Bruton v. Smithfield Foods, Inc.

Bruton v. Smithfield Foods, Inc., W.C.C.A. May 21, 2018, NO.WC17-6113

The Employee fell and dislocated his right shoulder on August 25, 2016.  Originally, primary liability was denied and the Employee received short term disability (STD) through a plan which was paid and administered by the Employer.  STD was paid at 80% of the Employee’s regular wages, and taxes were withheld from these payments.  On April 7, 2017, the Employer and Insurer belatedly admitted liability and began paying temporary total disability payments (TTD).  A payment was made to the Employee for the difference tax treatment between STD and TTD payments.

At hearing, the issue was whether the Employer and Insurer were entitled to an offset of TTD benefits for the STD benefits paid.  The issue went to the Compensation Judge on stipulated facts, with no witnesses providing testimony.  The Compensation Judge found that the Employer and Insurer were entitled to an offset of TTD benefits for STD benefits already paid.

The Employee appealed and the W.C.C.A. reversed the Compensation Judge holding that no offset was applicable based upon the facts on the record.  The W.C.C.A. specifically found that (1) STD payments were not wage continuation prescribed by the statute, as they were paid at 80% of the normal wage; (2) that although the parties and the Compensation Judge seemed to regard the STD plan and the Employer as synonymous, there was insufficient evidence establishing that the Employer and the STD plan were the same entity; (3) as the Employer and the STD plan were not the same entity, the STD plan was required to intervene; and (4) even if the STD plan intervened, the STD policy failed to provide a right to reimbursement in the case of improperly paid STD benefits.

Employers paying STD benefits should be prepared in court to have their plan either intervene or establish that the employer and the STD plan are the same entity and that the employer is entitled to reimbursement from the insurer.