5/23/2016. Presented by: Thomas, Thomas & Hafer LLP Attorneys: Presented by: Subrogration Rights Under Section 319 of the PA WC Act

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1 Subrogration Rights Under Section 319 of the PA WC Act Thomas, Thomas & Hafer LLP Thomas, Thomas & Hafer LLP is the largest defense civil litigation firm based in Central Pennsylvania. With its main office in Harrisburg, PA, the firm also has offices in Allentown, Pittsburgh, Philadelphia and Wilkes-Barre, Pennsylvania, as well as Baltimore, Maryland and Clinton, New Jersey, facilitating the firm's ability to provide services throughout Pennsylvania, Maryland, the District of Columbia, New Jersey and West Virginia. PENNSYLVANIA MARYLAND NEW JERSEY Presented by: Thomas, Thomas & Hafer LLP Attorneys: Regina M. Parker Four Penn Center, Suite JFK Blvd. Philadelphia, PA x8516 (phone) (fax) James A. Tinnyo 305 N. Front Street, 6FL (phone) (fax) Regina is experienced in providing legal representation to clients in areas of Labor and Employment Law, Workers' Compensation, ERISA, Personal Injury, and Social Security Disability. She received her Bachelor of Science degree in Communications from Temple University, and her Juris Doctor from Widener School of Law. Regina was also the Associate Editor of the Philadelphia Bar Reporter, the monthly publication of the Philadelphia Bar Association. She is admitted to practice law in Pennsylvania and New Jersey. Jim is a partner in the Harrisburg office of Thomas, Thomas and Hafer, LLP. Jim has practiced workers compensation law in Pennsylvania since 1987 and has litigated workers compensation cases before numerous workers compensation judges, the Workers Compensation Appeal Board, Commonwealth Court and the Pennsylvania Supreme Court. He is a frequent lecturer on workers compensation law, including the Pennsylvania Bar Institute s Tough Problems and Fall Section meeting seminars. 03 Presented by: Thomas, Thomas & Hafer LLP Attorneys: R. Burke McLemore 305 N. Front Street, 6FL (phone) (fax) bmclemore@tthlaw.com Chair of the firm s Workers Compensation Section, Burke s practice encompasses both trial and appellate representation of employers and carriers from the Maryland line to New York. Burke s significant cases include Wintermyer v. WCAB, the Pennsylvania Supreme Court decision that rewrote the standards for review of administrative agency decisions. Burke provides risk reduction and management advice to clients facing employment law and workers compensation claims. His more than thirty five years of defense experience is applied to complex cases bridging employment torts, workers compensation, and subrogation. Burke has been consistently recognized as a Pennsylvania Super Lawyer and was cited in Best Lawyers in America. 1

2 04 I. Right to subrogate against an employee s tort recovery The worker s compensation insurer or employer may, in certain cases, recover payment of wage loss and medical benefits made to and on behalf of an injured worker in connection with a work injury. 319, Pa. WC Act; 77 P.S The Act provides that [w]here the compensable injury is caused in whole or in part by the act or omission of a third party, the employer shall be subrogated to the right of the employee against such third party to the extent of the compensation payable under this article by the employer. 319, Pa. WC Act; 77 P.S Equitable Principles: Avoiding double recovery by claimant for the same injury; Ensuring that the employer is not compelled to pay compensation due to the wrongful act of a third party; and Preventing the third party from escaping liability for its wrongful conduct. 05 II. Employer s right to subrogation as an absolute statutory right Absolute right Primary right Whether the employer/carrier can pursue subrogation claims directly against third party tort feasors? 2. Statute of Limitations 3. Comparative Negligence 4. Spouse s Loss of Consortium Claim 5. Pain and Suffering 6. Motor Vehicle Accidents History: Motor Vehicle Financial Responsibility 1993 Amendments Provide for Workers' Compensation Subrogation No Subrogation Recovery Employee s insurance policy Subrogation Recovery Employer s Insurance Policy Subrogation Recovery Co employee s insurance policy Subrogation Recovery Other Insurance policy 2

3 07 7. Medical Negligence Generally, there is a right of subrogation against a third party civil action for medical malpractice where the negligent medical treatment was provided in connection with the original work related injury. The employer must prove that if not for the malpractice or negligent medical treatment, benefits would not have been paid. For example, in Griffin v. WCAB (Thomas Jefferson Univ. Hosp.), 745 A.2d 61 (Pa. Cmwlth. 1999), the court held that the employer will be precluded from asserting a subrogation lien against a malpractice settlement if it fails to establish that claimant could have sufficiently recovered from the work related injury to be employable, thus compelling it to make workers compensation payments due to the medical malpractice. To satisfy this burden, expert medical testimony is needed to address whether a successful surgery would provide the outcome that Claimant would become employable again. Employer bears the burden of establishing: (1) acausal connection between the original work injury and the subsequent event for which the third party is liable; and (2) that as a result of the subsequent event, the employer was compelled to pay compensation benefits greater than those required by the initial injury Protz v. WCAB (Derry Area Sch. Dist.) and the Medical Care Availability and Reduction of Error Act (MCARE). 40 P.S Subrogation for past wage loss and medical expenses has been eliminated by the MCARE Act. Subrogation of future earnings and medical benefits are not precluded. Protz Holding: The Court recognized that sections 508(a) and (c) of the MCARE Act, 40 P.S (a) and (c), preclude subrogation of a plaintiff s medical malpractice proceeds to the extent that those proceeds include past medical expenses. However, these Sections of the MCARE Act are silent regarding subrogation of future medical expense and wage loss awards in medical malpractice actions. Accordingly, the Court determined that the Legislature did not intend to change the existing law by omission and preclude subrogation under 319 of the Workers Compensation Act with respect to future benefits when it enacted Section 508 of the MCARE Act. The Commonwealth Court affirmed the Board s order awarding the employer and its workers compensation carrier subrogation of the claimant s third party medical malpractice recovery with respect to the award for future medical expenses and wage loss. Practice Tip: Employers and workers compensation insurance carriers should determine whether any of their claims involve subsequent, related medical malpractice actions (or potential future actions) and place the parties in the medical malpractice action on notice of the worker s compensation lien with regard to any award for future wage loss and medical expense payments Political subdivisions: The workers compensation insurer has no subrogation right against a negligent governmental actor, and no reimbursement right against recovery by its workers compensation claimant in a third party action versus that governmental actor. Frazier v. WCAB (Bayada Nurses, Inc.), 52 A.3d 241 (Pa. 2012). 10. Pennsylvania Property and Casualty Insurance Guaranty Association Act: An employer or carrier is not entitled to subrogation from the settlement proceeds of a medical negligence case from the Pennsylvania Property and Casualty Insurance Guaranty Association Act. 3

4 10 IV. Preserving the actual recovery 1. Notice to Parties of Worker Compensation Subrogation Lien Prompt notice should be provided to all parties regarding the existence (or potential right) of a subrogation lien against a third party recovery. Notice should be made to all concerned parties, including: claimant, claimant s worker s compensation counsel; claimant's civil action attorney; civil action defendant insurer (if known); and civil action defendant insurance attorney (if known). Request periodic litigation updates during the different phases of the third party litigation. 2. Monitoring third party actions Third party actions should be closely monitored by the employer and/or their counsel to determine the status of a third party action and evaluate potential recovery. The employer may also seek to obtain a written agreement from the claimant s third party counsel to escrow funds from the third party settlement/award prior to satisfaction of the lien. If Claimant s third party counsel will not sign a written agreement to protect the subrogation lien, an attorney should be retained to represent the employer s interest in subrogation recovery. 11 V. Enforcement of Subrogation V. Enforcement of Subrogation. 1. Modification Petition Ward v. WCAB (Sun Refining & Mktg. Co.), 599 A.2d 1013 (Pa. Cmwlth. 1991). The employer may seek future credit against the employee under 319 by a petition for modification. The employer can also request that the WCJ order immediate reimbursement for disability and medical payment made to the date of the third party settlement. 2. Recommended Response On Behalf of Employer and Insurer (a) Monitor civil action litigation. (b) Petitions to Modify or Suspend Benefits (c) Acknowledgement of subrogation lien. (d) Petition to Intervene: Pennsylvania permits employer/insurers to intervene via interpleader in third party action. VI. Waiver of Subrogation/Waiver of Right to Sue Third Party Parties 12 VI. Waiver of Subrogation/Waiver of Right to Sue Third Parties An employer may voluntarily reduce or waive its right to subrogation by way of written agreement. Note that the release or waiver of subrogation rights in a C&R may not be enforceable if the third party action was not contemplated at the time, unless it is specifically stated in the agreement that the waiver applies to known or unknown third party actions. Gorman v. WCAB (Kirkwood Constr.), 952 A.2d 748 (Cmwlth. 2008). Pre employment waiver of subrogation rights (Bowman v. Sunoco, Inc.), 65 A.3d 901 (Pa. 2013). 4

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