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Credit and Offset (Severance Pay)  

Issues: Credit and Offset (Severance Pay)
Case Name: Kramer v. WCAB (Rite Aide Corp.)February 22, 2002
Synopsis: FACTS: The claimant in this case received severance pay pursuant to a collective bargaining agreement when his employer relocated to another state. Pursuant to § 204(a) the insurance carrier took a credit against the claimant's workers' compensation benefit.

DECISION: Insurance carrier denied credit for severance benefits by the Commonwealth Court.

REASONING: The Court concluded that the literal language of § 204(a) specifically provides the offset to the "employer directly liable for the payment of compensation". (emphasis added)

Practice Points:This Decision impacts and insurance carrier's right to take credit for severance pay.

Third party administrators should continue to take an offset for severance pay paid by the employer who is liable for the payment of compensation.