and all obligations satisfied.

In Shaffer v. Workmen’s Compensation Appeal Board (Silver & Silver, Inc.), 138 Pa.Cmwlth. 624, 588 A.2d 1029 (1991), we dealt with the issue of whether a joint petition for commutation of future installment payments for partial disability compensation could be granted after the claimant’s death, where the petition was filed prior to the claimant’s death.⁸ In a footnote in that opinion, relying on Green, we stated that, “[ojnce a petition for commutation is granted and a commuted amount is paid, the relationship between employer and employee is settled and all obligations are satisfied, thereby precluding potential claims in the future.” Id. at 1032 n. 3 (emphasis added). And, again, in Tomlinson v. Workmen’s Compensation Appeal Board (J. Baker, Inc.), 167 Pa. Cmwlth. 329, 648 A.2d 96 (1994), we acknowledged that Green stood for the proposition that a commutation award settles all obligations between the parties relating to the underlying disability. See also Yeager v. Workmen’s Compensation Appeal Board (Schneider, Inc.), 657 A.2d 1372, 1375 (Pa.Cmwlth.), petition for allowance of appeal denied, 542 Pa. 682, 668 A.2d 1142 (1995).

It is evident from a review of the case law that we have never before been presented with a claimant attempting to commute only a portion of his total disability benefits, while retaining a right to collect benefits indefinitely into the future at the end of the temporary, segmented commutation period. In fact, in every case cited, except Shaftic, the commutations included all of the future benefits payable to the claimant, and, in Shaftic, even though the claimant received a commutation of a portion of his weekly benefit, he still collected the other portion of his benefit weekly throughout the entire, limited benefit period. In our review of these decisions, it is clear that a common thread has been established: a commutation does and should settle the obligations of both parties, resulting in the preclusion of future claims. Claimant argues that this proposition, outlined in the above cases, was mere dicta and should not be followed in addressing the issue now before us. Claimant may be correct that, in the cases just reviewed, our conclusions regarding the character of the commutations were not essential to the central issues raised there; but, those conclusions, nevertheless, represented important policy considerations regarding the effects of a commutation on future compensation benefits.

It must first be emphasized that we have recognized that an important purpose of the Act is to provide “ ‘a regular form of future income ... in installments over long periods and even for [a] lifetime in some cases.’ ” Green, 401 A.2d at 1246 (quoting 1 Barbieri, supra, § 5.43). It is true that, in essence, the Act is an income maintenance program designed to provide compensation to an injured worker during his or her recovery time. As such, consistent with the standards of statutory construction, Section 316 must be narrowly construed in order to carry out the overall purpose of the Act.⁹

The General Assembly, in our estimation, intended for the commutation provision of the Act to work, under a finite set of circumstances, simply as an alternative to weekly income maintenance. These circumstances outlined in Section 316 indicate a permanent change in the employee/employer relationship. For example, the provisions provide that compensation may be commuted under any one of the following circumstances: (1) if it is in the best interest of the employee and not an undue hardship to the employer, (2) if the employee is moving out of the United States, or (3) if the employer is going out of business. These conditions, we believe, indicate an intent to provide a claimant full compensation in situations where a continued relationship between the employee and the employer may not be desirable. We do not believe that the General Assembly envisioned that Section 316 would result in a situation where a claimant could request commutation of only a percentage of his or her total disability benefits, while at the same time maintaining a continuing relationship with the employer. Furthermore, we agree with Employer that, if the General Assembly intended the option of such a partial commutation, it would have explicitly drafted such a provision. Instead, it referred to “compensation” in the singular, suggesting that the entire total disability award may be commuted, not just a segment of it.

Accordingly, we hold that the Act, in certain circumstances, permits a commutation of a claimant’s entire compensation award, thereby satisfying all of the obligations of the employer and severing the employee/employer relationship, but a commutation providing for only a portion or percentage of a claimant’s future total disability benefits, which does not sever the liability of the employer, is not permitted under the Act. We reach our decision based on the intent of the General Assembly,¹⁰ along with this Court’s repeated pronouncements that a commutation of benefits results in a severance of the relationship between the employee and the employer and the satisfaction of all obligations.

Accordingly, the decision of the Board is affirmed.¹¹

ORDER

NOW, June 21, 2002, the order of the Workers’ Compensation Appeal Board in the above-captioned matter is hereby affirmed.

2 . Our standard of review is limited to a determination of whether there has been a violation of constitutional rights, whether an error of law has been committed, and whether all necessary findings of fact are supported by substantial evidence. Morey v. Workmen’s Compensation Appeal Board (Bethenergy Mines, Inc.), 684 A.2d 673 (Pa.Cmwlth.1996).

3 . We recognize that Section 412 of the Act, 77 P.S. § 791, permits the commutation of future benefits “where there are no more than fifty-two weeks of compensation to be commuted.... ”

4 . We, therefore, believe that the statement in 1 Barbieri, supra, § 5.43, that, “[ujnder Section 316, a commutation, or the present payment of future benefits in one lump sum, may be permitted in whole or in part” is over-broad, since that statement could be read to include what Employer here appropriately describes as a "temporaiy” partial commutation.

5 .For example, at one point, the Board, with 311 weeks remaining on the claimant’s compensation benefits, ordered $5.95 out of his $12.00 weekly benefit to be paid in one lump sum for the unexpired period for various expenses; specifically, the commutation sum of "$1,604.17, was paid to enable Shaftic to satisfy a mortgage of $1,400 upon his property, buy a cow, and pay grocery bills.” Shaftic, 161 A. at 774. The Board also ordered two more similar commutations at later dates.

6 . Because total disability under the old Act was limited to a finite period of time, it was, in effect, equivalent in this request to partial disability under the relevant provisions of the present Act, which runs for 500 weeks. Therefore, Shaftic is distinguishable from the present case and not instructive with regard to the commutation of total disability benefits where liability and entitlement are continuing.

7 . This case was obviously decided before the passage of Act 57, which allows the parties to negotiate a compromise and release of workers' compensation claims. See Section 449 of the Act, 77P.S. § 1000.5.

8 . We note that the commutation petition filed in Shaffer was for the entire partial disability period, and was not a request for only a portion of future benefits.

9 . Again, we note that the Act now permits compromise and releases, but, although not explicitly stated, for all practical purposes, Section 449 deals with partial disability benefits and a finite period of time.

10 . See, e.g., Section 1922 of the Statutory Construction Act, 1 Pa.C.S. § 1922 (pertaining to presumptions in ascertaining legislative intent); Fonner v. Shandon, Inc., 555 Pa. 370, 724 A.2d 903 (1999).

11 . Because of our disposition of this case, we need not address the issues of whether the commutation would be in the best interest of claimant and not an undue hardship on Employer.