Employers are Entitled to an Offset of Pennsylvania Workers’ Compensation Benefits when Claimants, who have been Receiving Social Security Disability Benefits, Reach their Full Retirement Age

BY: Anthony P. Salvino and Sandra L. Niemotka 

The Pennsylvania Workers’ Compensation Act (“Act”) was amended in 1996 to allow an employer to take an offset with respect to workers’ compensation indemnity benefits vis-à-vis the receipt of Social Security retirement benefits. However, the Act did not allow the offset to be taken if the individual was receiving Social Security disability benefits simultaneously with the receipt of workers’ compensation benefits. The Commonwealth Court of Pennsylvania, in a case dated January 14, 2008, has now provided an opportunity for employers and their insurance carriers to begin to take a credit against workers’ compensation benefits when a claimant who is receiving Social Security disability benefits (for which there is no credit), reaches his retirement age. The name of the case is Ropoch v. WCAB (Cmwlth. of Pennsylvania\DPW), No. 1638 C.D. 2007 (January 14, 2008).

In that case, Francis Ropoch, the claimant, sustained a work-related injury to his back on July 3, 1997, while in the course and scope of his employment with the Commonwealth of Pennsylvania. The claimant began receiving temporary total disability benefits as a result. Subsequently, the workers’ compensation carrier filed a Notice of Workers’ Compensation Benefit Offset as a result of the claimant’s receipt of Social Security benefits on April 3, 2006. On that date, the claimant’s Social Security disability benefits were converted to Social Security retirement age benefits pursuant to operation of law as contained in the United States Code dealing with those benefits.¹ The claimant filed a Petition to Review Compensation Benefits Offset alleging that the employer was inappropriately taking an offset of his Social Security disability benefits. The Workers’ Compensation Judge denied the Petition to Review, noting that once the claimant achieved his full retirement age (in this instance 65½ years old), the Social Security disability benefits automatically converted to retirement benefits and the employer was entitled to a credit. The Workers’ Compensation Appeal Board and the Commonwealth Court affirmed, stating the language in the Act was clear, unambiguous and mandatory.

It is now clear from the Court’s decision that all employers in Pennsylvania and their insurance carriers should review their files to determine if an injured worker who has previously received Social Security disability benefits has reached his full retirement age. If such is the case, the workers’ compensation carrier should file a Notice of Offset, LIBC-761. Moreover, the anticipated offset should always be a consideration in estimating future liability for Workers’ Compensation disability benefits for claims that may be payable after the injured worker reaches retirement age. A second look at this future liability can have a positive impact on settlement negotiations and in setting indemnity reserves.

¹42 USC § 423 (a)(1)(B) and 42 USC §416 (i)(2)(d) indicate that Social Security Disability benefits convert to Social Security Retirement benefits when the person attains his full retirement age. The age is determined by the individual’s date of birth. At the time of the Court’s decision, the table, which can be found at www.socialsecurity.gov, provided the following full retirement ages:

About the Authors: Anthony P. Salvino (610-782-4949 or salvinoa@whiteandwilliams.com) and Sandra L. Niemotka (215-864-6338 or niemotkas@whiteandwilliams.com) are both partners in the Workers' Compensation Group at White and Williams LLP.