Williams v. Workmen's Compensation Appeal Board

FRIEDMAN, Judge,

concurring and dissenting.

I concur with the majority in its determination that Daniel Williams (Claimant) failed to preserve for our review whether Realty Service Company (Employer) filed a timely Answer to the Claim Petition. With regard to the other issues properly before this Court, I respectfully dissent.

First, the majority has decided that Employer is not estopped from denying liability after commencing payment of . compensation to Claimant following a timely Notice of Compensation Denial. In order to reach this conclusion, the majority determined that Mosgo v. Workmen’s Compensation Appeal Board (Tri-area Beverage, Inc.), 84 Pa.Commonwealth Ct. 816, 480 A.2d 1285 (1984), did “not support the referee’s application of the doctrine of estoppel” where Employer issued a timely Notice of Compensation Denial and that Employer’s actions “do not support the conclusion that when the indemnity check was sent to Claimant, it intended to commence the compensation payment without agreement.” (Majority Op. at 284-285) (emphasis added).

Initially, I agree with the majority that the case of Mosgo does not apply here because Employer did file a timely Notice of Compensation Denial. 1 However, I disagree with the ma *288 jority’s statutory analysis of the legal effect of a payment that follows a timely Notice of Compensation Denial. I believe that Employer’s payment constitutes an admission of liability for compensation under the procedures established by The Pennsylvania Workers’ Compensation Act'(Act). 2

In deciding to the contrary, the majority has accepted without question that Employer issued the compensation payment to Claimant by mistake. 3 I do not believe that the record supports this assumption. Indeed, I believe that the record supports the referee’s rejection of that assumption. 4 As the ultimate factfinder with responsibility for adjudging witness credibility and resolving conflicts in the testimony, the referee’s finding must be upheld if supported by substantial evidence in the record. Investors Diversified Services v. Workmen’s Compensation Appeal Board (Howar), 103 Pa.Commonwealth Ct. 562, 520 A.2d 958 (1987). I believe that the referee has reasoned cogently in determining from the record before him that Employer did not issue the check in error. This Court cannot now assume just the opposite and justify that assumption by distorting the testimony of the adjuster.

*289 In its opinion, the majority states that “[t]he adjuster for Employer’s insurance carrier testified that the check for the two-week indemnity benefits was issued by mistake.” (Majority Op. at 280.) However, the adjuster who testified had no personal knowledge of the circumstances under which Employer issued the check or the second Notice of Compensation Denial 5 and testified only that he “believed” that the check was issued by mistake. (R.R. at 16a and 102a.) Indeed, Employer presented no evidence supporting its claim that the check was issued by mistake. The majority has simply not addressed this glaring deficiency in the record. 6

The majority makes much of the fact that Employer issued a second Notice of Compensation Denial “immediately” after the payment (Majority Op. at 284), implying that the second notice proves that the compensation payment was a mistake. The facts of this case belie the majority’s assertion that the second notice was sent “immediately” after the payment. 7 However, even if that were true, the Act does not give any legal effect to'the issuance of an untimely second Notice of Compensation Denial. It might be evidence that Employer sent Claimant a check by mistake if Employer had stated that its issuance was to rectify the mailing of a benefits check in *290 error. The second notice, however, does not mention that the prior benefits check had been sent in error.

The Act provides a comprehensive scheme for the commencement and cessation of benefit payments. Any failure to comply with the Act or the regulations promulgated thereunder can result in the imposition of penalties. See section 435(b) of the Act, 77 P.S. § 991. The Act does not give an employer the right of self-help. Moody v. Workmen’s Compensation Appeal Board, 127 Pa.Commonwealth Ct. 65, 560 A.2d 925 (1989). Rather, the Act provides the Supersedeas Fund as a vehicle to protect an insurer who makes compensation payments to a claimant who ultimately is determined not to be entitled thereto. St. Margaret Memorial v. Workmen’s Compensation Appeal Board, 152 Pa.Commonwealth Ct. 631, 620 A.2d 586 (1993). 8

The Act provides that an employer may commence payment of compensation benefits pursuant to the agreement of both parties. However,

[w]here payment of compensation is commenced without an agreement, the employer or insurer shall simultaneously give notice of compensation payable to the employe or his dependent, on a form prescribed by the department, identifying such payments as compensation under this act and shall forthwith furnish a copy or copies to the department as required by rules and regulations.

77 P.S. § 731 (emphasis added). In this case, Employer paid compensation without an agreement but failed to comply with the procedural provisions of section 407 because it did not simultaneously file a Notice of Compensation Payable.

Instead of commenting on Employer’s violation of the Act, 9 the majority rewards Employer for failing to officially ac *291 knowledge its liability to Claimant after commencing payments. Unlike the majority, I do not believe that the failure to simultaneously give Notice of Compensation Payable negates Employer’s affirmative act in commencing compensation payments. Such an affirmative act, even subsequent to a Notice of Compensation Denial, is consistent with an admission of liability. 10 If the employer later refuses to accept liability, it bears the burden of proof to show reasons why compensation should be terminated, whether because of a mistake or otherwise.

The Act' describes exclusive conditions under which an employer can legally terminate payment of compensation, none of which have been met here. 11 Clearly, the second *292 Notice of Compensation Denial does not extinguish liability because it is not one of the enumerated ways to terminate benefit payments. Therefore, a presumption of continued disability exists based solely on Claimant’s physical injuries, with the burden on Employer to prove entitlement to termination by one of the avenues available under the Act. 12

Because I disagree with the majority in regard to the allocation of the burden of proof, I also must disagree with their decision to remand for a determination of whether Claimant’s psychiatric disability is causally related to his physical injuries. I believe that because of Employer’s acceptance of liability, Claimant is entitled to a presumption of continuing physical disability with the burden on Employer to prove a right to terminate benefits either by showing that the disability ceased altogether or that the disability continues and is not work related. Giant Eagle v. Workmen’s Compensation Appeal Board, 161 Pa.Commonwealth Ct. 35, 635 A.2d 1123 (1993). Employer did not do this here. Because Claimant would receive no greater benefit by showing causation for his psychiatric injuries, I would not reach this issue.

Finally, the majority has decided not to address whether the Board erred in failing to award litigation costs and attorney fees to Claimant. Because of my disagreement with the majority opinion, I would address this issue. I would resolve the matter as follows.

*293 Claimant initially requests that the xerox costs for copying certain records, the pleadings and a brief be granted as proper litigation expenses. 13 Under Section 440 of the Act, a successful claimant is awarded reasonable costs for witnesses, necessary medical examination and the value of unreimbursed lost time to attend proceedings. 77 P.S. § 996. Costs incurred for reproducing medical records are reimbursable when they are actually used in the case. Boeing Vertol Co. v. Workmen’s Compensation Appeal Board (Coles), 107 Pa.Commonwealth Ct. 388, 528 A.2d 1020 (1987), appeal denied, 517 Pa. 619 , 538 A.2d 501 (1988). I would decline to award xerox costs for pleadings and a brief. As to the medical records, I am unable to determine which of these medical documents were actually copied and used in the case; therefore, I would remand to ascertain whether any xerox costs were for medical records actually used in the case.

Claimant also requests attorney fees based on an unreasonable contest by Employer. In this regard the referee concluded:

7. As the Claimant has not specifically pled or requested imposition of counsel fees on the administrative record, all counsel fees awarded below shall be charged to the award of the Claimant. Daugherty v. W.C.A.B., 97 Pa.Commonwealth Ct. 142, 510 A.2d 147 (1986).

(Referee’s Conclusion of Law, No. 7.) I believe that the referee’s understanding of the law in this regard is correct and therefore would deny the request for attorney fees.

In summary, I would hold that Claimant is entitled to a presumption of continuing disability until such time as Employer proves by appropriate means that the benefits should be terminated; therefore, I would reverse the Board and reinstate the referee’s award of benefits. Further, because I believe that Claimant would be entitled to reimbursement for costs incurred in reproducing medical documents introduced *294 into evidence, and the referee made no findings in that regard, I would remand for determination of which medical records, if any, were actually copied and used in this case, making them reimbursable.

. However, the majority incorrectly distinguishes Mosgo in asserting that "[t]here is no evidence in the record suggesting that Employer attempted to deny the liability after the payment on the basis of any medical report or its investigation of the claim." (Majority Op. at 284) (emphasis added).

Quite the contrary, Employer admits in its second Notice of Compensation Denial that it has not completed its investigation (unable to contact Claimant for investigation and “no further medical evidence of disability”). Therefore, like Mosgo , Employer sought to withhold its admission of liability because it had not completed its ongoing investigation.

Although the two cases are distinguishable on other grounds, they are nevertheless analogous with respect to the employer’s motive in hesitating to admit liability.

. Act of June 2, 1915, P.L. 736, as amended, 77 P.S. §§ 1-1031.

. Employer maintains that the compensation check was issued in error. Section 413 of the Act, 77 P.S. § 771, provides that an employer may challenge a Notice of Compensation Payable on grounds of mistake. In such cases, the burden is on the employer to prove the error. Armak-Akzona v. Workmen's Compensation Appeal Board (Naylor), 149 Pa.Commonwealth Ct. 543, 613 A.2d 640 (1992). Here, Employer failed to prove that its issuance of the check was a mistake.

. The referee rejected Employer's argument that the check was issued in error because:

(1) Employer's witness, the current claims adjuster, conceded that the check was for “two weeks of compensation” due to Claimant for the work injury of February 27, 1985.

(2) Employer’s witness testified only that he “believed” the compensation check was issued in error;

(3) nothing in the insurer's file definitively explained how or why the check was issued in error; and

(4) the second Notice of Compensation Denial mentioned an inability to contact Claimant for investigation purposes; however, Claimant stated in uncontroverted testimony that he was contacted by insurer "after the notice of denial.”

(R.R. at 16A.)

. In fact, the adjuster had only been assigned to Claimant’s case several weeks before his testimony was taken on April 5, 1989, (R.R. at 98a), four years after the issuance of the check and the second Notice of Compensation Denial.

. Employer did not present the testimony of the employee who authorized the check or the testimony of the employee who was responsible for issuing the second Notice of Compensation Denial. In fact, Employer did not present the testimony of any supervisory staff to explain what happened when the check or second notice was issued. No one with personal knowledge testified on Employer’s behalf regarding the "mistake!” Nor was there any evidence in Employer’s file on Claimant to definitively explain how or why the check was issued in error.

Still, the majority does not even consider the possibility that Employer issued the check because an authorized employee determined that Claimant was entitled to payment.

. Indeed, the payment was dated March 22, 1985 and the second Notice of Compensation Denial was sent about two weeks later on April 4, 1985.

. When a supersedeas has been requested and denied, and payments of compensation are made as a result, the insurer who has made such payments shall be reimbursed if it is subsequently determined after a hearing that such compensation was not, in fact, payable. Section 443(a) of the Act, 77 P.S, § 999.

. . If Employer had fully complied with the provisions of the Act, the majority opinion could not stand because the Notice of Compensation *291 Payable that should have been filed simultaneously with the initial check would have been a clear admission of liability.

. The Act is designed to promote prompt investigation of injuries and prompt payment of compensation. Section 406.1 of the Act, 77 P.S. § 717.1. If an employer is not able to complete an investigation within the time period allowed under the Act, the employer must nevertheless decide whether to admit or deny liability by the twenty-first day after notice of injury.

In practice, if an employer denies liability, as Employer initially did here, and the employer finds from its investigation that the claimant ought to receive compensation payments after all, the employer would commence payment of benefits and forego the expense of contesting the claim. The original Notice of Compensation Denial would lose its effect. Likewise here, when Employer commenced the payment of benefits, the original Notice of Compensation Denial lost its effect as a denial of liability.

. An employer and employee may terminate compensation payments by executing a Supplemental Agreement or a Final Receipt of Compensation pursuant to section 408 of the Act, 77 P.S. § 732. An employer may also seek to terminate compensation payments by filing a petition under various subsections of section 413 of the Act, 77 P.S. §§ 771-774.2, including:

(1) Petition to Terminate upon cessation of disability under Section 413(a) of the Act, 77 P.S. § 772,

(2) Petition to Suspend upon cessation of disability under Section 413(a) of the Act, 77 P.S. § 772,

(3) Petition to Review for error under Section 413(a) of the Act, 77 P.S. § 771,

. (4) Request for Supersedeas under Section 413(b) of the Act, 77 P.S. § 774, or

(5) Petition to Terminate filed within fifteen days of a return to work at prior or increased earnings under Section 413(c) of the Act, 77 P.S. § 774.2.

*292 However, here the referee specifically found:

9. After payment to Williams of the check for $386.26, the Defendant ceased all payments without execution of a Supplemental Agreement, Final Receipt of Compensation, Order of the Bureau, or the filing of a Petition under Section 413(c) of the Act.

(Referee’s Finding of Fact, No. 9.)

. In fact, even though Employer did not pursue one of these avenues, the referee treated Employer’s Answer to the Claim Petition as a Petition for Termination under § 413 of the Act and noted that the evidence presented by Employer failed to prove that Claimant’s physical injury had resolved or abated, or that work was available within Claimant’s restrictions. (R.R. at 17A.) Accordingly, the referee concluded that Claimant remained entitled to compensation benefits. (Conclusion of Law, No. 3.)

. The referee’s Finding of Fact, No. 20 states:

20. Although the Claimant alleged entitlement to recoup “Xerox costs” for records, pleadings, and brief, this proposed charge sounds in the nature of office overhead and is not a proper litigation expense.