Soper v. St. Regis Paper Co.

• Decision Date: 13 February 1980
• Citation: 411 A.2d 1004
• Parties: Donald SOPER v. ST. REGIS PAPER COMPANY.
• Court: Maine Supreme Court

Page 1004

411 A.2d 1004

Donald SOPER v. ST. REGIS PAPER COMPANY.

Supreme Judicial Court of Maine.

Feb. 13, 1980.

Archer & Downing, David R. Downing (orally), Brewer, for plaintiff.

Perkins, Thompson, Hinckley & Keddy, D. Brock Hornby (orally), Richard G. Moon, Portland, for defendant.

Before McKUSICK, C. J., and POMEROY, WERNICK, ARCHIBALD, GODFREY and NICHOLS, JJ.

GODFREY, Justice.

Donald Soper appeals from a judgment of the Superior Court, Hancock County, holding the defendant St. Regis Paper Company not obliged immediately to make full payments from a disability pension plan adopted as part of a collective bargaining agreement with Soper's union. St. Regis acknowledges that Soper is entitled to benefits from the plan, but claims the right, under the terms of the plan, to set off a sum of $10,000 it had paid Soper as a lump-sum settlement of his workers' compensation claim. Soper argues, first, that such a set-off is not authorized by the terms of the collective bargaining agreement; second, that such a set-off, if provided for, is contrary to public policy and the Workers' Compensation Act, chapter 1 of title 39 of the Maine Revised Statutes; third, that by entering the lump-sum compromise settlement, the defendant implicitly agreed not to set off the lump sum against his pension benefits. We deny the appeal.

Facts

The appeal was brought on an agreed statement of facts, which can be summarized as follows: Soper was employed by St. Regis Paper Company for more than thirty years, until July 25, 1971. Soper was a member of the International Brotherhood of Electrical Workers, Local No. 1777, which had negotiated a collective bargaining agreement with St. Regis, in effect from 1969 to 1972. That agreement provided for a pension plan for employees, which included a plan for disability payments. The terms of the pension plan, copies of which were available to all employees, included the following provision relating to the disability pension:

Section 8.02 : Excepting payments made under the Federal Social Security Act and any governmental payments for service-connected disability, the amount of any other pension or disability payments, made to and constituting income to such a former Participant, for which payments the Company has contributed or shall contribute, shall be deducted from the Disability Pension payable under this plan. . . .

Soper became ill on July 25, 1971, and ceased working. He filed a petition for workmen's compensation in February, 1972, which was contested by St. Regis. The parties eventually negotiated a lump-sum settlement of the claim for $10,000 which was approved by the Industrial Accident Commission and paid by St. Regis.

During the negotiation of this settlement, no specific reference was made to the disability provisions of the pension plan. According to the agreed statement of facts, the negotiating attorneys had only "a vague awareness that Soper might have other rights." Soper did not expect that his disability retirement benefits would be affected by the lump-sum settlement, but no one representing St. Regis made any statements to prompt Soper's expectation. Soper simply assumed that he would receive both sets of benefits.

St. Regis has refused to make any pension payments until the sum of payments which would otherwise have been due equals $10,000. That will occur in February, 1980; thereafter St. Regis will pay Soper his full pension.

Soper began this action in Superior Court in April, 1974. In July, 1974, summary judgment was granted to the defendant, and Soper appealed to this Court. His appeal was sustained on the ground that a material issue of fact existed as to the understandings of the parties in entering the lump-sum agreement. Soper v. St. Regis Paper Co., Me., 341 A.2d 8, 10 (1975). On remand, the Superior Court ruled for St. Regis.

Interpretation of the "Disability Payments" Set-off Provision

Soper's first argument concerns the meaning and intent of section 8.02 of the pension plan. He argues that the term "disability payments," as used in the pension plan, was not intended to include workers' compensation benefits. He also argues that even if weekly compensation payments were included, a lump-sum settlement is neither a "disability payment" nor "income" within the meaning of the plan, and that the set-off of a lump-sum settlement was not contemplated when the plan was drafted.

The interpretation of contract language is within the province of the court, Moulton Cavity & Mold, Inc. v. Lyn-Flex Industries, Inc., Me., 396 A.2d 1024 (1979), and unambiguous language in the contract must be given its plain meaning. T-M Oil Co., Inc. v. Pasquale, Me., 388 A.2d 82 (1978). We find that the term "disability payments", as used in section 8.02 of the St. Regis pension plan, is unambiguous: there is no doubt that workers' compensation is a form of "disability payment". Moreover, a lump-sum settlement of a workers' compensation claim is also a form of "disability payment" to a disabled worker. The difficult question is whether the lump-sum payment in this case was a payment "constituting income" within the meaning of section 8.02 of the pension plan.

The first of Soper's arguments is that a lump-sum payment for an illness is not income because it is equivalent to a "lump sum payment for loss of a bodily member", a phrase used in an informational brochure sent by St. Regis to its employees describing the pension plan but not used in the contract. A somewhat similar argument was rejected in Fultz v. Union Carbide Corp., 219 Tenn. 345, 409 S.W.2d 541 (1966), on the ground that there was no evidence that the contract language "loss of bodily member" was intended to include an illness of the entire body. That reasoning has even more force here, where the wording was not even used in the contract itself. Whether "constituting income" was meant to exclude a payment for loss of a bodily member need not be decided, for Soper did not receive such a payment.

The meaning of "income" is not clear on the face of the contract. In the context of this pension plan, the term does not mean income as defined by the tax laws. ¹ The phrase "disability payments constituting income" refers to payments that provide the disabled employee with a substitute source of income, as distinguished from payments that compensate for loss by reimbursing the employee for medical and other expenses. Section 52 of the Workers' Compensation Act provides for medical expenses, and sections 54 and 55 provide for compensation calculated from the employee's average weekly wages. Only compensation paid under sections 54 and 55 can be considered "payments constituting income".

This interpretation of section 8.02 of the pension agreement is supported by an examination of an analogous offset provision in the Federal Social Security Act, 42 U.S.C.A. § 424a (Supp.1979). That section provides, among other things, that social security disability payments shall be reduced by the amount of workers' compensation so that the combined total of payments for any one month does not exceed 80 percent of the employee's average pre-disability earnings. The regulations of the Social Security Administration provide that this offset shall not apply to

(a)mounts paid or incurred, or to be incurred, by the individual for medical, legal, or related expenses in connection with his workmen's compensation claim, or the injury or occupational disease on which his workmen's compensation award or settlement agreement is based . . . . Such medical, legal, or related expenses may be evidenced by the workmen's compensation award, compromise agreement, or court order in the workmen's compensation proceeding, or by such other evidence as the administration may require. Such other evidence may consist of:

(1) A detailed statement by the individual's attorney, physician, or the employer's insurance carrier; or

(2) Bills, receipts, or canceled checks; or

(3) Other clear and convincing evidence indicating the amount of such expenses; or

(4) Any combination of the foregoing evidence from which the amount of such expenses may be determinable.

Any expenses not established by evidence required by the administration will not be excluded. Social Security Administration Regulations, 20 C.F.R. § 404.408(d) (1979).

See Smith v. Weinberger, 381 F.Supp. 1307, 1310 (E.D.Mich.1974), aff'd, 513 F.2d 632 (6th Cir. 1975); 4 A. Larson, The Law of Workmen's Compensation § 97.31 at 18-13 and § 97.33 at 18-19 n. 31 (1979). The use of the words "constituting income" in the St. Regis pension plan indicates an intent to adopt a similar policy of not off-setting medical, legal or other expenses.

The problem presented in the present case is how this offset in a private plan should apply to a single-sum payment of the sort received by Soper. The offset provision in the Social Security Act specifically excludes a benefit payable as a lump sum, "except to the extent that it is a commutation of, or a substitute for, periodic payments." 42 U.S.C.A. § 424a(b) (1974). The purpose of this exclusion is revealed in Senate Report No. 404 on the Social Security Amendments of 1965, as follows:

Since in some workmen's compensation cases, workers incur medical, legal, or related expenses in connection with their workmen's compensation claims, or in connection with the injuries they have suffered, and since the workmen's compensation awards are generally understood to include compensation for these expenses (except to the extent that special provision is made in the award to cover them or they are provided without cost to the worker), for purposes of this section the Secretary would not, in computing the amount of the periodic benefit payable to an individual under a workmen's compensation program, include any part of the workmen's compensation lump sum or benefit which he finds is equal to the amount of such expenses paid or incurred by the worker. Sen.Rep. No. 404, 89th Cong.,...