Laundry Owners Mutual Liability Ins. v. Workmen's Compensation Appeal Board

617 A.2d 860, 151 Pa. Commw. 556, 1992 Pa. Commw. LEXIS 706
CourtCommonwealth Court of Pennsylvania
DecidedNovember 19, 1992
DocketNo. 2641 C.D. 1991
StatusPublished
Cited by1 cases

This text of 617 A.2d 860 (Laundry Owners Mutual Liability Ins. v. Workmen's Compensation Appeal Board) is published on Counsel Stack Legal Research, covering Commonwealth Court of Pennsylvania primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Laundry Owners Mutual Liability Ins. v. Workmen's Compensation Appeal Board, 617 A.2d 860, 151 Pa. Commw. 556, 1992 Pa. Commw. LEXIS 706 (Pa. Ct. App. 1992).

Opinions

BARRY, Senior Judge.

This is a case of first impression for this Court which raises the question of whether any provision of The Pennsylvania Workmen’s Compensation Act1 (the Act) entitles an insurer to interest on compensation payments reimbursed from the Supersedeas Fund (the Fund).

Barbara Herpak filed a claim petition which alleges that she was disabled from injuries she received in an auto accident when she worked for Stop-N-Go Food Stores. The referee ordered Stop-N-Go and its insurer (the Insurer) to pay compensation for total disability. The Workmen’s Compensation Appeal Board (the Board) affirmed and the Insurer filed an appeal with Commonwealth Court. Both the Board and the Court denied the Insurer’s requests for supersedeas. We reversed the Board’s order because we concluded that Herpak was not in the scope of her employment when she was injured. The Supreme Court affirmed. Stop-N-Go Food Stores v. Workmen’s Compensation Appeal Board (Herpak), 521 Pa. 481, 555 A.2d 1293 (1989). The Insurer filed an application for reimbursement of compensation payments, medical bills and interest on payments made pending the final outcome of the case from the Fund. The referee granted only reimbursement for compensation payments. The Insurer appealed, claiming an entitlement to reimbursement for medical bills which were found to be unreasonable, unnecessary or unrelated to the work injury. It also claimed interest on the compensation payments and the medical bills. The Board affirmed the portion of the referee’s decision denying interest on the reimbursement but reversed the referee’s decision and awarded reimbursement for the medical bills because of our decision in Insurance Company of North America v. Workmen’s Compensation Appeal Board (Kline and Packard Press), 137 Pa.Commonwealth Ct. 393, 586 A.2d 500 (1991). The Insurer filed an immediate appeal.

The Insurer claims a right to accrual of interest on reimbursements of compensation payments from the Fund [558]*558because it has lost the use of funds when it paid claimant’s compensation benefits pending the final outcome of the procedure. Furthermore, the Insurer asserts that to grant accrual of interest we need do no more than extend to insurers the reasoning we have applied to claimants. It has been consistently recognized that any right to charge interest is a privilege granted by statute and subject to legislative control. Equitable Credit & Discount Co. v. Geier, 342 Pa. 445, 21 A.2d 53 (1941); Weiner v. Bank of King of Prussia, 358 F.Supp. 684 (1973). The Insurer contends that accrual of interest is statutorily provided in the Act because the Act does not prohibit the payment of interest on reimbursed funds to insurers and Section 406.1 of the Act and Section 443 of the Act, when read together, permit an award of interest. The Insurer reasons that because we have held that Section 406.1 interest is additional compensation to claimants, Frymiare v. Workmen’s Compensation Appeal Board (D. Pileggi & Sons), 105 Pa.Commonwealth Ct. 325, 524 A.2d 1016 (1987), we should conclude that interest is additional compensation to insurers also. We do not agree.

The Insurer claims that Section 406.1 of the Act authorizes the payment of ten percent interest on all back awards of compensation benefits. Section 406.1 provides in part:

Prompt payment of compensation; interest; credit for excess payment; controversion
The employer and insurer shall promptly investigate each injury reported or known to the employer and shall proceed promptly to commence the payment of compensation due either pursuant to an agreement upon the compensation payable or a notice of compensation payable as provided in section 407 [77 P.S. § 731], on forms prescribed by the department and furnished by the insurer. The first installment of compensation shall be paid not later than the twenty-first day after the employer has notice or knowledge of the employe’s disability. Interest shall accrue on all due and unpaid compensation at the rate often per centum per annum.

[559]*55977 P.S. § 717.1 (emphasis added). To interpret this section as a general authorization of interest charges on all back awards of compensation stretches the bounds of imagination as well as the rules of statutory construction. The clear language of Section 406.1 indicates a legislative intent to require prompt acceptance or denial of compensation liability for worker’s injuries. See Mosgo v. Workmen’s Compensation Appeal Board (Tri-Area Beverage, Inc.), 84 Pa.Commonwealth Ct. 316, 480 A.2d 1285 (1984); Department of Labor and Industry v. Workmen’s Compensation Appeal Board, 47 Pa.Commonwealth Ct. 108, 407 A.2d 139 (1979). Moreover, we have held that Section 406.1 interest is additional compensation awarded to an employee when insurer’s payment has been delayed beyond twenty-one days. Becerra v. Workmen’s Compensation Appeal Board (Leaseway Systems), 137 Pa.Commonwealth Ct. 362, 586 A.2d 485 (1991); Lastoka v. Workmen’s Compensation Appeal Board, 51 Pa.Commonwealth Ct. 310, 413 A.2d 481 (1980). We can reach only one conclusion, that the legislature specifically authorized the payment of interest to a claimant where commencement of compensation payments is delayed. Nothing in Section 406.1 indicates a legislative intent to authorize payments of interest to an insurer.

The Fund is established as specifically in the State Treasury, maintained separate and apart from all other funds, the purpose of which “shall be to provide moneys for payments pursuant to subsection (a).” 77 P.S. § 999(b). Section 443(a) of the Act provides:

(a) If, in any case in which a supersedeas has been requested and denied under the provisions of section 413 or section 430, [77 P.S. §§ 771 to 774.1 and 971] payments of compensation are made as a result thereof and upon the final outcome of the proceedings, it is determined that such compensation was not, in fact, payable, the insurer who has made such payments shall be reimbursed therefor.

77 P.S. § 999(a). The critical language in Section 443(a) is “the insurer who has made such payments shall be reimbursed therefor”. “Reimburse” is defined “to pay back, to make restoration, to repay that expended.... ” Black’s Law Dictio[560]*560nary, 1157 (5th Ed.1979). Section 443(a) of the Act authorizes the return to the insurer of payments actually made to the claimant which it is determined were not payable, but nothing more. As we have seen from our analysis of Section 406.1 of the Act, the legislature has awarded the accrual of interest on payments due a claimant.

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617 A.2d 860, 151 Pa. Commw. 556, 1992 Pa. Commw. LEXIS 706, Counsel Stack Legal Research, https://law.counselstack.com/opinion/laundry-owners-mutual-liability-ins-v-workmens-compensation-appeal-board-pacommwct-1992.