The Workers' Compensation Act mandated that a claimant's benefits be suspended during his incarceration, according to the Supreme Court of Pennsylvania.

In April 1992, David J. Banic injured his back while in the course of his employment with Trans-Bridge Lines Inc. As a result of his injury, Mr. Banic began receiving weekly workers compensation benefits. On July 12, 1993, Mr. Banic pled guilty in federal court to four counts of a federal offense and was sentenced to 27 months' imprisonment. He began serving his sentence on Sept. 1, 1993.

On Aug. 31, 1993, the Workers Compensation Act in Pennsylvania was amended to provide that nothing in the act shall require payment of compensation for any period during which an employee is incarcerated after a conviction. Mr. Banic reported to federal prison one day after the amendment became effective. On that same date, his employer ceased paying workers comp benefits because of the amendment. The Commonwealth Court of Pennsylvania affirmed the suspension of benefits.

On appeal, Mr. Banic argued that the application of the amendment to him constituted an impermissible retroactive application of the law adversely affecting his compensation benefits to which he was entitled before the amendment. The appellate court concluded that the issue of the amendment's retroactivity was immaterial because there was other basis for denying Mr. Banic's continued benefits. According to the court, when he was incarcerated his loss of earning power was no longer causally related to his back injury. Rather, the court said it was caused by his incarceration, which necessarily set his earnings level at zero. Because of this change of circumstances, the court said, Mr. Banic's injury was no longer the cause of his decreased earning power such that compensation under the act was warranted in order to provide him compensation for a work-related injury. Thus, the court said the employer was entitled to seek a suspension of his benefits.

Banic vs. W.C.A.B. (Trans-Bridge Lines), Supreme Court of Pennsylvania, Dec. 24, 1997. (BI/02/Jy.-$10)

This abstract was prepared by Mayo H. Stiegler. Copies of this decision are available by sending a $10 check, payable to Mayo H. Stiegler, to Business Insurance, 740 N. Rush St., Chicago, Ill. 60611-2590. Please list the number for each opinion.