IN THE COMMONWEALTH COURT OF PENNSYLVANIA 

edical Revenue Associates, 
Petitioner 

 
 
 
 
Sue Ellen Kanefsky (Workers’ 
Compensation Appeal Board), 
Respondent 
 

 
v. 
 

 

 

 

  

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: 
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: 
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:  No. 1410 C.D. 2021 
:  Submitted:  September 30, 2022 

  

 
 
 
 
 
 

EFORE:  HONORABLE MICHAEL H. WOJCIK, Judge 

HONORABLE CHRISTINE FIZZANO CANNON, Judge 
HONORABLE STACY WALLACE, Judge 
 

PINION NOT REPORTED 

EMORANDUM OPINION  
BY JUDGE FIZZANO CANNON 

 

 

FILED:  March 22, 2023 

Medical  Revenue  Associates  (Employer)  petitions  for  review  of  the 

November 17, 2021, decision of the Workers’ Compensation Appeal Board (Board).  

The  Board  affirmed  (as  amended)  the  May  20,  2021,  decision  of  the  Workers’ 

Compensation  Judge  (WCJ),  who  granted  a  penalty  petition  filed  by  Sue  Ellen 

Kanefsky (Claimant).  Upon review, we affirm. 

I.  Procedural & Factual Background 

The  underlying  facts  are  not  in  dispute.    Claimant,  a  medical  biller, 

sustained a disabling work-related injury when she fell on black ice in Employer’s 

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parking lot on January 9, 2015.1  Reproduced Record (R.R.) at 5a.  She filed a claim 

petition in 2017, which Employer contested.  Id. at 6a.  A WCJ granted her claim 

petition in a January 16, 2019, decision  (WCJ I) that awarded ongoing temporary 

total benefits of $475.50 per week as of January 19, 2015.  R.R. at 108a.  The WCJ 

also granted Claimant’s penalty petition based on Employer’s failure to timely file 

responsive documents with the Bureau of Workers’ Compensation (Bureau) when it 

had actual notice that Claimant had been injured.2  Id. at 29a & 108a.   The WCJ 

awarded Claimant 50% over and above her compensation benefits through the date 

of decision.  Id. at 108a.  Employer did not appeal WCJ I.  Id. at 43a & 95a. 

 

Shortly thereafter, on January 22, 2019, Employer’s insurer drafted a 

third-party  settlement  agreement  relating  to  Claimant’s  $650,000  resolution  of  a 

third-party claim arising from the January 2015 incident.3  R.R. at 2a & 101a.  The 

agreement,  which  was  never  finalized  because  Claimant  did  not  sign  it,  did  not 

include an accrued lien amount based on wage benefit payments already made by 

1 When Claimant slipped and fell, she sustained severe fractures to her right thigh, knee, 

foot and ankle.  Reproduced Record (R.R.) at 5a.   

 

 When the incident occurred, Claimant’s supervisor came out to the accident scene and 
Claimant  was  taken  to  the  hospital  in  an  ambulance.    R.R.  at  5a.    Pursuant  to  the  Workers’ 
Compensation Act (Act), Act of June 2, 1915, P.L. 736, as amended, 77 P.S. §§ 1-1041.4, 2501-
2710, once an employer is on notice of an injury, the employer must file a Notice of Compensation 
Payable, Notice of Temporary Compensation Payable, or Notice of Compensation Denial within 
21 days or be subject to a penalty.  Brutico v. Workers’ Comp. Appeal Bd. (US Airways, Inc.), 866 
A.2d 1152, 1155 (Pa. Cmwlth. 2004) (citing Section 406.1(a) of the Act, 77 P.S. § 717.1(a), added 
by the Act of February 8, 1972, P.L. 25). 

 The third-party settlement agreement is a boilerplate form supplied by the Bureau; when 
signed by both employer and claimant, it memorializes the employer’s subrogation rights vis-à-
vis  the  claimant’s  third-party  recovery.    Whitmoyer  v.  Workers’  Comp.  Appeal  Bd.  (Mountain 
Country Meats), 186 A.3d 947, 956-58 (Pa. 2018).  The form includes a formula to calculate the 
employer’s share of the litigation expenses for the third-party recovery as well as a “grace period” 
during  which  the  employer  may  reduce  or  abstain  from  benefits  payments  in  order  to  recoup 
amounts it paid the claimant prior to the third-party settlement.  Id. at 956-57. 

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Employer.  Id. at 2a.  The agreement indicated that after deduction of attorneys’ fees 

and  litigation  expenses  from  the  third-party  recovery,  $370,988.66  would  remain 

against which Employer could secure a subrogation interest.  Id. at 2a.  Employer’s 

calculations  indicated  that  it  would  be  responsible  for  42%  of  Claimant’s  future 

benefits  until  its  subrogation  lien,  the  amount  of  which  was  unspecified  in  the 

document, was fully recovered.  Id. 

The  parties  agreed  that  Employer  could  refrain  from  payment  of 

benefits based on WCJ I until after a voluntary mediation concluded.  R.R. at 43a.  

The mediation in early March 2019 was not successful.  Id.  Claimant, in the apparent 

belief that the previous agreement allowing Employer to avoid payment pending the 

mediation had elapsed, immediately filed a second penalty petition (Claimant’s first 

asserting  nonpayment)  on  March  8,  2019,  alleging  that  Employer  failed  to  pay 

benefits in accordance with WCJ I.  Id. at 34a & 108a.   

A  payment  log  in  evidence  indicates  that  in  April  2019,  Employer 

began making payments to Claimant but unilaterally deducted amounts representing 

its  subrogation  interest.    Certified  Record  (C.R.)  at  175.4    On  April  15,  2019, 

Employer  filed  petitions  formally  asserting  its  subrogation  interest  without 

indicating a specific amount that it had expended or sought to recover.  R.R. at 37a 

& 108a.   

On  May  15,  2019,  the  WCJ  issued  an  interlocutory  order  (WCJ  II) 

stating that as of that date, Employer had not paid Claimant all of the benefits due in 

accordance with WCJ I.  R.R. at 46a.  The WCJ directed Employer to pay Claimant’s 

due and outstanding benefits, but deferred payment of the penalty outstanding from 

WCJ I until the pending petitions were resolved.  Id.  The WCJ acknowledged that 

 

 

 

4 Page references in the Certified Record (C.R.) are to electronic pagination. 

 

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Employer had filed petitions asserting a subrogation interest, but did not expressly 

authorize  Employer  to  deduct  any  amounts  for  subrogation  from  Claimant’s 

disability payments.  Id. at 45a-47a. 

 

 

On  June  20,  2019,  during  the  litigation  of  Claimant’s  first  penalty 

petition for nonpayment and Employer’s subrogation petitions, Claimant filed a third 

penalty petition (her second asserting nonpayment) alleging that Employer still had 

not paid Claimant all of the past benefits due and had wrongly reduced Claimant’s 

ongoing  benefits  unilaterally.    R.R.  at  48a.    Claimant  asserted  that  Employer 

therefore failed to comply with WCJ II and was subject to additional penalties.  Id.   

In  the  consolidated  litigation  on  Claimant’s  first  and  second  penalty 

petitions for nonpayment and Employer’s subrogation petitions, Employer’s adjuster 

testified that the total amount due to Claimant based on WCJ I was about $188,000, 

with $153,000 due to Claimant in wage benefits and $35,000 in attorney’s fees to 

her counsel.5  R.R. at 62a.  He noted that in early April 2019, a month after Claimant 

filed her  first  penalty petition for nonpayment,  Insurer  issued its  first payment to 

Claimant, a lump sum of $71,653.68 for wage loss benefits through April 2, 2019.  

R.R. at 61a.  To reflect its subrogation interest, Employer unilaterally reduced that 

payment as well as ongoing weekly payments  to Claimant even though Claimant 

had never signed the third-party settlement agreement.6  Id.  The adjuster admitted 

5 This summary of the adjuster’s testimony is adapted from the WCJ’s subsequent decision 
on  Claimant’s  first  and  second  penalty  petitions  for  nonpayment  and  Employer’s  subrogation 
petitions (WCJ III).  The original transcript of the adjuster’s testimony is not in the record of this 
matter, which is limited to the penalty petition at issue in this appeal. 

 Claimant’s exhibit in support of her subsequent November 2020 penalty petition, which 
the WCJ relied on in the matter underlying this appeal, reflected that after deduction of attorney’s 
fees from her weekly benefit rate of $475.50, she should have received $380.40 per week.  C.R. at 
87-88.  However, after Employer’s unilateral deductions for its subrogation interest, it usually paid 
her only $163.28 per week.  Id.  Employer made these reduced payments through September 2020, 
when it began paying $380.40 per week.  Id. at 88. 

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he took the agreement at face value and did not seek to have Claimant sign it; he also 

did  not  secure  the  third-party  settlement  distribution  documents  from  Claimant’s 

counsel in order to confirm his calculations.  Id. at 62a.   

 

On  July  1,  2020,  the  WCJ  issued  a  decision  (WCJ  III)  resolving 

Employer’s subrogation petitions and Claimant’s first and second penalty petitions 

for  nonpayment.    R.R.  at  56a-66a.    WCJ  III  noted  that  the  third-party  settlement 

agreement drafted by Employer, which indicated the amount of Claimant’s recovery 

against  which  Employer  could  subrogate,  had  not  been  signed  by  Claimant  or 

finalized.    Id.  at  60a.      WCJ  III  also  concluded  that  Employer had  not  fully  paid 

Claimant’s  disability  benefits  pursuant  to  WCJ  I;  therefore,  Employer  had  not 

“perfected” its subrogation interest in Claimant’s third-party recovery, even though 

it had been unilaterally deducting  subrogation amounts from her weekly benefits.  

Id. at 63a & 109a.  Consequently, WCJ III denied Employer’s subrogation petitions, 

ordered Employer to pay past due benefits as ordered in WCJ I as well as ongoing 

benefits,  both  without  a  subrogation  deduction,  and  granted  Claimant’s  first  and 

second  penalty  petitions  for  nonpayment  (imposing  further  50%  penalties  on  all 

outstanding amounts owed).  Id. at 66a & 109a.   

 

Employer appealed WCJ III to the Board and requested supersedeas of 

all payments ordered by the WCJ, including penalties and all back due and ongoing 

disability benefits.  R.R. at 83a-84a.  The Board issued a supersedeas order in August 

2020  stating  that  Employer  could  defer  payment  of  any  outstanding  penalties7 

pending the Board’s merits decision, but denying Employer’s request “in all other 

respects.”    Id.  at  89a.    Employer  began  paying  Claimant’s  benefits  without 

 

7  The  order  did  not  specify  whether  this  pertained  only  to  Claimant’s  first  and  second 
penalty  petitions  for  nonpayment,  which  were  granted  in  WCJ  III,  or  included  the  still  unpaid 
penalty from WCJ I concerning Employer’s failure to timely issue Bureau documents. 

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subrogation  deductions  in  September  2020,  but  did  not  pay  Claimant  any  of  the 

amounts  it  previously  deducted,  despite  having  been  ordered  to  pay  Claimant 

without  deductions  in  WCJ  I  (before  it  asserted  subrogation  rights)  and  WCJ  II 

(while its subrogation petitions were pending), and WCJ III, which it was appealing.  

See C.R. at 172. 

While  Employer’s appeal of  WCJ III  was pending before the Board, 

Claimant  filed  another  penalty  petition  on  November  5,  2020,  her  third  for 

nonpayment and the basis of this appeal.  Claimant asserted that Employer had still 

failed  to  pay  the  full  amount  of  benefits  owed  as  directed  by  the  WCJ’s  prior 

decisions and the Board’s August 2020 supersedeas order.8  R.R. at 103a & 229a.   

Employer argued that Claimant’s November 2020 penalty petition was 

 

 

precluded because there was no “new” misconduct alleged against Employer since 

the alleged payment defects arising in 2019 that gave rise to WCJ III, and because 

WCJ III was still pending on appeal with the Board.9  R.R. at 110a-11a.  The WCJ 

rejected this argument in a May 20, 2021, decision (WCJ IV), which underlies this 

appeal.  WCJ IV concluded that Claimant had successfully asserted new misconduct, 

specifically  that  Employer  failed  to  comply  with  the  Board’s  August  2020 

supersedeas  order  directing  it  to  pay  Claimant  any  due  and  owing  outstanding 

disability benefits pending  the merits outcome of the appeal  of  WCJ  III.  R.R. at 

111a.  WCJ IV interpreted the Board’s supersedeas order as allowing Employer to 

8 By this time the original WCJ had retired and a new WCJ was assigned to the case.  R.R. 

 

 Employer cited Grasha v. Workmen’s Compensation Appeal Board (School District of 
Pittsburgh),  413  A.2d  771  (Pa.  Cmwlth.  1980)  and  Gienec  v.  Workers’  Compensation  Appeal 
Board (Palmerton Hospital), 130 A.3d 154 (Pa. Cmwlth. 2015), which WCJ IV noted “stand for 
the propositions that a party cannot relitigate an issue when the same issue is pending on appeal 
and that a petition is premature if it is dependent on the outcome on appeal of the initial claim.”  
R.R. at 110a. 

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at 113a. 

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withhold  payment  of  the  previously  ordered  penalties  but  in  all  other  respects 

upholding the status quo, which pursuant to WCJ I, WCJ II, and WCJ III required 

Employer to pay Claimant all due benefits going back to WCJ I.  Id. at 109a.  The 

WCJ  accepted  Claimant’s  calculations  that  Employer  still  owed  $57,775.32  in 

outstanding disability benefits pursuant to and since WCJ I.10  Id. at 110a.  In light 

of Employer’s failure to comply with the Board’s August 2020 supersedeas order 

directing Employer to pay those sums, WCJ IV imposed another 50% penalty against 

Employer.  Id. at 111a-112a. 

 

On  June 3,  2021,  just  after  WCJ  IV  was  issued,  the  Board  issued its 

merits decision (Board I) on Employer’s appeal of WCJ III.  R.R. at 95a & 109a.  

The Board first addressed WCJ III’s determination that Employer failed to secure its 

subrogation interest.  Id. at 99a.  The Board stated that Claimant settled her third-

party claim in August 2018 and that all parties were aware of that settlement when 

WCJ I was issued, even though that decision did not address Employer’s subrogation 

rights.11  Id. at 101a.  The Board concluded that because an employer’s subrogation 

rights are both automatic and absolute, once Claimant settled her third-party case, 

Employer’s  interest  vested;  therefore,  the  WCJ  had  no  basis  in  WCJ  III  to  deny 

10  WCJ  IV  calculated  that  the  gross  amount  due  to  Claimant  was  $69,454.30;  after 
subtracting  Claimant’s  counsel’s  fees  of  $11,678.98  on  that  amount,  the  net  amount  due  to 
Claimant was $57,775.32.  R.R. at 110a. 

1 Generally, an employer must assert its potential right to subrogation during the original 
claim petition litigation even if it contests the petition; failure to do so may result in waiver of the 
right.    Boeing  Helicopters  v.  Workers’  Comp.  Appeal  Bd.  (Cobb),  713  A.2d  1181,  1186  (Pa. 
Cmwlth. 1998).  Board I indicated that Claimant’s third-party matter settled on August 3, 2018.  
R.R.  at  101a.    The  record  for  the  underlying  claim  litigation  was  still  open  at  that  time,  since 
Employer’s doctor did not give his deposition until September 26, 2018.  Id. at 4a.  It is unclear 
why Employer did not raise its potential right to subrogation during the initial claim litigation that 
led to WCJ I.  However, as Claimant did not argue waiver in response to Employer’s April 2019 
petition asserting subrogation rights and WCJ III did not find waiver sua sponte, we assume that 
Employer preserved its right to subrogation in this matter. 

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Employer’s petitions asserting those rights.  Id.  The Board therefore reversed WCJ 

III in that respect and remanded to the WCJ to determine the amount of Employer’s 

subrogation lien.  Id. at 102a.   

Board I also vacated WCJ III’s award of penalties.  R.R. at 102a.  The 

Board  noted  that  its  decision  upholding  Employer’s  subrogation  interest  would 

impact all benefit amounts due to Claimant as far back as WCJ I.  Id. at 101a.  The 

WCJ  was  therefore  directed  on  remand  to  recalculate  those  amounts,  including 

disability benefits, and any outstanding penalties and attorneys’ fees.  Id. 

On  November  17,  2021,  the  Board  issued  its  decision  (Board  II) 

resolving  Employer’s  appeal  of  WCJ  IV  concerning  Claimant’s  November  2020 

penalty petition.  The Board affirmed, agreeing with WCJ IV that Employer failed 

to comply with the Board’s August 2020 supersedeas order.  R.R. at 231.  However, 

the  Board  acknowledged  its  prior  decision  in  Board  I  upholding  Employer’s 

subrogation interest.  Id. at 203a.  The Board therefore amended the WCJ IV order 

to reflect that the penalty would not be based on the calculations in WCJ IV, which 

did not account for Employer’s subrogation interest.  Id.  Instead, the penalty amount 

would be based on the remand ordered in Board I, which directed the WCJ to finalize 

Employer’s subrogation interest and recalculate the benefits still due to Claimant.  

Id.   

Employer has appealed Board II to this Court. 

Employer  argues  that  Claimant’s  November  2020  penalty  petition 

(alleging that Employer failed to comply with the Board’s supersedeas order in the 

appeal  of  WCJ  III)  should  have  been  dismissed  as  precluded  because  it  raised 

 

 

 

 

 

II.  Issues 

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identical issues to those still pending at that time on appeal with the Board in WCJ 

III,  specifically  whether  Employer  should  have  been  subject  to  a  penalty  for  its 

reduction  of  payments  in  anticipation  of  subrogation.    Employer’s  Br.  at  13-17.  

Employer  maintains  that  because  Board  I  ultimately  validated  its  subrogation 

interest and vacated the penalties in WCJ III for Employer’s unilateral subrogation 

deductions  from  Claimant’s  disability  benefits,  there  was  no  basis  to  support  the  

imposition in WCJ IV of a penalty for Employer’s failure to comply with the Board’s 

August 2020 supersedeas order.   Id. at 17.  Employer adds that because it began 

making  payments  without  deductions  in  September  2020,  there  was  no  “new” 

misconduct to support Claimant’s November 2020 penalty petition.  Id. at 18. 

Claimant  responds  that  her  November  2020  penalty  petition  was 

correctly granted because Employer continued to reduce her benefits even after it 

had been ordered not to do so in WCJ II and WCJ III.  Claimant’s Br. at 3.  Claimant 

adds that even though Employer ultimately prevailed on the merits of its subrogation 

interest in Board I, the penalty in WCJ IV was valid because Employer violated the 

Board’s August 2020 supersedeas order in the appeal of WCJ III, which had directed 

it to pay Claimant’s past due disability benefits without deductions.  Id. at 5. 

Both  sides  argue  this  appeal  on  the  basis  of  general  precedent 

concerning penalties and the inability of a party to petition the WCJ anew when the 

same  issue  is  pending  on  appeal  in  a  previous  litigation  phase.    However,  that 

question is intertwined with the underlying issue of whether an employer that asserts 

a subrogation interest in a claimant’s third-party recovery may unilaterally reduce 

the claimant’s disability benefits without subjecting itself to a penalty.   

 

 

 

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III.  Discussion 

 

Section 435(d)(i) of Pennsylvania’s Workers’ Compensation Act (Act),12 

77 P.S. § 991(d)(i), provides that an employer may be penalized up to 50% of the 

awarded amount for its failure to comply with the Act or its supporting regulations 

in  cases  of  unreasonable  or  excessive  delays.    City  of  Phila.  v.  Workers’  Comp. 

Appeal Bd. (Andrews), 948 A.2d 221, 228 (Pa. Cmwlth. 2008).  A claimant who files 

a  penalty  petition  must  first  meet  an  initial  burden  to  prove  with  evidence  that  a 

violation of the Act occurred.  Id.  Thereafter, the burden shifts to the employer to 

prove that it did not violate the Act.  Id.  The decision to impose a penalty, as well 

as  the  amount  of  such  a  penalty,  is  within  the  WCJ’s  discretion  and  will  not  be 

disturbed on appeal absent an abuse of  that discretion.  Id.  However, within this 

context, “not every violation of the Act requires, as a matter of law, the automatic 

imposition of a penalty.”  Kurpiewski v. Workers’ Comp. Appeal Bd. (Caretti, Inc.), 

202 A.3d 870, 889 (Pa. Cmwlth. 2019). 

 

Generally, Section 430 of the Act requires that an employer must pay 

benefits as awarded unless there is an order from the WCJ or Board or an agreement 

between the parties that relieves the employer of its obligation.  77 P.S. § 971(b); 

City of Phila., 948 A.2d at 228.  An employer’s unilateral cessation or failure to pay 

a claimant’s benefits therefore triggers the penalty provisions of the Act.  Id. at 229.  

Where the employer appeals a WCJ’s award of benefits, the mere filing of the appeal 

does not stay the employer’s obligation to pay in the absence of a supersedeas order 

12 Act of June 2, 1915, P.L. 736, as amended, 77 P.S. §§ 1-1041.4, 2501-2710.  Section 

435(d)(1) was added by Section 3 of the Act of February 8, 1972, P.L. 25. 

 

 

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suspending that obligation during the pendency of the appeal.13  Thomas v. Workers’ 

Comp.  Appeal  Bd.  (Delaware  Cnty.),  746  A.2d  1202,  1205  (Pa.  Cmwlth.  2000).  

When  the  Board  denies  a  supersedeas  request  “in  all  material  respects,”  the 

employer’s obligation to pay benefits remains “constant and unchanging.”  Gardner 

v. Workers’ Comp. Appeal Bd. (Genesis Health Ventures), 888 A.2d 758, 763 n.6 

(Pa. 2005). 

 

 

An  employer’s  subrogation  right  is,  by  law,  absolute  and  automatic.  

Fortwangler v. Workers’ Comp. Appeal Bd. (Quest Diagnostics), 113 A.3d 28, 33 

(Pa. Cmwlth. 2013).  Nevertheless, there is no exception for subrogation in our law 

requiring employers to pay benefits in the absence of an agreement or order (such as 

in the supersedeas context) allowing them to evade that obligation.  City of Phila., 

948 A.2d at 228.  As such, an employer generally may not engage in “self-help” to 

reduce or withhold benefits payments.  City of Phila., 948 A.2d at 228.  Whether 

noncompliance in this regard warrants a penalty, however, is less straightforward.  

In DeVore v. Workmen’s Compensation Appeal Board (Sun Oil Co.), 

645  A.2d  917  (Pa.  Cmwlth.  1994),  the  employer  filed  a  petition  asserting 

subrogation rights against the claimant’s third-party recovery, and during litigation 

of that petition, it unilaterally reduced the claimant’s disability payments.  Id. at 918.  

The  WCJ,  then known  as  a  referee,  granted the  employer’s petition,  calculated  a 

reduced payment in accordance with the employer’s subrogation interest, and denied 

the claimant’s penalty  petition; the Board affirmed.   Id.    This Court  affirmed the 

 

13 To the extent that an employer is ultimately found to have overpaid benefits, recovery is 
available  from  the  Supersedeas  Fund.    H.A.  Harper  Sons,  Inc.  v.  Workers’  Comp.  Appeal  Bd. 
(Sweigart), 84 A.3d 363, 366 (Pa. Cmwlth. 2014) (explaining that the General Assembly created 
the Fund for the purpose of “reimbursing, under prescribed circumstances, an employer who has 
been ordered to pay workers’ compensation benefits that are later determined not to be owed. . . .  
The  Fund  injects  fairness  into  a  system  that  requires  an  employer  to  pay  a  disputed  award  of 
benefits after the award is appealed.”). 

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Board,  concluding  that  because  the  WCJ  ultimately  ordered  the  employer  to  pay 

reduced benefits at the same rate the employer had been paying them unilaterally, 

the WCJ did not abuse his discretion in declining to impose a penalty.  Id. at 920. 

 

In P. & R. Welding & Fabricating v. Workmen’s Compensation Appeal 

Board  (Pergola),  664  A.2d  657  (Pa.  Cmwlth.  1995),  the  employer  claimed  an 

accrued lien for past benefits and medical expenses paid prior to the claimant’s third-

party  settlement.    Id.  at  659.    The  parties  settled  that  lien.    Id.    Thereafter,  the 

employer unilaterally reduced the claimant’s ongoing disability payments.  Id.  The 

WCJ imposed a penalty on employer, which the Board affirmed.  Id. at 660.  Relying 

on DeVore, this Court reversed the penalty.  Id. at 663-64.  Although the employer 

had acted improperly, we concluded that based on the calculations and taking the 

employer’s  deductions  into  account,  the  employer  had  actually  overpaid  the 

claimant.  Id. at 664.  Given those facts, we concluded that  “the WCJ abused his 

discretion in imposing a penalty for a violation of the Act when  [the employer’s] 

payment schedule substantially complies with the Act.”  Id. 

 

In  Griffis  v.  Workers’  Compensation  Appeal  Board  (Albert  Einstein 

Healthcare Network) (Pa. Cmwlth., No. 280 C.D. 2019, filed July 15, 2020), 2020 

WL  3989478  (unreported),  the  employer  unilaterally  suspended  the  claimant’s 

benefits in order to recoup its subrogation lien.  Id., slip op. at 34, 2020 WL 3989478, 

at *15.  Relying on DeVore and P. & R. Welding, we upheld the WCJ’s denial of the 

claimant’s penalty petition.  Id.  Even though the employer had technically violated 

the  Act,  a  penalty  was  not  warranted  because  the  WCJ  ultimately  suspended  the 

claimant’s benefits on the same basis as that on which the employer had withheld 

them.  Id.   

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In  Boeing  Helicopters  v.  Workers’  Compensation  Appeal  Board 

(Cobb), 713 A.2d 1181 (Pa. Cmwlth. 1998), the WCJ imposed a penalty against the 

employer  for  unilaterally  deducting  subrogation  amounts  from  the  claimant’s 

disability  benefits  without  ever  formally  asserting  subrogation  rights  before  the 

WCJ;  the  Board  affirmed.    Id.  at  1183.    This  Court  affirmed,  concluding  that 

although  the  claimant  had  signed  an  agreement  commemorating  the  employer’s 

subrogation rights, the agreement did not include the specific amount the employer 

was claiming or any terms concerning how the amount was to be recouped.  Id. at 

1186.  Moreover, the agreement itself was not filed with the WCJ and the proper 

amount and terms that would arise from the agreement were never established by 

the WCJ even if the amount withheld by the employer may  ultimately have been 

correct.  Id.  This Court, in a 5-2 en banc decision, without recourse to DeVore or its 

progeny,  upheld  the  WCJ’s  penalty  as  valid.    The  employer  may  have  correctly 

calculated  the  amount  at  issue,  but  its  unilateral  withholding  of  payments  in  the 

absence of an assertion (much less approval) of its subrogation rights before the WCJ 

violated the Act.  Id. 

 

As the above cases reflect, an employer’s decision to unilaterally reduce 

a  claimant’s  benefit  payments  in  order  to  satisfy  its  subrogation  lien  technically 

violates the Act and may be subject to a penalty.  In these circumstances, we have 

consistently treated the employer’s subrogation calculations as at least relevant to 

evaluating its overall conduct.  An employer may be able to avoid a penalty as in 

DeVore or have a penalty reversed as in P. & R. Welding if a WCJ ultimately comes 

to  the  same  conclusion  as  the  employer  in  terms  of  the  amount  and  terms  of 

recoupment.  However, where an employer unilaterally reduces payments and makes 

the  correct  calculations  but  commits  additional  misconduct,  such  as  failing  to 

13 
 

properly assert subrogation rights so that the WCJ may properly calculate amounts 

due to the claimant, a penalty is more likely to be upheld, as in Boeing Helicopters.  

In any event, the matter is fact-sensitive and within the WCJ’s discretion, and the 

abuse of discretion standard sets a high bar for action by the reviewing court. 

 

Here, WCJ IV acknowledged the procedural complexity of this matter 

but  distilled  the  issue  in  Claimant’s  November  2020  penalty  petition  to  the  sole 

question  of  whether  Employer  failed  to  comply  with  the  Board’s  August  2020 

supersedeas order directing Employer to pay all due and owing disability benefits 

without deductions pending the Board’s merits determination on WCJ III.  R.R. at 

83a-84a,  89a  &  111a.    WCJ  IV  interpreted  the  Board’s  supersedeas  order, which 

allowed Employer to withhold penalty payments but denied Employer’s request “in 

all other respects,” as restoring the status quo in which Employer had been ordered 

in WCJ I, WCJ II, and WCJ III to pay Claimant all benefits due and owing without 

deductions, even though WCJ III was pending on appeal.  Id. at 109a.  In so deciding, 

WCJ  IV  rejected  Employer’s  position  that  Claimant’s  November  2020  penalty 

petition for nonpayment (based on the supersedeas order in the appeal of WCJ III) 

should have been precluded while that appeal, which pertained to the same issues--

Employer’s subrogation rights and the prior imposition of penalties for its deduction 

of subrogation amounts from its payments--was still pending before the Board and 

at the time of WCJ IV, had not yet been decided.  Id. at 111a.  Noting in WCJ IV that 

Employer presented no explanation other than preclusion for its failure to pay back 

due benefits in response to the Board’s supersedeas order in the WCJ III appeal, the 

WCJ granted Claimant’s third penalty petition for nonpayment.  Id.   

 

The  Board’s  decision  on  appeal  here,  Board  II,  affirmed  the  penalty 

award in WCJ IV, modifying it only to direct recalculation of the proper amounts 

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based on Board I, which upheld Employer’s subrogation interest and remanded for 

calculation of the amount of that interest.  Id. at 231a-32a.  Board II stated that its 

affirmance  of  the  WCJ  IV  penalty  was  based  on  Employer’s  “failure  to  pay 

indemnity benefits due when the Board denied supersedeas” in August 2020.  Id. at 

231a  (emphasis  added).    This  clearly  pertained  to  unpaid  amounts  deducted 

unilaterally by Employer in anticipation of its subrogation interest prior to its appeal 

of WCJ III.   

 

 

According  to undisputed payment logs in  evidence, Employer  began 

paying Claimant without deductions in September 2020 after the Board’s August 

2020 supersedeas order in the appeal of WCJ III.  C.R. at 88.  However, Employer 

did  not  pay  Claimant  the  amounts  it  had  previously  deducted  from  her  benefits 

payments,  in  the  apparent  belief  that  its  subrogation  claim  and  right  to  reduce 

payments  would  ultimately  be  vindicated.    This  was  contrary  to  the  Board’s 

supersedeas order, which allowed Employer to defer payment of previously imposed 

penalties, but denied its request “in all other respects.”  Id. at 103.  As posed, the 

Board’s supersedeas order effectively directed Employer to pay in compliance with 

the status quo prior to its appeal of WCJ III.  Gardner, 888 A.2d at 763 n.6.   

At  the  time  the  Board  issued  its  supersedeas  order  in  August  2020, 

Employer had been ordered in WCJ I, WCJ II, and WCJ III to pay Claimant the full 

amount due without subrogation deductions.  That obligation was not negated even 

though  Employer  appealed  WCJ  III  and  maintained  that  it  should  not  have  been 

penalized  for  asserting  and  acting  on  its  subrogation  rights.    Rather  than  paying 

upfront  and  seeking  reimbursement  from  the  Supersedeas  Fund  after  the  fact, 

Employer  assumed  the  risk  that  if  it  did  not  pay  Claimant  back  for  its  previous 

deductions, it would be subject to a penalty.  See City of Phila., 948 A.2d at 228.  In 

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that regard, Employer at least technically violated the Act, as WCJ IV concluded.  

R.R. at 111a.   

 

This does not, however, end our inquiry into the imposition of a penalty 

in WCJ IV.  As noted, a technical violation of the Act need not always result in a 

penalty.    Kurpiewski,  202  A.3d  at  889.    The  above-cited  cases  reflect  that  an 

employer’s calculations, both the calculated risk of a penalty for nonpayment and 

the  actual  calculations  of  its  subrogation  interest,  matter  in  this  inquiry.    An 

employer’s  unilateral  deduction  of  anticipated  subrogation  amounts  from  a 

claimant’s disability payments may be excused from penalization when the amounts 

and method of deduction are ultimately approved by a WCJ.  See P. & R. Welding, 

664  A.2d  at  663-664.    Here,  whether  Employer  is  subject  to  a  penalty solely  for 

unilaterally deducting subrogation amounts could arguably depend, at least in part, 

on the outcome of the remand in Board I to determine the proper amount of benefits 

due to Claimant as well as Employer’s subrogation lien.   

 

However,  imposition  of  a  penalty  is  always  within  the  WCJ’s 

discretion, and in the context of an employer’s unilateral subrogation deductions, we 

have upheld penalties where the WCJ determined some additional misconduct on 

the employer’s part, even if the employer’s calculations were ultimately correct.  See 

Boeing Helicopters, 713 A.2d at 1186.  Here, WCJ IV found that Employer violated 

the Board’s August 2020 supersedeas order by failing to pay Claimant the back due 

amounts  Employer  had  deducted  from  Claimant’s  benefits,  which  had  also  been 

ordered  in  the  previous  WCJ  opinions.    R.R.  at  111a.    Claimant’s  payment  logs 

following  issuance  of  the  supersedeas  order,  which  Employer  did  not  dispute, 

established the nonpayment of those back due amounts.  Employer’s conduct here 

was  therefore  more  egregious  than  in  P.  &  R.  Welding,  where  the  employer 

16 
 

unilaterally deducted subrogation amounts in technical violation of the Act, but did 

not disobey repeated orders specifically directing it to repay the deducted amounts.  

Whereas there may have been a basis to reverse the WCJ’s penalty in that case, we 

find  no  similar  mitigating  circumstances  here.    WCJ  IV  therefore  did  not  abuse 

discretion by imposing the penalty. 

 

IV.  Conclusion 

In light of the foregoing, the order of the Board is affirmed. 

 
 
 

 
 
 

 
 

__________________________________ 
CHRISTINE FIZZANO CANNON, Judge 

 

   

 
 

17 
 

IN THE COMMONWEALTH COURT OF PENNSYLVANIA 

edical Revenue Associates, 
Petitioner 

 
 
 
 
Sue Ellen Kanefsky (Workers’ 
Compensation Appeal Board), 
Respondent 
 

 
v. 
 

 

 

 

  

: 
: 
: 
: 
: 
: 
:  No. 1410 C.D. 2021 
: 

  

 
 
 
 
 
 

O R D E R 

AND NOW, this 22nd day of March, 2023, the November 17, 2021, 

order of the Workers’ Compensation Appeal Board (Board) is AFFIRMED. 

 
 
 

 
 
 

 
 
 

 
__________________________________ 
CHRISTINE FIZZANO CANNON, Judge 

  M