Subcontractor is employer directly liable to pay compensation and entitled to pension offset under §204(a), claimant voluntarily withdrew from workforce, entitled subcontractor to suspension of wage loss benefits.

This case involved multiple petitions, two separate decisions from a workers’ compensation judge, and appeals to the Workers’ Compensation Appeal Board and the Commonwealth Court. The claimant suffered a work injury to his left knee in 2010 while working as a union painter for M. Schnoll & Sons. The general contractor was Merion Construction. Schnoll issued a Notice of Compensation Payable (NCP), accepting liability for a torn meniscus, and the claimant began receiving total disability benefits. Later, the judge expanded the knee injury by granting the claimant’s review petition.
    
Schnoll then filed a modification petition, alleging the claimant had an earning power of $520.00 per week based on a Labor Market Survey (LMS). The claimant filed a review petition, seeking to expand the injury to the low back and groin. The judge granted the modification petition, and the claimant’s compensation was reduced to a partial rate. The judge also partially granted the claimant’s review petition, finding that he had a lumbar sprain and strain as a result of his altered gait from the left knee injury. Both Schnoll and the claimant appealed to the Board. The Board affirmed, but remanded to the judge to award costs limited to the claimant’s partially successful review petition.

Meanwhile, Schnoll filed another modification/suspension petition based on the claimant’s receipt of a union disability pension. The claimant contested the petition, maintaining that the employer directly liable for payment of compensation was not Schnoll but Merion, since they agreed to serve as the statutory employer. Schnoll also filed a modification petition, alleging an earning power of $1,346.00 per week based on an LMS, and a suspension petition, alleging the claimant voluntarily removed himself from the workforce based on prior deposition testimony he gave that he did not intend to return to work. The claimant filed a petition joining Merion and New Hampshire Insurance into the litigation. The judge issued a decision granting Schnoll’s petitions and finding that Schnoll was entitled to a pension offset, the claimant had an earning power of $1,346.00 per week, and the claimant voluntarily withdrew from the workforce as of January 9, 2018, (the date of claimant’s prior deposition), entitling Schnoll to a suspension of wage loss benefits. The claimant appealed to the Appeal Board, which affirmed, and the claimant then appealed to the Commonwealth Court. 

The claimant argued to the Commonwealth Court that Merion, not Schnoll, was the employer directly liable for payment of compensation; therefore, Schnoll was not entitled to an offset under Section 204(a) of the Act. The claimant further argued that the amount of the pension offset found by the judge was wrong. According to the claimant, he did not voluntarily remove himself from the workforce, noting he received Social Security Disability Benefits and a disability pension, and he was stranded into disability by his work injury. He further maintained he did not have an earning power as found by the judge because he was unable to perform the jobs listed in the LMS due to physical limitations and a past felony conviction. 

The Commonwealth Court dismissed the claimant’s appeal and affirmed the judge and the Board on all counts. According to the court, the record supported the conclusion that Schnoll, not Merion, was the employer directly liable for the payment of compensation due to Schnoll’s purchase of workers’ compensation insurance per the terms of the subcontract. The court further rejected the claimant’s argument that the pension contribution made by Schnoll of $54,860.99 was not accurate since he worked for two entities, Schnoll and Schnoll Painting, both of which contributed to his pension. The court affirmed the workers’ compensation judge’s finding as to the amount of the pension contribution made by Schnoll, and Schnoll was entitled to a pension offset. 

Concerning the voluntary withdrawal from the workforce issue, the court held the record supported the judge’s findings that there was a lack of medical evidence the claimant was totally disabled and that the claimant had a lack of effort in returning to work, despite having the ability to do so. Further, the record supported the judge’s finding that there was no evidence that returning to work would endanger the claimant’s union benefits, so long as he did not work for a business competing with the union. The court also said the record supported the judge’s finding that the claimant was capable of performing the jobs listed in the LMS and agreed with the judge that it appeared the claimant was sabotaging his job search by calling potential employers and telling them he was a “convicted felon,” with no indication the crimes were in the past and he has had a clean record. 

_{What’s Hot in Workers’ Comp, Vol. 28, No. 9, September 2024, is prepared by Marshall Dennehey to provide information on recent legal developments of interest to our readers. This publication is not intended to provide legal advice for a specific situation or to create an attorney-client relationship. We would be pleased to provide such legal assistance as you require on these and other subjects when called upon. ATTORNEY ADVERTISING pursuant to New York RPC 7.1 Copyright © 2024 Marshall Dennehey, all rights reserved. No part of this publication may be reprinted without the express written permission of our firm. For reprints or inquiries, or if you wish to be removed from this mailing list, contact tamontemuro@mdwcg.com.}