Commonwealth Court Holds Employer May Take Section 204 Offset Only After Receipt of LIBC-756

In Maxim Crane Works v. WCAB (Solano) the Claimant was injured on October 10, 2000 and was terminated by the Employer in December of 2000. In January of 2003, the Claimant applied for social security old age benefits. An agreement for compensation was entered into on April 4, 2003, and a supplemental agreement was entered into on September 12, 2003.

34 Pa. Code §123.501provides:
An insurer shall notify the employe of the employe's
reporting requirements under sections 204 and 311.1(a)
and (d) of the act (77 P.S. §§ 71 and 631.1(a) and (d)). In
addition, the insurer shall provide the employe with the
forms required to fulfill the employe's reporting and
verification requirements under section 311.1(d) of the act.

It was on June 6,2005 when the Employer first sent Form LIBC-756 to the Claimant. The Claimant reported his social security old age benefit. The Employer issued a Notice of Benefit Offset on August 3,2005 providing for a future credit and recoupment of a credit accrued during the past 14 months.

The Claimant challenged the recoupment of a past credit by filing a petition to review benefit offset. The WCJ denied recoupment prior to June 6,2005. The Board and Court affirmed.

The Court stated the Employer has no right to an offset until it complies with 34 Pa. Code §123.501. "While Claimant does owe a duty to report receipt of old age Social Security benefits, the regulations place the initial duty upon the employer or insurer to notify the employee of the reporting requirements and provide the employee with the proper forms." In addition, 34 Pa. Code §123.5(a) provides the Employer may take an offset only after receipt of LIBC-756

Employers are now limited to a section 204 credit only into the future and after receipt of LIBC-756, unless the Employer shows the Claimant provided inaccurate information on a prior LIBC-756. Taking an offset without receiving a LIBC-756 and/or taking recoupment of an accrued offset will subject the Employer to an assessment of penalties.