Category: Workers Comp

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).

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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.

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