R. Blythe v. WCAB (City of Chester) ( 2021 )

IN THE COMMONWEALTH COURT OF PENNSYLVANIA
Robert Blythe, :
Petitioner :
: No. 437 C.D. 2020
v. :
: Submitted: November 20, 2020
Workers’ Compensation Appeal :
Board (City of Chester), :
Respondent :
BEFORE: HONORABLE PATRICIA A. McCULLOUGH, Judge
HONORABLE MICHAEL H. WOJCIK, Judge
HONORABLE J. ANDREW CROMPTON, Judge
OPINION NOT REPORTED
MEMORANDUM OPINION
BY JUDGE McCULLOUGH FILED: December 29, 2021
Robert Blythe (Claimant) seeks review of the April 10, 2020 order of the
Workers’ Compensation Appeal Board (WCAB), which affirmed the May 15, 2019
decision and order of the Workers’ Compensation Judge (WCJ) to award the City of
Chester (City) the entitlement of a pension benefit offset credit.
Factual and Procedural History
Claimant injured his right shoulder while employed as a police officer for
the City and was awarded total disability benefits at the rate of $845.00 per week as of
August 8, 2013. On February 8, 2016, the City filed a petition for suspension alleging
that (1) as of November 30, 2015, Claimant had voluntarily withdrawn from the
workforce, and (2) it was entitled to a credit for pension benefits paid to Claimant but
funded by the City. By decision circulated June 19, 2017, the WCJ denied the petition
for suspension. The WCJ also denied the City’s request for a credit for pension benefits
because the City did not present sufficient evidence to establish its entitlement to a
credit:
This [WCJ] finds further that even if Claimant could be said
to be retired, [the City’s] evidence does not establish an
entitlement to a suspension of Claimant’s workers’
compensation benefits. [The City’s witness, Dejuana]
Mosley did not testify as an expert and did not adequately
explain Exhibit D-4 so as to allow it to form the basis of any
alteration in Claimant’s benefits. [Exhibit] D-4 has no
authentication. This [WCJ] has no idea who prepared it or
what the figures purport to show. This [WCJ] accepts that
[Exhibit] D-3 shows that Claimant’s pension . . . is $6,061.58
per month, but even if this [p]etition [for suspension] was
granted and Claimant had voluntarily removed himself from
the workforce, there is no evidence as to the proper credit.
(WCJ decision, June 19, 2017, Findings of Fact (F.F.) No. 12.)
The City appealed the decision to the WCAB, which (1) affirmed the
denial of the petition for suspension and the denial of the credit, but (2) remanded the
matter to the WCJ “to allow [the City] to submit substantial competent evidence which,
if found to be credible, will establish the amount of its funding of [Claimant]’s pension
benefit and support the assertion of a credit under section 204(a) of the [Act].[1]”
(WCAB decision, May 16, 2018, at 8.)
1
Act of June 2, 1915, P.L. 736, as amended, 77 P.S. §71. Section 204(a) of the Act, reads, in
pertinent part:
The severance benefits paid by the employer directly liable for the
payment of compensation and the benefits from a pension plan to the
extent funded by the employer directly liable for the payment of
compensation which are received by an employe shall also be credited
against the amount of the award made under sections 108 [added by
the Act of October 17, 1972, P.L. 930, 77 P.S. § 27.1] and 306 [77 P.S.
§§ 511-517], except for benefits payable under section 306(c) [77 P.S.
§ 513]. The employe shall provide the insurer with proper authorization
(Footnote continued on next page…)
2
The City’s Expert
On remand, the City presented the testimony of its Deputy Controller,
Dejuana Mosley (Mosley), who had previously testified in the underlying proceedings.
The WCJ summarized Mosley’s prior testimony relevant to the pension credit issue, as
follows:
a. Ms. Mosley is the Deputy Controller for the City of
Chester and handles all issues related to the pension and
internal controls for the City. She also handles the deferred
retirement option program (“DROP”). Ms. Mosley
explained in detail the provisions of the “DROP” program
which is a retirement benefit offered to police and fire
personnel. Claimant entered the DROP program on
December 1, 2010, and his separation date would be five
years later on November 30, 2015.
b. Ms. Mosley testified that an employee contributes to a
Pension Fund with payroll deductions. The City receives
State Aid through Act 44[2] and then the City is responsible
to make municipal minimal obligation annual contributions.
The City, State and employee contribute. When an employee
is in the DROP program, the State aid is still contributed
through the plans, but they are deemed retired and are no
longer making pension contributions. The City still receives
State Aid but not for the person enrolled in the DROP
program because they are no longer making pension
contributions. When Claimant entered the DROP program,
there was no longer any State aid for him, but he was still
getting credit for what the City paid in for him. Once you go
to secure the amount which the employe is receiving under the Social
Security Act.
77 P.S. §71 (emphasis added).
2
Act of September 18, 2009, P.L. 396, No. 44 (commonly known as Act 44) amended the
Municipal Pension Plan Funding Standard and Recovery Act, Act of December 18, 1984, P.L. 1005,
No. 205, as amended, 53 P.S. §§895.101-895.1131 (commonly known as Act 205) by adding Chapter
11, titled “Deferred Retirement Option Plans.” See Sections 1101-31 of Act 205, 53 P.S. §§895.1101-
31.
3
into the DROP program your pension deduction
automatically ceases. Once you enter the DROP program
only Act 205 money and City money would be put in.
c. Ms. Mosley testified that [] the City of Chester offers a
defined benefit plan and payment is based off of a contract
or city ordinance obligation based on criteria which is usually
set up by age and service years. Once an employee qualifies
for obtaining years or age, the benefit is based off your
calculations that are described in your contract or city
ordinance. For police officers, once they reach retirement
age or years the benefit is their last twelve months that they
worked. The City contribution into the pension fund is a
global contribution for all people that the City is paying for
within the fund. In order to tell what contribution was made
on behalf of Claimant, Ms. Mosley had to consult with
consultants and the State Actuary.
d. Claimant separated from the DROP program on November
30, 2015 and he started receiving his actual pension and his
DROP benefit in December of 2015. This means he has
retired from the City of Chester. On cross examination, Ms.
Mosley testified that as a DROP participant Claimant is
receiving a weekly check from the City in his pension benefit
that was calculated as being invested for him. The plan can
determine the City’s Municipal Minimum Obligation
(MMO) payment from the year Claimant started working
until he separated from the DROP program. The plan can
determine what the City required to put in as well as the State
Aid invested and the investment earnings. This would show
whether or not the City made the MMO or overpaid it. Ms.
Mosley testified that except for 2014, 2015 and 2016, the
City has made [MMO] contributions although they were late.
When the contributions are late, the City is charged seven
and a half percent (7.5%) interest which is credited to the
respective pension fund.
(WCJ decision, May 15, 2019, F.F. No. 8(a)-(d).)
4
On remand, the City also presented the testimony of Larry Brisman
(Brisman), who was employed with the Beyer-Barber Company as a vice president and
actuary. He has been an enrolled actuary since 1992. (Reproduced Record (R.R.) at
29a, 182a-84a.) He was responsible for close to 400 municipal pension plans. He
explained that “we would run the evaluations of the pension plans every two years. It’s
my responsibility to review the results, help prepare reports that go to the municipalities
to show them what their funded status is at the particular point in time. Also, what the
required contribution is that needs to be made in order to satisfactorily fund the pension
plan.” (R.R. at 29a, 183a.)
Brisman was requested by the City, through its third-party administrator,
Thomas Anderson & Associates, to review the pension plan with respect to the
Claimant. Brisman reviewed an employee pension face sheet that provided Claimant’s
date of birth, salary, and monthly benefit as well as a list of the contributions that were
made by Claimant, the City, and the Commonwealth of Pennsylvania. After review of
the materials, Brisman prepared a letter to the third-party administrator detailing the
calculation that was done in order to determine the City’s contribution to Claimant’s
pension benefit. (R.R. at 29a, 188a, 191a, 212a-16a.)
Brisman explained how he performed the calculations. The calculations
were based on Claimant’s personal information such as date of birth, date of
employment, and date of disability. Brisman then factored an interest rate assumption
or real rate of return of 7½% per year, as that represented a long-term rate of return of
the pension plan. Brisman explained that one must look at the asset allocation of the
plan and “apply capital market assumptions to it to get a sense of what the long-term
rate would be.” (R.R. at 29a, 191a-94a.) The rate of interest/real rate of return of 7½%
was within the average range of what municipalities use. Id.
5
Brisman further explained that to determine Claimant’s contribution, he
looked at the accumulated value of Claimant’s contributions as of December 1, 2010.
That amount was $75,157.00. The accumulated value was divided by an annuity factor
which was determined from the 7½% interest and mortality table to obtain the annual
benefit or contribution made by Claimant. Claimant’s annual contribution was
$5,822.66. (R.R. at 29a, 195a-96a.) Brisman explained that the remaining benefits in
the amount of $66,916.30 were then attributable to either the Commonwealth or the
City. Using the figures provided by the third-party administrator, Brisman determined
that the accumulated contributions from the Commonwealth were $40,671,799 and the
City were $13,222,520. Dividing the remaining amount of $66,916.30 by each of the
accumulated contributions, he determined that the City’s portion of the contributions
was $21,754.70, which was 29% of the total annual benefit. Brisman determined that
Claimant’s portion was 8% and the Commonwealth’s portion was 62% of the total
figure. Brisman confirmed that even if the City did not make the MMO, the
calculations accurately reflected only the years money was contributed. He explained
that if the City made a late payment, it paid interest and the contribution to the pension
fund was only considered in the year the contribution was made. (R.R. at 29a-30a,
196a-97a, 200a-01a, 213a-16a.)
Brisman explained in detail how he calculated the annual portion of
benefits paid to the portion of the pension fund attributable to Claimant by the City to
be $21,754.70 or 29% of the total figure. Claimant provided no rebuttal evidence to
show there was no entitlement to a credit and did not provide any documents or
calculations that differed from the documents and Brisman’s testimony regarding the
City’s credit. (R.R. at 30a.)
6
WCJ Decision
By decision dated May 15, 2019, the WCJ granted the City’s suspension
petition and awarded the City a 29% credit against Claimant’s ongoing temporary total
disability benefits from December 25, 2015, and ongoing, as long as the Claimant
continued to receive both workers’ compensation benefits and his pension benefits.
(WCJ decision, May 15, 2019, F.F. No. 13.) The WCJ found that the City was entitled
to an additional credit of 20% against Claimant’s temporary total disability benefits
until the City had recouped the credit that it was owed from December 25, 2015, until
the date that the City took its credit. Id. F.F. No. 14. In Finding of Fact No. 11, the
WCJ found the testimony of the City’s witnesses, Mosley and Brisman, credible and
persuasive. The WCJ noted that Claimant failed to provide rebuttal evidence to show
that the City was not entitled to a pension offset credit or provide any documents or
calculations that differed from the documents provided by the City’s experts.
Claimant appealed to the WCAB, arguing that (1) the City waived its right
to present evidence to establish its entitlement to a credit, and that the WCAB erred by
ordering a remand; and (2) the evidence was not sufficient to establish the amounts
contributed by the City and Claimant to permit the appropriate calculations under the
Act – specifically, because the actuarial evidence accepted as credible by the WCJ
included contributions from the Commonwealth, which was not his employer, and
because the City did not address pension underfunding.
WCAB Opinion
On April 10, 2020, the WCAB circulated an opinion affirming the WCJ’s
decision. With regard to the issue of waiver and whether the WCAB erred in
remanding the matter to allow the City to present additional evidence, the WCAB held
that no error had occurred. It reasoned that section 204(a) of the Act requires that
7
employer-funded contributions to a claimant’s benefits under a pension plan must be
credited against a workers’ compensation award. 77 P.S. §71(a). It concluded that
because the language of section 204(a) is mandatory, a remand was not improper.
Regarding the pension benefit offset credit, the WCAB rejected
Claimant’s argument that the City failed to establish the extent of its funding of
Claimant’s pension benefits. The WCAB did not agree with Claimant that Brisman’s
testimony was deficient. The WCAB concluded that Brisman calculated the separate
contributions by Claimant, the City, and the Commonwealth, and that he did not evade
questions concerning MMO payments and that he explained that late payments are
included in the year they were actually made.
Issues and Analysis
In his petition for review,3 Claimant raises two issues: (1) whether the
WCAB erred in remanding the case to the WCJ to allow the City to submit additional
evidence on the pension benefit offset credit; and (2) whether the WCAB erred by
concluding that the City met its burden of proving its entitlement to a pension benefit
offset credit.
1.
In his first issue, Claimant argues that the WCAB erred by remanding this
matter to the WCJ for further evidence, and the WCJ’s acceptance of additional
evidence was error. He submits that a failure to present evidence to establish the
entitlement to specific relief is fatal to a petition in workers’ compensation matters.
(Claimant’s Br. at 10 (citing Romaine v. Workers’ Compensation Appeal Board (Bryn
3
This Court’s scope of review is limited to determining whether necessary findings of fact
are supported by substantial evidence, whether an error of law was committed, or whether
constitutional rights were violated. Schriver v. Workers’ Compensation Appeal Board (Department
of Transportation), 699 A.2d 1341 (Pa. Cmwlth. 1997).
8
Mawr Chateau Nursing Home), 901 A.2d 477 (Pa. 2006)).) He contends that in the
original proceedings before the WCJ, the City chose not to present expert testimony
and that was fatal to its request for a credit for pension benefits. (Claimant’s Br. at 9-
14 (citing Commonwealth v. Workers’ Compensation Appeal Board (Harvey), 993
A.2d 270 (Pa. 2010), and other cases for proposition that actuarial expert testimony is
required to establish entitlement to a pension offset when there is a defined pension
plan).) He asserts that the WCAB found that the City had failed to present substantial
competent evidence to establish its entitlement to a credit. In Claimant’s view, that
should have ended the WCAB’s inquiry. He argues that the purpose of a remand is not
to allow a party to present evidence it failed to present previously.
We discern no error in the WCAB’s remand to permit the City to provide
substantial competent evidence to establish how much it contributed to the pension.
The WCAB has broad discretionary authority under section 419 of the Act, added by
the Act of June 26, 1919, P.L. 642, 77 P.S. §852, to remand to a WCJ. Section 419 of
the Act provides:
The [WCAB] may remand any case involving any question
of fact arising under any appeal to a [WCJ] to hear evidence
and report to the [WCAB] testimony taken before him or
such testimony and findings of fact thereon as the [WCAB]
may order. . . .
77 P.S. §852. See also McDaniel v. Workers’ Compensation Appeal Board (Maramont
Corporation), 157 A.3d 544, 548 (Pa. Cmwlth. 2016). Section 204(a) of the Act
provides that the benefits of a pension plan, to the extent funded by the employer
directly liable for the payment of compensation, shall be credited against a workers’
compensation award. 77 P.S. §71(a) (emphasis added). The purpose of section 204(a)
of the Act is to reduce the cost of workers’ compensation benefits in Pennsylvania by
allowing employers to avoid paying duplicate benefits for the same loss of earnings.
9
Kramer v. Workers’ Compensation Appeal Board (Rite Aid Corporation), 883 A.2d
518, 536 (Pa. 2005); Harvey, 993 A.2d at 281 (citing Kramer and noting the
Legislature’s clear intention in enacting section 204(a) was “to afford effective
redress”); Pennsylvania State University v. Workers’ Compensation Appeal Board
(Hensal), 911 A.2d 255 (Pa. Cmwlth. 2005). Here, the City presented evidence in the
original proceedings before the WCJ that the City had definitely contributed funds to
Claimant’s pension. In light of the clear legislative intent to provide employers relief
from concurrent payment of workers’ compensation and employer-funded pension
benefits, we cannot say the WCAB erred in requiring the WCJ to take evidence and to
make findings on a crucial issue necessary for the proper application of the law. See
Craftsmen v. Workers’ Compensation Appeal Board (Krouchick), 809 A.2d 434 (Pa.
Cmwlth. 2002) (upholding WCAB’s remand pursuant to section 419 of the Act where
the WCAB was convinced that additional findings were needed on the issue of
causation, for proper application of the law surrounding the claimant’s burden of proof
in a cardiac death case). Because the language of section 204(a) is mandatory, we
conclude that the WCAB correctly held that a remand to the WCJ was proper. 77 P.S
§71(a).
2.
Next, Claimant argues that, under section 204(a) of the Act, an employer
is only entitled to offset workers’ compensation disability benefits from a pension plan
“to the extent funded by the employer directly liable for the payment of compensation.”
77 P.S §71(a). Referring to the WCJ’s Finding of Fact No. 8(3) (“[t]he remaining
benefits were then attributable to either the Commonwealth or [the City]”), Claimant
argues that the City’s evidence did not reflect its actual contributions because Brisman
intermingled the City’s contributions with those of the Commonwealth. He contends
10
that because the offset calculations included the Commonwealth, not Claimant’s actual
employer, the City’s evidence was hypothetical and did not represent its actual
contributions. We disagree with Claimant’s assessment.
Under section 204(a) of the Act, 77 P.S. §71(a), the employer bears the
burden to establish the extent of its funding of the claimant’s pension benefits.
Department of Public Welfare/Polk Center v. Workers’ Compensation Appeal Board
(King), 884 A.2d 343, 347 (Pa. Cmwlth. 2005). Actuarial assumptions and calculations
may be used to determine the employer-funded component of a defined benefit pension
plan. Harvey, 993 A.2d at 281-82. The Act does not require the employer to prove the
amount of its actual contributions. Id.
Based on the record, we conclude that the City’s evidence, as accepted by
the WCJ, meets this standard. The City presented unrebutted evidence that it
contributed $21,754.70 to Claimant’s annual pension benefits that he received in
addition to his workers’ compensation benefits.4 The WCJ credited the testimony of
Mosley, the City’s Deputy Controller, which was taken in the original proceeding. The
WCJ also found Brisman’s testimony credible, observing that Brisman explained his
calculations in detail and that Claimant did not present rebuttal evidence to show that
there is no entitlement to a credit, or provide differing calculations. We do not agree
that Brisman’s testimony was deficient in the manner argued by Claimant. Claimant
fails to take into consideration the remainder of Brisman’s testimony. Specifically,
Brisman explained that the accumulated value of Claimant’s contributions as of
December 1, 2010, was $75,157.00. That sum was divided by an annuity factor of
12.907684, yielding an annual benefit of $5,822.66 attributable to Claimant’s
4
In his brief, Claimant cites to a “Report on Municipal Pension Funds” and an article titled
“State: Chester’s pension fund is going broke.” However, because this “evidence” was never
submitted to the WCJ during the underlying litigation or on remand, we will not consider it on appeal.
11
contributions. Although Brisman noted that the remaining benefit of $66,916.30 was
attributable to the Commonwealth aid and the City’s contributions, he went on to
calculate the total of the combined contributions of Claimant, the Commonwealth and
the City. Precisely, the remaining benefit was multiplied by a ratio of the City’s
accumulated contributions to the total of the combined Commonwealth and the City’s
contributions. The same calculations were used to determine the Commonwealth aid
amount. The portion of Claimant’s benefit attributable to his contribution was
determined to be 8% of the total; the Commonwealth’s contribution was determined to
be 62.1% of the total; and the City’s portion was determined to be 29.9% of the total.
(WCJ decision, May 15, 2019, F.F. No 8(c).)
The WCJ has complete authority over questions of credibility, conflicting
evidence and evidentiary weight. Daniels v. Workers’ Compensation Appeal Board
(Tristate Transportation), 828 A.2d 1043, 1052 (Pa. 2003). The WCJ is free to accept
or reject, in whole or in part, the testimony of any witness. Lombardo v. Workers’
Compensation Appeal Board (Topps Company, Inc.), 698 A.2d 1378 (Pa. Cmwlth.
1997).
Because an employer may sustain its burden of proof for offset purposes
through expert actuarial opinion, and the WCJ here found the City’s offer of this
evidence credible, the City is entitled to an offset. City of Philadelphia v. Workers’
Compensation Appeal Board (Grevy), 968 A.2d 830, 839 (Pa. Cmwlth. 2009)
(explaining that, “[i]f the actuarial testimony is accepted as credible, it is legally
sufficient to establish the extent of an employer’s funding for offset/credit purposes”).
The order of the WCAB is affirmed.
________________________________
PATRICIA A. McCULLOUGH, Judge
12
IN THE COMMONWEALTH COURT OF PENNSYLVANIA
Robert Blythe, :
Petitioner :
: No. 437 C.D. 2020
v. :
:
Workers’ Compensation Appeal :
Board (City of Chester), :
Respondent :
ORDER
AND NOW, this 29th day of December, 2021, the April 10, 2020
opinion and order of the Workers’ Compensation Appeal Board is hereby
AFFIRMED.
________________________________
PATRICIA A. McCULLOUGH, Judge