JORDAN v. SEARS
12/20/1994
The employer, Sears, Roebuck & Company, appeals from a decision of the Appellate Division affirming the denial by the Workers' Compensation Commission of the employer's petition for coordination of benefits. The Commission held that, pursuant to 39 M.R.S.A. § 62-B (1989), an employer is not entitled to a coordination of compensation benefits when an employee rolls pension benefits over into an individual retirement account (IRA) until those funds are distributed from the IRA. We affirm the decision.
The record reflects the following undisputed facts: the employee, Kenneth Jordan, received a compensable back injury on April 29, 1987, while employed by Sears. Sears accepted liability for the injury and paid Jordan total incapacity benefits. Because of his inability to work, Jordan was forced to accept early retirement in November 1988. At the time of his retirement, Sears gave Jordan a $22,026.96 check for funds that Sears had paid into Jordan's pension account. The next day, Jordan deposited the funds in an IRA to defer taxation on the receipt of the money. See Internal Revenue Code, 26 U.S.C. § 402(c) (1993). Jordan, who is now 59 years of age, testified at the hearing that he intends to leave the pension funds in the IRA until he reaches the age of seventy.
In January 1992, Sears filed a petition to coordinate benefits pursuant to 39 M.R.S.A. § 62-B, seeking to have its benefit obligation reduced by the amount of the pension that had been rolled over into the IRA. The Commission denied the petition for coordination, concluding that because Jordan was not required to pay taxes on the funds that had been rolled over, Jordan had not "received" a "payment" of his pension benefits pursuant to section 62-B. On appeal by Sears, the Appellate Division affirmed the commissioner's ruling. We granted Sears' petition for appellate review pursuant to 39-A M.R.S.A. § 322 (Supp. 1993).
Sears contends that it is entitled to immediately offset the $22,026.96 in pension funds against its obligation to pay workers' compensation benefits pursuant to the plain meaning of section 62-B that provides in pertinent part:
1. Application. This section applies when weekly
compensation is payable to an employee under section 54-B or
55-B for any period for which he is receiving or has received
old age insurance benefit payments under the United States
Social Security Act . . . or payments under an employee benefit
plan.
3. Coordination of benefits. Benefit payments subject to
this section shall be reduced in accordance with the following
provisions.
A. The employer's obligation to pay weekly compensation
under section 54-B or 55-B shall be reduced by:
(2) The after tax amount of the payments received or being
received under an employee benefit plan provided by the same
employer by whom benefits under section 54-B or 55-B are
payable if the employee did not contribute directly to the
plan. . . .
39 M.R.S.A. § 62-B(1) & (3)(A)(2) (emphasis added). Section 62-B also provides the following definitions:
2. Definitions. As used in this section, unless the context
otherwise indicates, the following terms have the following
meanings.
A. "After tax amount" means the gross weekly amount of an
old age insurance benefit or benefit under an employee
benefit plan, reduced by the prorated
B. "Employee benefit plan" means a self-insurance disability
plan, wage continuation plan, disability insurance plan and a
pension or retirement plan which is funded or paid for by the
emp
Page 1 2 3 4 Maine Personal Injury Attorneys