This case raised the issue whether the Connecticut Workers’ Compensation Act permits an employer to offset disability retirement payments against wage replacement benefits otherwise due an injured worker under the Act. Eileen Smedley suffered a back injury while employed by the State of Connecticut and received workers’ compensation benefits. In 1999, she retired with State Disability Retirement benefits. Smedley has been employed in private industry earning less than she earned in her former state job, and she is again seeking wage supplement benefits under the Act, which would, if these were awarded without regard to the amount that she is receiving in disability retirement benefits, result in Smedley receiving more income than she had as a state employee. The Workers’ Compensation trial commissioner included Smedley’s disability retirement benefits in calculating her eligibility for workers’ compensation benefits, and concluded that she was ineligible for workers’ compensation benefits. The Workers’ Compensation Commission upheld that ruling, and Smedley appealed.
The Connecticut Supreme Court took the appeal, and NELF filed a brief in support of the employer State of Connecticut on its own behalf, and on behalf of the Connecticut Business and Industries Association. In its brief, NELF argued that both the plain language of the Act and case law prohibit double compensation. NELF also argued that there is compelling public policy in favor of preserving the continued financial viability of the workers’ compensation system by avoiding duplicate benefits and excessive compensation. The system is supported by the mandatory contributions of employers, and excessive payouts ultimately have one of two impacts: they force a reduction of wages and benefits available to workers generally, or they increase the cost to employers. If the employer is the state, the result can be tax increases, program cuts, or both. In its decision, the Connecticut Supreme Court decided against NELF’s position and for Smedley, based entirely on the specific statutory provisions of the State Employees Retirement Act. Somewhat troubling is dictum in a companion case dealing with the same issue, Starks v. University of Connecticut, 270 Conn. 1, 850 A.2d 1013 (2004), that state disability retirement benefits may be analogous to Social Security or private disability insurance payments.
Nevertheless, the Connecticut court took NELF’s concern about double dipping seriously. Despite statutory authorization, the state retirement board had not deducted workers’ compensation benefits from retirement benefits because of administrative convenience. The court held that where the statute explicitly authorized a deduction from retirement benefits to offset workers’ compensation, and not vice versa, the administrative agencies must handle the offset according to the statutory mandate and not based on administrative convenience.