Penalty for Workers Compensation Denial After Admitting Liability
In Gereyes v. Workers' Compensation Appeal Board, 793 A.2d 1017 (Pa. Cmwlth. 2002), petition for allowance of appeal denied, 572 Pa. 768, 819 A.2d 549 (2003) Gereyes received workers' compensation benefits pursuant to a temporary notice of compensation payable in connection with tendonitis in both wrists.
The temporary notice of compensation payable was dated May 4, 1999, but payments commenced as of April 11, 1999.
Gereyes returned to work with a wage loss sometime thereafter.
On June 28, 1999, New Knight, Inc. (New Knight), Gereyes's employer, issued its last compensation check under the notice.
On June 29, 1999, New Knight issued a notice stopping temporary compensation payable and a notice of compensation denial.
In the denial notice, New Knight stated that Gereyes was not disabled as a result of an injury within the meaning of the Act.
Gereyes petitioned for penalties and alleged that New Knight violated the Act by illegally reducing and then suspending the payment of benefits.
The WCJ granted the penalty petition on the basis that Employer issued the notice to stop temporary compensation more than five days after Gereyes's payments had been reduced and approximately one month after Gereyes stopped working.
The WCJ assessed a twenty percent penalty on all compensation payable to Gereyes after May 18, 1999. Gereyes and New Knight both appealed to the Board which reversed.
The Board concluded that the WCJ's relevant findings were not supported by substantial evidence and the WCJ misconstrued Section 406.1 of the Act, 77 P.S. 717.1. Gereyes, 793 A.2d at 1018-1019.
On appeal to this Court, Gereyes contended that New Knight unlawfully reduced his compensation in violation of the temporary notice of compensation procedures in Section 406.1 of the Act, 77 P.S. 717.1, that as a matter of law the notice of temporary compensation payable converted to a notice of compensation payable, and that New Knight improperly issued a compensation denial after it had effectively admitted liability when it proposed that he sign a supplementary agreement and voluntarily paid his partial disability benefits. Gereyes, 793 A.2d at 1019.
This Court determined that a penalty was appropriate for the reduction of Gereyes's benefits.
However, with respect to whether New Knight improperly issued the notice of compensation denial, this Court determined:
The record establishes the undisputed facts that the Employer New Knight paid Gereyes temporary compensation pursuant to a notice of temporary compensation payable from April 11, 1999 until June 29, 1999.
The Employer New Knight then decided to controvert the claim, and on June 29, 1999, it sent Gereyes a notice stopping temporary compensation within five days after the last payment and within the ninety-day period during which temporary compensation was payable in conformance with the requirements of subsection (d)(5) and (6) as quoted above.
Also on June 29, 1999, the Employer New Knight sent Gereyes a notice of compensation denial, stating the grounds upon which the claim was controverted in conformance with subsection (5) as quoted above.
Because the Employer New Knight complied with the requirements of subsection (d)(5) and (6), the judge's conclusions that the Employer New Knight failed to properly issue its notice of stopping temporary compensation and notice of compensation denial are in error.
In stopping temporary compensation and denying liability, the Employer New Knight complied with the statute, and the notice of temporary compensation payable was not converted to a notice of compensation payable. Gereyes, 793 A.2d at 1020-1021.