In a ruling in late November 2019, the Pennsylvania Supreme Court in Sayles v. Allstate Ins. Co., ___ A.3d ___ , 58 MAP 2018, 2019 WL 6138409 (Pa. Nov. 20, 2019), ruled ineffective as against public policy, the standard language in PA auto policies that required insureds to attend PIP medical exams under terms of the auto policy. (A typical policy provision states “If an accident or loss occurs, the following must be done for the terms of the policy to apply: Any person qualifying as an insured under any coverage part of this policy must … submit, as often as we reasonably require, to physical exams by physicians we select.”). While many observers in the defense bar characterize this as “yet another victory” scored at the Pennsylvania Supreme Court by the plaintiff’s bar (a not-unreasonable observation), this case in fact is the culmination of a trend pre-dating the current make-up of the Supreme Court. Also, there is concern expressed that the ruling now makes the selection of the medical examiner solely and exclusively within the purview of the court. We think that is an overstatement of the ruling.
Author: Tom Tyler
Status of Long-Arm Jurisdiction in Pennsylvania Federal Courts
In June 2019, Judge Robreno of the Eastern District of Pennsylvania federal court held that the Pennsylvania statutory business registration scheme’s purported conferral of consent to general personal jurisdiction in exchange for a company’s ability to legally do business in Pennsylvania was unconstitutional under Due Process Clause. Sullivan v. A.W. Chesterton, Inc., et al. (In re Asbestos Products Liab. Litig. (No. VI)), 384 F.Supp.3d 532 (E.D. Pa. 2019). According to Judge Robreno,
In 2014, the [U.S.] Supreme Court decided the case of Daimler AG v. Bauman [571 U.S. 117, 134 S.Ct. 746, 187 L.Ed.2d 624 (2014)] which brought about a sea change in the jurisprudence of exercising general personal jurisdiction over a foreign corporation. Daimler held that under the Due Process Clause, subjecting a foreign corporation to general jurisdiction in every state in which it “engages in a substantial, continuous, and systematic course of business” was “unacceptably grasping.” Under Daimler, the exercise of general jurisdiction over a foreign defendant (except in extraordinary circumstances) was limited to where the corporation was “at home,” namely, the forums in which the foreign corporation is incorporated and where it maintains its principal place of business.
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Observations on Spoliation of Evidence in Pennsylvania Law
The law in Pennsylvania is well settled as to defining and sanctioning spoliation of evidence. “Spoliation is the destruction or significant alteration of evidence, or the failure to preserve property for another’s use as evidence in pending or reasonably foreseeable litigation.” Pyeritz v. Com., 613 Pa. 80, 88 n.4, 32 A.3d 687, 692 n.4 (2011), quoting West v. Goodyear Tire & Rubber Co., 167 F.3d 776, 779 (2d Cir.1999), citing in turn Black’s Law Dictionary 1401 (6th ed.1990). “A plaintiff has a general duty to preserve relevant evidence where: (1) the plaintiff knows that litigation against the defendants is pending or likely; and (2) it is foreseeable that discarding the evidence would be prejudicial to the defendants.” Mount Olivet Tabernacle Church v. Edwin L. Wiegand Div., 781 A.2d 1263, 1270-71 (Pa.Super.,2001), citing Baliotis v. McNeil, 870 F.Supp. 1285, 1290 (M.D.Pa.1994). See also, Pennsylvania Trust Co. v. Dorel Juvenile Group, Inc. 2011 WL 2789336, at 5 (E.D.Pa., 2011) (“A duty to preserve evidence arises when the party knows that litigation is pending or likely, and it is foreseeable that discarding the evidence would be prejudicial to the other party”, citing Creazzo v Medtronic. Inc., 903 A.2d 24, 29 (Pa.Super. 2006)).
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The Effect of The Affordable Care Act (“Obamacare”) on Reducing Claims for the Expense of Future Medical Care: There’s Not Much There
In a number of recent cases we’ve defended where the cost of future medical care was an item of claimed damages by the plaintiff, there were proposals by some enterprising defendants to argue at trial that the costs of future care (such as plaintiffs’ very expensive Life Care Plans) could be reduced by the terms of the federal Affordable Care Act, the effect of which could dramatically lower that typically-high item of special damages. Because (at least generally speaking) (1) the application of the ACA is federally mandated, (2) the ACA carries a wide array of mandated benefits, and (3) its costs to a user are both relatively predictable, and lower than the charged expenses for medical and ongoing care, the thinking was that the expense of the ACA benefits to the plaintiff could be shown to be far lower than the anticipated expense the medical provider or Life Care Planner would describe. Such an approach was attempted at trial by defendants in the Philadelphia County Court of Common Pleas case of Deeds v. University of Pennsylvania, 110 A.3d 1009 (Pa.Super. 2015), a medical malpractice action alleging a failure to diagnose that culminated in severe birth defects of the minor plaintiff. At trial, the court permitted the defendant to “inform the jury that [the minor plaintiff’s] substantial medical needs were all being attended to at little to no cost to [the] legal guardian due to the existence of state and federal education and medical benefits programs,” in the form of Medicaid and the ACA.
Clarification by the Pennsylvania Supreme Court on the Recovery of Worker Comp Liens
The Workers Comp Carrier May Not Unilaterally Pursue Its Subrogated Lien Against the Tortfeasor Without Including the Injured Worker as a Plaintiff
In Liberty Mutual Ins. Co. v. Domtar Paper Co., ___ A.3d ___, 2015 WL 1888572, decided April 27, 2015, the Pennsylvania Supreme Court addressed the ability of a workers’ comp carrier alone to assert a claim to recover its lien against the third party tortfeasor, where the injured worker has not asserted a tort claim against the tortfeasor. In Domtar Paper, the Supreme Court appeared to clarify its 2012 ruling in Frazier v. Workers’ Comp Appeals Board, 52 A.3d 241 (Pa. 2012). Frazier dealt with whether a workers comp lien could be asserted against a governmental agency as the tortfeasor, otherwise immune from liability. Frazier’s Footnote 10 appeared to permit the employer (or workers comp insurer) to make its own claim for lien recovery against the tortfeasor where the injured plaintiff himself made no such claim:
While not directly implicated by this case, we note that normally in subrogation, the right of action lies in the injured employee, and the action for subrogation against the third-party tortfeasor is brought in the employee’s name. Nonetheless, an “employer … is not to be denied his right of suit [in subrogation] because the employee does not sue [the third-party tortfeasor], but may institute the action in the latter’s name.” Scalise v. F.M. Venzie & Co., 301 Pa. 315, 152 A. 90, 92 (1930).
Insurance Federation of Pennsylvania Gives Major Assist in Supreme Court Victory for Statutory Employers & Their Insurers
On March 26, 2014, the Supreme Court of Pennsylvania announced its unanimous decision in the case of Patton v. Worthington Associates, 625 Pa. 1, 89 A.3d 643 (2014), reversing decisions in the lower courts and forcefully reaffirming the Statutory Employer Doctrine of the Pennsylvania Workers Compensation Act. In its decision, the Court frequently and favorably cited the amicus brief prepared by Tom Tyler of Davis Parry & Tyler, counsel for amici Insurance Federation of Pennsylvania, Inc., and Shoemaker Construction Company.
According to the Workers Compensation Act of Pennsylvania, at 77 P.S. § 52, the Statutory Employer Doctrine fixes responsibility to provide workers compensation benefits to injured workers. The statute provides that responsibility is imposed not only on the injured worker’s immediate employer, but also, in case that employer defaults, on any superior contractor up the vertical contractual ladder that contracted with that employer. In return for the imposition of such workers compensation liability (even if a superior contractor has not been called upon to actually pay such benefits), these “statutory employers” are immune from tort liability to the injured worker. 77 P.S. § 481. According to the seminal 1930 Supreme Court decision of McDonald v. Levinson Steel Co., 302 Pa. 287, 153 A. 424, the following 5 elements must be shown for a general contractor to be deemed a “statutory employer”: (1) the general contractor is under contract with an owner or one in the position of an owner; (2) the construction site premises are occupied by or under the control of the general contractor; (3) there is a subcontract made by such general contractor with a subcontractor on the job; (4) the work entrusted by the general contractor to the subcontractor is required of the general contractor under the contract with the owner; and (5) the injured worker is an employee of such subcontractor. In 2012, the Superior Court’s ruling in the Patton case effectively eviscerated the Statutory Employer Doctrine, with predictable adverse consequences for general contractors and their insurance carriers.
Heads I Win; Tails You Lose: Patton v. Worthington Associates, Inc. and the Destruction of the Statutory Employer Doctrine
In March 2012, a 2-1 Superior Court panel rendered a decision in the construction accident case of Patton v. Worthington Associates, Inc., 43 A.3d 479 (Pa.Super. 2012), that for practical purposes has eviscerated the statutory employer doctrine in Pennsylvania. A number of weeks later, I strolled back from court to my office with plaintiff counsel in our own construction accident tort case; his reliance on Patton had resulted in the recent denial of my statutory employer defense in the case. Counsel commented on what he viewed as Patton’s salutary effect, observing that “finally, the Superior Court and the Commonwealth Court are on the same page.” Counsel’s observation, however, immediately struck me as faulty, since, if the statutory employer doctrine is properly applied, disparate results should be found in the two courts: in a nutshell, where statutory employer liability to pay workers compensation benefits is found in Commonwealth Court, that party’s statutory employer defense to tort liability should arise in Superior Court. Conversely, if that party is not a statutory employer, it will be without workers compensation liability in Commonwealth Court, but will face tort liability to the injured party in Superior Court.
This paper will examine the origins and near-century-long treatment, both legislative and judicial, of the statutory employer doctrine, and the ill-considered practical effects of Patton. In short, while its reasoning strongly suggests Patton’s presumed goal was to constrain (or even eliminate altogether) the immunities from tort liability that the statutory employer may enjoy (a goal clearly at odds with well-settled Pennsylvania Supreme Court decisional law), its surely unintended consequence is to offer a means by which a statutory employer may in fact escape workers compensation liability to injured workers.