Alabama Workers' Comp Blawg

Alabama Court of Appeals Weighs Set-Off of Other Disability Benefits

On July 22, 2016, the Alabama Court of Civil Appeals released its opinion in City of Birmingham v. Thomas, in which it addressed whether the City of Birmingham improperly reduced Thomas’ employer-provided disability benefits due to his prior workers’ compensation settlement. Thomas had filed a workers’ compensation claim while working for the City, and the parties reached a settlement in October 2013. The terms of the settlement provided that the city would pay Thomas $225,000 in exchange for a release of all claims against the City, except future medical benefits arising under The Alabama Workers’ Compensation Act. The settlement was court approved on December 12, 2013. Then on December 20, 2013, Thomas applied for "Extraordinary Disability Benefits" through the City’s Retirement and Relief Pension Board. In his application, Thomas acknowledged "I am aware that if I am granted an Extraordinary Disability Pension (job related disability), there will be a set-off with any workers’ compensation benefits that I receive". Thomas also signed a document labeled "Notice to Applicants Applying for Extraordinary Disability Pension", which provided that any Extraordinary Disability Benefits awarded by the Board would be offset, dollar for dollar, by the amount of any workers’ compensation benefit, as provided in the City of Birmingham Retirement and Relief System Pension law. The notice also informed Thomas that the City of Birmingham Retirement and Relief System was a separate entity from the City of Birmingham.

In September 2015, Thomas filed a Motion to Enforce Settlement Agreement, in which he asserted that the city had unilaterally decided to reduce his pension benefits, contrary to the workers’ compensation settlement agreement. His argument was essentially that the city improperly set off his Extraordinary Disability Benefits by the amount of his workers’ compensation settlement. The City responded to that motion, asserting that it had made all payments agreed upon in the workers’ compensation settlement; that the Board was a separate entity from the City; and that the Board had informed Thomas that his Extraordinary Disability Benefits would be offset by the workers’ compensation payments. The trial court entered an order finding that since there was no mention of the sett-off in the workers’ compensation settlement agreement and/or order, the City had waived, or was estopped from asserting, any right to a set-off. The order further directed the City to pay all Extraordinary Disability Benefits that had accrued, and to make monthly payments thereafter. The City obtained a stay of the trial court’s judgment and appealed. The Court of Appeals held that the city was not estopped from asserting its right to a set-off. It also held that since the city was separate entity from the board, the city could not have waived any right the board might have to a set-off. Finally, the Court rejected the argument that the board was merely an instrumentality of the city, and that the trial court therefore did not have jurisdiction over the Board in the workers’ compensation case. The Court of Appeals remanded the case back to the trial court with instructions that it deny Thomas’ Motion to Enforce.

My Two Cents:

The outcome of this case could have been much different if it were not for the fact that the City and the Board were two separate and distinct entities. In situations where an employer offers other disability benefits through a plan outside of the Workers’ Compensation Act, it is wise to address what, if any, effects any workers’ compensation settlement may have on eligibility for such benefits.

---

About the Author

This article was written by Charley M. Drummond, Esq. of Fish Nelson & Holden, LLC. Fish Nelson & Holden is a law firm located in Birmingham, Alabama dedicated to representing employers, self-insured employers, and insurance carriers in workers’ compensation cases and related liability matters. Drummond and his firm are members of The National Workers’ Compensation Defense Network (NWCDN). The NWCDN is a national and Canadian network of reputable law firms organized to provide employers and insurers access to the highest quality representation in workers’ compensation and related employer liability fields. If you have questions about this article or Alabama workers’ compensation issues in general, please feel free to contact the author at cdrummond@fishnelson.com or (205) 332-3414.