In Organ v. Pennsylvania State Police, 112 Pa.Cmwlth. 352, 535 A.2d 713 (1988), this Court held, as pointed out by the Board, that the portion of workers' compensation benefits paid directly to an attorney as a fee is not subject to recovery by the employer.Summary of this case from Philadelphia v. W.C.A.B
Argued November 16, 1987.
January 7, 1988.
Workers' compensation — Disability of state police officer — Heart and Lung Act, Act of June 28, 1935, P.L. 477 — Attorney fees — Reimbursement of Commonwealth.
1. Provisions of the Heart and Lung Act, Act of June 28, 1935, P.L. 477, which require a state police officer who is a beneficiary under that statute to pay over to the Commonwealth the workmen's compensation benefits received as a result of the same disability, do not require that the portion of the workmen's compensation benefits paid directly to the attorney for the beneficiary be paid over to the Commonwealth by the beneficiary as such an interpretation would frustrate the legislative purpose of providing full compensation to the officer. [355-6-7]
Argued November 16, 1987, before Judges CRAIG, COLINS, and Senior Judge BARBIERI, sitting as a panel of three.
Appeal, No. 476 C.D. 1986, from the Order of Office of Budget and Administration in case of Re: Payment of Attorney Fees/David J. Organ, dated January 23, 1986.
Commonwealth deducted from retirement and sick benefits an amount paid to attorney for workmen's compensation counsel fees. Claimant appealed deduction to Office of Budget and Administration. Deduction affirmed. Claimant appealed to the Commonwealth Court of Pennsylvania. Held: Reversed. Reimbursement ordered plus interest.
Anthony C. Busillo, II, Mancke, Lightman Wagner, for petitioner.
Robert J. Schwartz, Assistant Counsel, for respondent.
David J. Organ, a recipient of benefits under both the Heart and Lung Act and the Workmen's Compensation Act, appeals a determination of the Office of Budget and Administration deducting from his salary the amount of the workmen's compensation award paid directly to his attorney.
Section 1 of the Act of June 28, 1935, P.L. 477, as amended, 53 P. S. § 637.
Act of June 2, 1915, P.L. 736, as amended, 77 P. S. § 1-1603.
The undisputed facts are established by documentary evidence in the record. Mr. Organ suffered a heart attack while employed as a state trooper, which resulted in his receiving benefits under the Heart and Lung Act. Mr. Organ also applied for and received workmen's compensation benefits. Twenty percent of the award went directly to Mr. Organ's attorney, and the balance of the award went to the state police as required by the Heart and Lung Act. Mr. Organ later retired from the state police. Upon receipt of a retirement and sick leave payment, he discovered that the Commonwealth had deducted from that money the amount of the workmen's compensation award which had been paid directly to his attorney.
In the briefs and argument, counsel for Mr. Organ offered no explanation of why Mr. Organ pursued the workmen's compensation claim, and the Commonwealth has offered no objection or criticism with respect to that course of action.
Under the Heart and Lung Act, sick leave benefits are treated as a fixed component of salary and remain unaffected during the period of disability. Tyson v. Workmen's Compensation Appeal Board, 67 Pa. Commw. 213, 446 A.2d 733 (1982).
After Mr. Organ protested this deduction, the Office of Budget and Administration ruled that the Heart and Lung Act requires that money paid directly to an attorney from the workmen's compensation award be credited to the Commonwealth as if paid by the state to the employee.
The issue is whether the portion of the workmen's compensation benefits paid directly to the attorney was constructively received by Mr. Organ and was therefore subject to recovery by the Commonwealth under the Heart and Lung Act.
Because the rules of statutory construction require a literal reading of the statute and because Mr. Organ never actually received the portion of the workmen's compensation benefits paid directly to his attorney, nor any benefit therefrom greater than what the state received, that portion is not subject to recovery by the Commonwealth. Therefore, we reverse.
The Heart and Lung Act provides as follows:
(a) Any member of the State Police Force . . . who is injured in the performance of his duties . . . and by reason thereof is temporarily incapacitated from performing his duties, shall be paid by the Commonwealth of Pennsylvania. . . . During the time salary for temporary incapacity shall be paid by the Commonwealth of Pennsylvania . . . any workmen's compensation, received or collected by any such employee for such period, shall be turned over to the Commonwealth of Pennsylvania . . . and paid into the treasury thereof, and if such payment shall not be made by the employe the amount so due the Commonwealth of Pennsylvania shall be deducted from any salary then or thereafter becoming due and owing.
53 P. S. § 637 (emphasis added).
The Commonwealth would apply the statute here as if the attorney's fee portion of the workmen's compensation award had been paid solely to and for the benefit of the claimant.
A literal reading of the statute does not support the Commonwealth's position. The statute states that any money from workmen's compensation received or collected by a beneficiary under the Heart and Lung Act must be turned over to the Commonwealth. Mr. Organ never received or collected the portion of the workmen's compensation award paid directly to his attorney.
The Statutory Construction Act requires that all provisions of a statute enacted "prior to September 1, 1937 which are in derogation of the common law" be strictly construed. 1 Pa. C. S. § 1928(b)(8). The Heart and Lung Act, enacted in June of 1935, is in derogation of the common law in that it provides that employers can be liable without fault. Therefore, the Statutory Construction Act requires that the language of the Heart and Lung Act be strictly construed.
To accept the Commonwealth's argument, we would have to find Mr. Organ to be in constructive receipt of the payment made to the attorney. The concept of constructive receipt exists to prevent injustice.
In Huckel v. Unemployment Compensation Board of Review, 68 Pa. Commw. 193, 448 A.2d 700 (1982), Mr. Huckel misrepresented the reason for his unemployment when he applied for unemployment benefits. While waiting for the receipt of unemployment benefits, he applied for and received welfare benefits. When Huckel began to receive his unemployment benefits, the Office of Employment Security (OES) sent the first five checks to the Department of Public Welfare as reimbursement. OES later determined that Huckel was liable for a fault overpayment because of his misrepresentation. When Huckel again became unemployed, the OES withheld the amount of the fault overpayment made during his earlier receipt of unemployment benefits. Huckel argued that he had never received the overpayments because they had been sent to the Department of Public Welfare and therefore he should not be liable because the overpayment had simply gone from one branch of the government to another. The Huckel court rejected this argument and held that Huckel was in constructive receipt of the payments and therefore liable for the fault overpayments.
Thus, in the Huckel case, this court applied the principle of constructive receipt to ensure that Mr. Huckel would not benefit unjustly from his misrepresentation to the OES. Unlike the Huckel case, the application of constructive receipt in this case would not correct an injustice but would create one.
Although a Heart and Lung Act beneficiary is not required to recover workmen's compensation, if the employee recovers workmen's compensation benefits, he must relinquish them to the employer. Therefore, proceeds which a Heart and Lung Act beneficiary receives from workmen's compensation may inure to the benefit of the employer, at least if insurance is involved, as is the case with respect to many municipal employers of Heart and Lung Act beneficiaries. To make Mr. Organ also responsible for the 20% of the workmen's compensation award paid directly to the attorney would penalize pursuance of a process which tends to benefit employers.
In this case the Commonwealth, through the state police, apparently bears the cost of the workmen's compensation payments as well as the Heart and Lung Act payments. Thus, the Commonwealth argues that it did not receive any benefit from Mr. Organ's recovery of workmen's compensation payments. However, because insurance may be involved in many instances as noted above, that argument does not meet the broader implications.
Moreover, the purpose of the Heart and Lung Act is to provide important public safety personnel with full compensation while disabled from work related injuries. Official Attorney General Opinion, 79-4. In this case, the determination of the Department of Budget and Administration obviously would defeat the legislative purpose of providing full compensation.
Accordingly we reverse the determination of the Office of Budget and Administration.
NOW, January 7, 1988, the determination of the Office of Budget and Administration dated January 23, 1986 is reversed. The Commonwealth is ordered to pay Mr. Organ $2,888.46 plus interest.