Gallagher Bassett Services v. WCAB

• Decision Date: 23 June 2000
• Citation: 756 A.2d 702
• Parties: GALLAGHER BASSETT SERVICES, Petitioner, v. WORKERS' COMPENSATION APPEAL BOARD (BUREAU OF WORKERS' COMPENSATION), Respondent.
• Court: Pennsylvania Commonwealth Court

756 A.2d 702

GALLAGHER BASSETT SERVICES, Petitioner, v. WORKERS' COMPENSATION APPEAL BOARD (BUREAU OF WORKERS' COMPENSATION), Respondent.

Commonwealth Court of Pennsylvania.

Argued April 13, 2000.

Decided June 23, 2000.

Reargument Denied August 24, 2000.

Sharon J. McGrail-Szabo, Allentown, for petitioner.

Shelley M. Jones, Harrisburg, for respondent.

Before SMITH, Judge, KELLEY, Judge, and McCLOSKEY, Senior Judge.

SMITH, Judge.

Gallagher Bassett Services (Gallagher) appeals from an order of the Workers' Compensation Appeal Board (Board) that affirmed the decision of Workers' Compensation Judge Thomas J. Hines (WCJ Hines) denying Gallagher's request for reimbursement from the Supersedeas Fund. The question presented is whether the Board erred, under the circumstances of this case, in affirming WCJ Hines' decision in which he concluded that there was no final outcome in the underlying termination proceedings in which Workers' Compensation Judge Joseph B. Sebastianelli (WCJ Sebastianelli) determined that compensation was not in fact payable to the claimant. WCJ Sebastianelli's decision to grant a termination of compensation was based upon a stipulation between the parties that Claimant Thomas Barker had fully recovered from his work injury and that benefits were terminable as of a certain date.

I

Barker suffered a herniated nucleus pulposus and lumbar myleopathy in the course of his employment with Air Products and Chemicals, Inc. (Employer) on March 16, 1993. Barker was granted workers' compensation benefits pursuant to a decision circulated by WCJ Sebastianelli on December 14, 1994. On February 28, 1997, Employer filed a termination petition through Gallagher, its workers' compensation insurer, alleging that Barker was fully recovered from his work injury. The termination petition also requested supersedeas. At an April 25, 1997 hearing before WCJ Sebastianelli, Barker's counsel stated that his client did not oppose the termination petition.

WCJ Sebastianelli gave the parties 30 days to submit a stipulation, and he stated that he would issue an order granting the supersedeas as of that day. The WCJ also accepted evidence from Gallagher, including the medical report of Dr. Eugene DiSalvo, which was entered into the record without opposition. Thereafter the parties executed a stipulation of facts indicating that Barker had fully recovered. Despite WCJ Sebastianelli's statement at the April 1997 hearing that he would grant supersedeas as of that date, no written order granting supersedeas was issued. Accordingly, Gallagher's supersedeas request was deemed denied from the date it was filed by operation of 34 Pa.Code § 131.43.¹ On July 3, 1997, WCJ Sebastianelli circulated a decision which adopted the parties' stipulation and terminated Barker's benefits as of February 5, 1997 based upon the stipulation.

On August 6, 1997, Gallagher filed a Supersedeas Fund reimbursement application seeking $6,840.00 for overpayment of compensation through July 3, 1997. The Department of Labor and Industry, Bureau of Workers' Compensation (Bureau) filed an answer to the application denying Gallagher's entitlement to reimbursement because the termination petition was resolved by a stipulation of facts instead of by an arm's-length determination. WCJ Hines issued a decision on August 7, 1998 denying Gallagher's application because there was no final outcome in which it was determined that compensation was not, in fact, payable. The Board affirmed the decision of WCJ Hines on the grounds that the termination proceeding was not an arm's-length determination. The Board believed that it was compelled to reach that result by controlling case precedent, but in doing so the Board stated that it found the result insulting to the ideal of judicial economy.²

II

A party seeking reimbursement from the Supersedeas Fund must establish the following five criteria:

1. A supersedeas must have been requested;

2. The request for supersedeas must have been denied;

3. The request must have been made in a proceeding under Section 413 of the [Workers' Compensation Act (Act), Act of June 2, 1915, P.L. 736, as amended, 77 P.S. §§ 771-774.1.3.]

4. Payments were continued because of the order denying supersedeas; and

5. In the final outcome of the proceedings `it is determined that such compensation was not, in fact, payable.'

Bureau of Workers' Compensation v. Workmen's Compensation Appeal Board (Insurance Company of North America), 101 Pa.Cmwlth. 552, 555, 516 A.2d 1318, 1320 (1986); Section 443(a) of the Act, 77 P.S. § 999(a).³ The issue in this case is whether Gallagher has satisfied the fifth criterion.

The Bureau argues that WCJ Sebastianelli's July 3, 1997 decision granting Employer's termination petition was not a final outcome of the proceedings because the WCJ adopted the parties' stipulation as the basis for terminating benefits. As support for its position, the Bureau relies upon this Court's decisions in Bureau of Workers' Compensation v. Workers' Compensation Appeal Board (Bethlehem Steel Corp.), 723 A.2d 1061 (Pa.Cmwlth.1998), Bureau of Workers' Compensation v. Workmen's Compensation Appeal Board (Old Republic Insurance Company), 689 A.2d 372 (Pa.Cmwlth.1997) (Old Republic II), and Bureau of Workers' Compensation v. Workmen's Compensation Appeal Board (Old Republic Insurance Company), 685 A.2d 224 (Pa.Cmwlth.1996) (Old Republic I).

The cases cited by the Bureau applied the Court's most oft-cited decision in this area of workers' compensation law: Insurance Company of North America. However, that decision does not support the proposition that an insurer may never recover reimbursement from the Supersedeas Fund when the final outcome of predicate proceedings results in a WCJ's decision based upon a stipulation or an agreement between the parties. The insurer in Insurance Company of North America filed a December 29, 1981 petition to suspend the claimant's benefits as of December 7, 1981. In April 1983 the claimant's counsel directed a letter to the referee stating that the claimant agreed to a finding in favor of the insurer as of the date of a hearing scheduled for that month. The sole evidence presented at the hearing was a statement from the claimant's treating physician indicating that the claimant was able to return to work as of February 21, 1983. Nevertheless, the referee entered an order granting suspension as of December 7, 1981. The Board thereafter granted the insurer Supersedeas Fund reimbursement for payments made since December 29, 1981.

The Court first determined in Insurance Company of North America that the Bureau could challenge the validity of the referee's order because the outcome of the suspension proceedings had been reached through an agreement of parties other than the Bureau with no opportunity for the Bureau to participate or to be heard. The Court next considered the referee's order in the suspension proceedings and concluded that there was no support in the record for suspending the claimant's benefits from December 7, 1981. The sole evidence in the record supporting suspension was the statement from the claimant's physician indicating that she could return to work as of February 21, 1983. Because this evidence supported a "true underlying decision on which the claim against the Fund could properly be predicated," id., 516 A.2d at 1323, the Court accordingly modified the Board's award and allowed reimbursement from the Supersedeas Fund, but only for payments made after February 21, 1983.

Thus the Court allowed the...