YUSTIN v. Department of Public Safety

2011 VT 20, 19 A.3d 611, 189 Vt. 618, 2011 Vt. LEXIS 27

• Court: Supreme Court of Vermont
• Decided: February 23, 2011
• Docket: 09-294
• Status: Published

Opinions

¶ 1. Claimant in this workers’ compensation proceeding contends the Commissioner of Labor erred in ruling that his employer, the Vermont Department of Public Safety (DPS), may offset the sick wages paid to claimant during a period of temporary total disability against the workers’ compensation disability benefits it was ordered to pay for the same period. We affirm.

¶ 2. The material facts are undisputed. Claimant was employed as a Vermont State Trooper on June 12, 2006, when he suffered a shoulder injury while exercising in preparation for a physical fitness exam. Claimant continued to work until January 2007, when he underwent shoulder surgery for a partial rotator-cuff tear, and was out of work until May 2007. The Risk Management Division, the state agency that handles workers’ compensation claims by state employees, disputed whether the injury was work-related and denied coverage. Claimant used accumulated employer-funded sick leave to receive full wages during the period that he was out of work and challenged the denial of workers’ compensation. Following an informal conference in January 2008, the Labor Department hearing officer issued an interim finding that the injury was work related and ordered payment of temporary total disability benefits to claimant for the period that he was out of work, totaling about $16,500, as well as related medical benefits. See 21 V.S.A. § 662(b) (authorizing commissioner to order interim payment of compensation, pending a final determination and subject to repayment, when the parties are not in agreement).

¶ 3. DPS did not contest the interim order and, pursuant to a provision in the State of Vermont Personnel Policy and Procedures Manual, restored claimant’s sick leave by the amount of disability benefits owed. The personnel policy in question, Policy 13.9, states:

Days lost during the pay period of injury should be coded on time reports as sick leave. Employees who do not have enough sick leave accrued to cover their lost time may report lost days as annual leave, if they have any accumulated. Any sick or annual leave used for this injury will be reimbursed to the employee if the claim is approved for Workers’ Compensation indemnity, subject to the waiting periods outlined above.

¶ 4. Claimant challenged this method of payment, asserting that he was entitled to a separate and direct payment of compensation benefits from which he could pay his attorney’s fees, rather than a reimbursement of sick leave. Following a second informal conference, the Department hearing officer upheld the payment method, finding that claimant had effectively been paid his benefits and “made whole” through the reimbursement of his sick time, and that the attorney could seek fees from claimant. The Commissioner upheld the ruling, concluding that it was “implicit” in Policy 13.9 “that the employee cannot recoup the leave time he or she took without also repaying the leave wages he or she received; otherwise, he or she would be receiving compensation above and beyond what the parties had contracted for in their employment agreement.” Under the policy, the Commissioner reasoned, “the wages paid are akin to an advancement of workers’ compensation benefits,... and therefore the offset is both practical and fair.” The Commissioner expressly limited her holding to situations where, like the State of Vermont, the employer is self-insured for workers’ compensation, so that the leave wages to be offset and the workers’ compensation benefits to be paid “derive from the same source.”

¶ 5. Claimant appealed directly to this Court pursuant to 21 V.S.A. § 672, and the Commissioner certified the following question for review: “Was it proper for [DPS] to offset the sick leave wages it paid to Claimant during his period of temporary total disability from the workers’ compensation benefits it later was ordered to pay for the same period?” As explained below, we conclude that this accounting device did not violate the statute or deprive claimant of any workers’ compensation benefits due.

¶ 6.. The parties focus on the applicability of the state personnel policy, disputing whether DPS’s assent to the interim order constitutes an “approval” of the claim under the policy and whether the set-off authorized by the Commissioner constitutes an impermissible “assignment” of benefits under the Workers’ Compensation Act. We conclude, however, that an employer’s credit to itself for sick leave payments paid on account for what was ultimately determined to be a work-related injury, accompanied by a credit to the employee of the sick leave benefits claimed, is entirely consistent with the compensatory purpose of the Act pertinent to claimant’s situation. Required by the Act to pay partial wage replacement for time missed from work due to on-the-job injury, 21 V.S.A. § 618, DPS first paid claimant in the form of sick leave which it later replenished upon accepting the Department’s interim ruling that the disability was work-related.

¶ 7. Like most states, Vermont’s workers’ compensation scheme evinces a clear and strong policy against the double recovery of benefits. See, e.g., 21 V.S.A. § 624(e) (requiring reimbursement of amounts paid by employer or insurance carrier from third-party damages collected by employee); id. § 643a (requiring that employee repay all benefits to which he or she was not entitled); Travelers Ins. Co. v. Henry, 2005 VT 68, ¶24, 178 Vt. 287, 882 A.2d 1133 (holding that, if employee recovers economic damages under employer’s insurance policy, workers’ compensation carrier “is entitled to reimbursement to prevent a double recovery”); St. Paul Fire & Marine Ins. Co. v. Surdam, 156 Vt. 585, 589-90, 595 A.2d 264, 266 (1991) (noting that the goal of workers’ compensation is to provide injured workers with “expeditious and certain payments” not to permit “double recovery ... for the same injury”).

¶ 8. Unlike many other states, our workers’ compensation law does not contain an express provision authorizing a credit or offset against an employee’s compensation award for sick leave or other wages paid during the disability period. Yet such provisions are not uncommon and serve the salutary purpose of encouraging continued payment to the employee for the period of time that his or her claim is being considered while preventing a double recovery in the event that the claim is ultimately allowed. See, e.g., Freel v. Foster Forbes Glass Co., 449 N.E.2d 1148, 1151 (Ind. Ct. App. 1983) (observing that not allowing employer to credit wages paid during temporary disability period under wage-continuation plan pursuant to statute would impermissibly enable claimants to “receive from the employer more money for the period of disability than could have been earned if there had been no injury”); Gendreau v. Tri-Cmty. Recycling, 1998 ME 19, ¶ 7, 705 A.2d 1106 (concluding that compensation board’s interpretation of “wage continuation” statute to allow offset of sick-leave payments against workers’ compensation award was “consistent with the policy of the Act prohibiting double-recoveries”); Knoll v. Chemung Cnty., 845 N.Y.S.2d 477, 478-79 (App. Div. 2007) (upholding procedure under advance-payments statute in which workers’ compensation award was credited to employer as “reimbursement” for sick leave benefits previously paid and subsequently restored but reversing for recalculation of the restored benefits to avoid possible “windfall” to claimant); Donegal Sch. Dist. v. Workers’ Comp. Appeal Bd., 798 A.2d 857, 861 (Pa. Commw. Ct. 2002) (concluding that, where sick leave benefits paid during disability period were restored, denying employer credit against workers’ compensation award would result in impermissible “windfall to [claimant”).

¶ 9. While Vermont’s workers’ compensation law may not contain a similar provision, it does clearly spell out the employer’s affirmative duty to a work-injured employee: “the employer... shall pay compensation in the amounts . . . specified” by the statutory schedule of disability and death benefits. 21 V.S.A. § 618(a)(1); see 21 V.S.A. § 642 (limiting, generally, temporary total disability benefits to two-thirds of the employee’s average weekly wages). Here, claimant utilized his employer-funded sick leave until the employer acceded to the Commissioner’s order, and the employer thereafter reimbursed his sick leave account by the amount of disability benefits due. Accordingly, the employer fulfilled its express statutory obligation by first paying full wage compensation in the form of sick leave benefits and, after the Department’s interim ruling that the claim was compensable, by later paying temporary disability benefits as ordered. Claimant was held harmless from any loss to his accumulated sick leave by the employer’s reimbursement to that account as called for in the personnel policy.

1110. Echoing claimant, the dissent complains that sick leave reimbursement by the employer fails to satisfy the statutory obligation to pay “to the person” the amounts specified by the Commissioner. 21 V.S.A. § 618(a)(1). The dissent ignores, as does claimant, that by paying the sick leave benefits the employer already paid that portion of compensation specified by the Commissioner “to the person” of claimant. There is no dispute that claimant received full and direct payment of wage replacement from the employer during the disability period. Having paid the compensation ultimately required by statute and by the Commissioner, the employer, need only replenish the sick leave to return claimant to his status quo ante on that account. The workers’ compensation statute bothers not over what account the money comes from, so long as it comes from the employer. Claimant’s theory to acquire two payments for the same injury runs not only contrary to established policy against double recovery, but would have the employer do more than what the statute demands. Whatever the dissent’s inclination to have the employer pay twice, it cannot point to a violation of the statute when, as here, the employer has paid once.

¶ 11. Claimant contends, nevertheless, that the employer’s credit must be disallowed but offers no authority in the first instance obligating DPS to pay him more wage replacement in addition to that already paid in sick leave at the employer’s expense. The argument fails. While the Act, to be sure, may omit an express set-off clause, nowhere does it compel employers to pay twice for the same lost time due to work injury or prohibit a credit for payments made by employers for what are later deemed compensable injuries. Indeed, as noted, such a double recovery is patently inconsistent with the Act. The employer here paid for, and claimant received, all statutory disability benefits to which he was entitled under § 618. Accordingly, we discern no grounds to reverse the Commissioner’s ruling.¹

¶ 12. Claimant also relies on the Act’s general prohibition against assignment of benefits to creditors under 21 V.S.A. § 681 (generally exempting workers’ compensation benefits “from all claims of creditors” and declaring that “[c]laims for compensation under the provisions of this chapter shall not be assignable”). The § 681 ban against assignment is inapposite, since no assignment was made by or required from claimant. The policy merely authorizes workers, entirely at their election, to draw a substitute payment from the employer in advance of any workers’ compensation benefits due, and sets off that amount against any balance owing.

¶ 13. As other courts have recognized, nothing in this procedure violates the text or purpose of the anti-assignment statute. See Newberg v. Sarcione, 865 S.W.2d 317, 319 (Ky. 1993) (noting that purpose of nonassignment statute is to ensure that compensation benefits are available to meet needs of worker and his or her dependents, and is not violated where “an advancement of benefits by the employer” is made pending adjustment of claim and later “deducted from the ultimate award of benefits”); Caddie Homes, Inc. v. Falic, 235 A.2d 437, 441 (Pa. Super. Ct. 1967) (“[M]any other states have recognized that, despite a statutory non-assignability clause, agreements which provide that an employer who advances money to an employee will be repaid out of compensation benefits are enforceable . . . because the employee is, as a practical matter, being advanced the amount of his compensation . . . and is thus receiving the full benefit of it.” (quotation omitted)). Again, we find no basis to disturb the Commissioner’s decision.

¶ 14. Finally, although the employer’s sick leave credit against workers’ compensation results in no diminution of wages and benefits, claimant asserts that the procedure was not “cost neutral” because he had to retain an attorney to pursue his claim, incurring legal fees which otherwise could have been paid from a lump-sum compensation award. Claimant’s argument overlooks his clear statutory right to seek from the Commissioner a reimbursement of reasonable attorney’s fees incurred in pursuing his claim, a right that applies even where — as here — the attorney’s fees are incurred prior to final hearing. See 21 V.S.A. § 678(d) (authorizing an award of attorney fees incurred to secure payment of benefits in settlement after denial but before formal hearing). Thus, we are not persuaded that the employer’s offset-credit policy in this case compromised in any way claimant’s opportunity to seek attorney’s fee reimbursement under the statute.²

Affirmed.

1 The dissent dismisses the restoration of claimant’s sick leave as “an empty gesture” because such benefits are not paid when an employee leaves state employment. Post, ¶ 25. This is beside the point. The salient fact is that claimant received full wages during the disability period and lost nothing in the way of sick or annual leave. Claimant’s real complaint is that he did not receive a lump sum payment, but the workers’ compensation statute does not entitle him to payment in that form.

2 The dissent asserts that the right to seek attorney’s fees is “illusory” based on certain workers’ compensation rules limiting the circumstances where fees will be awarded for informal hearings. Post, ¶ 27. One of those circumstances, however, is where benefits were denied “without [a] reasonable basis.” Workers’ Compensation and Occupational Disease Rules, Rule 10.0000(a)(3)(ii), 3 Code of Vt. Rules 24 010 003-6, available at http://www. michie.com/vermont. The record here shows that claimant was awarded benefits based on unequivocal findings by the workers’ compensation hearing officer that — despite employer’s assertions to the contrary — claimant was “clearly” required to maintain a minimum level of fitness to perform the duties of his job; that it was “clear that the injury occurred on the employer’s premises”; and that claimant was therefore plainly entitled to temporary total disability benefits. Thus, claimant was afforded a reasonable opportunity, had he applied, to secure his attorney’s fees. Recovery of fees may not be guaranteed, but it is not illusory. Of course, claimant cannot recover what he does not seek.