State News : Pennsylvania

The Pennsylvania Supreme Court has issued two decisions recently impacting workers’ compensation in Pennsylvania.  In actuality, these cases actually deal with civil actions but involve interplay with the Pennsylvania Workers’ Compensation Act (“Act”). 

The first case, Franczyk v. The Home Depot, Inc., No. 11 WAP 2022, 2023 WL 2992700 (Pa. April 19, 2023), dealt with the Court finding that a claim for negligent investigation of an accident was barred by the exclusivity provision of the Act.  The Claimant was working at Home Depot when a customer brought a dog into the store, which bit the Claimant, who was ultimately diagnosed with cubital tunnel syndrome for which she underwent surgery. The claim was accepted as a compensable work injury.

The Employer did not allow the claimant to have any contact with the dog owner or witnesses and it did not obtain contact information from anyone. Accordingly, the Claimant could not bring a third-party action against the dog owner.  Thus, Home Depot was sued on the basis that its negligent investigation deprived her of the ability to pursue a third-party action.  Home Depot asserted immunity under the exclusivity provision of the Act. 

Summary judgement was survived at the trial court level and the Superior Court affirmed.  It felt the injury that was the basis of the lawsuit was separate from the incident which caused the work injury, which was the actual dog bite.  The Pennsylvania Supreme Court has now reversed and barred the suit based upon the exclusivity provision of the Act. 

The Court noted that even intentional misconduct by an employer does not trigger an exemption from the exclusivity provision. Poyser v. Newman & Co. (employer willfully ignored safety protcols); Kuney v. PMA (alleged bad faith in carrier handling claim caused emotional harm); and Santiago v. Pennsylvania National Mutual Ins. Co. (bad faith in settlement negotiations causing psychological harm).  The Claimant relied upon Martin v. Lancaster Battery Co., in which the Pennsylvania Supreme Court allowed a separate civil action where the employer withheld or altered blood toxicity testing results for the employees who dealt with lead.  This resulted in a deterioration of the claimant’s condition.  In that matter, the Court allowed a tort claim for fraudulent misrepresentation given the separate “aggravation” by withholding the information was an “injury unto itself” which was distinct and preventable.

The Court focused on whether there was “truly a separable injury” which they felt was not present here.  The ability to bring a third party suit was “inextricably intertwined” with the dog bite which caused the work injury. The Court noted that the Employer would need to defend the dog owner, in absentia, which is what the exclusivity provision is designed to prevent. 

Separately, in Alpini v. WCAB (Tinicum Township), No. 2 MAP 2022 (Pa. May 16, 2023), the Pennsylvania Supreme Court held that there was no workers’ compensation lien or subrogation where a dram shop claim arose from a motor vehicle accident. 

This case was not based solely upon the Act but rather was a case where the injured worker was also entitled to the payment of full salary continuation benefits concurrently under the Heart and Lung Act, which provides for the payment of full salary benefits to police officers and firefighters who are injured in the performance of their job duties.  The municipality also had a carrier who paid workers’ compensation benefits on account of the work injury.  In practice what typically occurs is the worker’ compensation check received by the Claimant is then reimbursed back to the municipality for any period of time that the Claimant receives the payment of full salary continuation benefits from the municipality under the Heart and Lung Act. 

Even though the carrier made payments under the Act, and there is a right to subrogation pursuant to Section 319 of the Act, 77 P.S. § 671, the carrier was denied subrogation on account of the Claimant’s receipt of benefits under the Heart and Lung Act.  This is due to the Court’s prior interpretations of a separate statute, the Motor Vehicle Financial Responsibility Law (MVFRL), specifically Section 1720 of this statue, which precludes subrogation against a third party recovery for a motor vehicle accident.  This law was changed by Act 44, which once again allowed for subrogation against motor vehicle accidents under the Act.  However, as this new statute did not specifically indicate it was repealing the anti-subrogation provision for Heart and Lung Benefits, this prohibition remained for such benefits, even though the MVFRL did not specifically indicate it applied to Heart and Lung Benefits. 

The Claimant was police officer who was injured on 04/17/11 when a drunk driver struck his patrol car.  In addition to suing the drunk driver, the Claimant also sued two tavern owners for violating the Dram Shop Act by serving a visibly intoxicated person. These third party actions settled and the carrier filed to seek subrogation, which was granted by the Workers’ Compensation Judge, which was affirmed by the Board, which remanded for calculation of the lien and how it was to be paid, and this was also affirmed by the Commonwealth Court.  However, the Pennsylvania Supreme Court has reversed in a majority opinion. 

The Court considered the statutory construction of Section 1720 of the MVFRL, which provides “[i]n actions arising out of the maintenance or use of a motor vehicle, there shall be no right of subrogation or reimbursement from a claimant’s tort recovery with respect to…benefits paid or payable by a program, group contract or other arrangement whether primary or excess under section 1719[.]” It determined that the lower court improperly conflated the phrase “arising out of” with the much narrower phrase “arising under.” The Supreme Court interpreted the statute to provide that an “action arises out of the maintenance or use of a motor vehicle” if the claimant’s judicial proceeding originates, stems, or results from the maintenance or use of a motor vehicle. Accordingly, the Court precluded subrogation. A request was filed for reconsideration, which was denied, so as to address the payment of medical benefits since the original decision tended to focus on the payment of wage loss and how the Claimant did not retain the workers’ compensation payment. 

When now Justice Brobson was on the Commonwealth Court, he authored a dissent in City of Philadelphia v. Hargraves/Frazier in which he noted that the anti-subrogation provision relative to Heart and Lung Benefits is based upon language in Section 1719(b) of the MVFRL.  However, when reviewing that particular language, which deals with “program, group contract or other arrangement”, he noted that this section appeared to be geared toward what are colloquially referred to as Blue Cross/Blue Shield health insurance plans and would not be applicable to benefits paid under the Heart and Lung Act.  The Supreme Court did not review this language and rather simply continued to apply the holdings of Bushta and Stemel, without getting into the issue of whether such cases were properly decided.

What hopefully will result in some change is Justice Wecht’s dissent in which he noted that the Court’s holding in Bushta should not be mechanically applied to simply find that Heart and Lung Benefits subsume workers’ compensation benefits. The Majority in Alpini appears to focus on the payments received simply from the Claimant’s perspective and finds that the workers’ compensation payments are “legally immaterial” apparently in terms of what the Claimant “receives.”  However, Justice Wecht  correctly noted that the legal fiction created that there is no compensation payable under the Workers’ Compensation Act is not the reality to the Workers’ Compensation Insurer who is making a payment of benefits on account of there being liability under the Workers’ Compensation Act.

He would treat municipalities that are insured for the purpose of workers’ compensation differently than those who are not.  However, this is really a distinction without a difference.  If there is a work-related injury, the Workers’ Compensation Act provides for the payment of “compensation payable” and Section 319 allows for subrogation to the extent of the compensation payable under Article III of the Act.  Justice Wecht points out that the statutory treatment relative to the interplay of the Workers’ Compensation Act, the Heart and Lung Act and the Motor Vehicle Financial Responsibility Law leads to all manner of confusion and warrants legislative correction. Presently, there is confusion as to whether the Claimant in a third party action is able to board damages in terms of the payment of benefits under the Workers’ Compensation Act or Heart and Lung Act.  While the anti-subrogation provision was created to keep down costs of auto insurance for drivers, now it may actually provide a benefit to the auto insurer by driving down the value of a recovery based upon a motor vehicle accident based upon there not being a right to subrogation. 

Hopefully this is a matter where the General Assembly can get involved and hear from both sides and try to come up with a solution that makes sense for everyone relative to the interplay of benefits under these Acts and specifies what are damages that can be plead and what subrogation rights exist relative to benefits paid under the Workers’ Compensation Act and Heart and Lung Act.