By: Robert F. Horn, Esquire

On October 8, 2014, I will be arguing the Domtar case, before the Pennsylvania Supreme Court, captioned as Liberty Mutual as Subrogee of George Lawrence v. Domtar, et al, 19 WAP 2014. In all, six briefs and two motions were filed by the two parties and by five amicus associations.

ConnorsLaw is lead counsel for Liberty Mutual, fighting to protect workers compensation carriers’ subrogation rights. In the case at hand, Liberty Mutual filed the action “as subrogee” to recover for benefits paid resulting from a slip and fall injury due to the negligence of the property owner.

The injured employee did not file his own suit.

The question before the Court is:

Does Section 319 of the Pennsylvania Workers’ Compensation Act, 77 P.S. §671, allow the employer/insurer to step into the shoes of the injured employee against the tortfeasor?

Suggested Answer: Yes.

Perhaps the most important part of any appellate brief is forming the question that is at the heart of the appeal. If you control the question, then you can control the outcome. Here, we crafted the question from an affirmative statement of the Supreme Pennsylvania Supreme Court in the Frazier case.

The lead argument for subrogation is a seven page analysis of the Pennsylvania subrogation statute. In summary, the plain meaning of the workers’ compensation subrogation statute mandates subrogation utilizing the words “shall,” “right,” and “against such third party.”

The Pennsylvania Workers’ Compensation Subrogation Act, states (emphasis added):

Where 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, his personal representative, his estate or his dependents, against such third party to the extent of the compensation payable under this article by the Employer;

First, the principle of the plain meaning rule operates as a rule of caution: courts cannot change a statute under the guise of interpreting it. If the language of the statute has a “plain meaning,” it must be followed.

The Superior Court in the underlying decision changed the plain meaning of subrogated to mean reimbursement if the injured employee sues.

Further, the statute uses a semicolon to separate the former section defining the right of subrogation, from the latter section (not cited above) describing the right to reimbursement; thereby conferring two independent rights to the employer/carrier to either directly subrogate or to recover a lien by reimbursement when the injured employee sues.

Second, subrogation rights in workers’ compensation were previously affirmed in a recent Supreme Court decision on this matter, stating the statute permits an employer to step into the shoes of the claimant and recover directly from a third party tortfeasor. Frazier v. WCAB (2012).

Furthermore, longstanding decision of the Supreme Court have affirmed the right of subrogation without the injured employee filing his own action, namely, that an employer is not to be denied its right of suit because the employee does not sue [the third party tortfeasor], but may institute the action in the latter’s name. Scalise v. FM Venzie & Co., Inc., affirmed in Frazier.

Another long-standing case law precedent of the Supreme Court plainly states, “The employer may bring suit against the wrongdoer.” Smith v. Yellow Cab. Co.

Third, a subrogation action is distinct from an independent cause of action. This matter was filed as a subrogation action: “Liberty Mutual as subrogee of George Lawrence,” and not as an independent action by Liberty Mutual for indemnification, contribution, or the like; rather Plaintiff/Appellant filed as a subrogee in a clear attempt to step into the shoes of the injured worker.

Fourth, the true purpose of subrogation, as identified in Gillett v. Wurst, cannot be realized without a direct right of subrogation:

(1) To prevent double recovery by the Claimant for the same injury;
(2) To insure that an employer is not required to pay for the negligence of the third party; and,
(3) To prevent a third party from escaping liability for its wrongful act

Specifically, two of the above three principles of subrogation are violated by requiring an employer/insurer to pay for the negligence of a third party, and by permitting a third party tortfeasor to escape liability for its wrongful conduct.

Finally, there are several very strong public policy reasons for supporting subrogation, evidenced by four insurance groups filing amicus briefs in support of Liberty Mutual.

In short, denying workers’ compensation carriers the right of subrogation will produce a significant negative impact on the Pennsylvania economy, it will create an inequity between common law subrogation and statutory subrogation, and it is directly contrary to legislative intent to keep premiums down by allowing subrogation for workers’ compensation in the Pennsylvania Workers’ Compensation Act.

The brief submitted by the Appellee, National Retail, avoids any direct analysis or interpretation of the statute in question.

Rather than analyze the statute, National Retail simply identifies case law which surrounds this issue, in whole or in part.

Admittedly, several Superior Court cases are contradictory on subrogation, and confuses independent actions with subrogation actions at times. In our reply brief, we distinguish this action from independent actions, like in Reliance Ins. Co. v. Richmond Machine Co (contribution action), Whirley Industries v. Segel (action for increased premiums), and Olin Corp v. WCAB (action for failed prosecution of a third party claim) which the appellee relies upon.

In summary, reasoned statutory interpretation, longstanding precedents of the Supreme Court in Scalise and Frazier, and strong public policy consideration should allow the employer/insurer to step into the shoes of the injured employee, to proceed in subrogation to perfect recovery rights against negligent third parties causing work injuries.

At ConnorsLaw, we look forward to this opportunity to argue this case before the Pennsylvania Supreme Court in order to preserve the workers’ compensation carrier’s direct right of subrogation.

If you would like more information on this issue, please feel free to contact Robert F. Horn at [email protected] or (610) 524-2100, ext. 126.

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