INSURANCE-FINANCIAL RESPONSIBILITY LAW-SUBROGATION-PENNSYLVANIA STATE POLICE

July 5th, 2018 by Rieders Travis in Insurance

Pennsylvania State Police v. Workers’ Compensation Appeal Board (Bushta), 2018 Pa. LEXIS 2582 (May 29, 2018) Todd, J.  In this discretionary appeal, we consider whether Appellant, the Pennsylvania State Police (“PSP”), is entitled to subrogation of benefits that a trooper—who was injured in a motor vehicle accident—was eligible to receive under the Workers’ Compensation Act (“WCA”)  against the trooper’s recovery from a third-party tortfeasor pursuant to the Motor Vehicle Financial Responsibility Law (“MVFRL”). For the reasons that follow, we conclude that PSP does not have a right of subrogation. Accordingly, we affirm the order of the Commonwealth Court.

The instant appeal involved the interplay between three Pennsylvania statutes—the WCA, the Heart and Lung Act, and the MVFRL.

On January 21, 2014, Claimant and his spouse entered into a Settlement and Indemnity Agreement and Release of all Claims (“Settlement Agreement”) with the tractor-trailer driver, the driver’s employer, and the other responsible parties (collectively, “third-party tortfeasors”) for $1,070.000.1 The Settlement Agreement provided, inter alia, that Claimant would “reimburse any lien holder, known or unknown, for any liens as a result of the ․ incident.” Claimant further acknowledged that he was “solely responsible for the payment of any medical bills, hospital liens, MedPay liens, worker[s’] compensation liens, attorney’s fees, taxes, withholding and all other fees, costs and expenses they have incurred as a result of the Accident.” Id. at 1 ¶ 6.

On February 4, 2014, PSP filed a petition to review compensation benefits pursuant to Section 771 of the WCA, asserting a right of subrogation against the proceeds of Claimant’s settlement with the third-party tortfeasors under Section 319 of the WCA. On November 19, 2014, Claimant entered into a signed stipulation (“Stipulation”) with PSP and PSP’s third-party administrator, Inservco Insurance Services, Inc. (“Inservco”). The Stipulation indicated, in pertinent part, that, between the date of Claimant’s injury on February 26, 2011 and the date he returned to work on June 3, 2012, Claimant had been paid $56,873.13 under the WCA.

By contrast, this case does involve the [MVFRL], and it prohibits a plaintiff from including as an element of damages payments received in the form of workers’ compensation or other “benefits paid or payable by a program ․ or other arrangement.” 75 Pa.C.S. § 720. This language “benefits paid or payable by a program” has been construed to include the program by which Heart and Lung benefits are paid. Fulmer [v. Pennsylvania State Police, 167 Pa.Cmwlth. 60, 647 A.2d 616, 618–19 (Pa. Cmwlth. 1994) ]. Section 25(b) of Act 44 changed the Section 1720 paradigm only for workers’ compensation benefits, not Heart and Lung benefits. This means Claimant continued to be “precluded” from recovering the amount of benefits paid under the Heart and Lung Act from the responsible tortfeasors. 75 Pa.C.S. § 722. There can be no subrogation out of an award that does not include [workers’ compensation benefits]. Likewise, because the tort recovery cannot, as a matter of law, include a loss of wages covered by Heart and Lung benefits, Claimant did not receive a double recovery of lost wages or medical bills.

Payment of a claimant’s medical care and treatment is required under the Heart and Lung Act, and, regardless of the pricing schedule utilized, such payment constitutes a Heart and Lung benefit.

For all of the foregoing reasons, we conclude that all of the benefits Claimant received were Heart and Lung benefits, not WCA benefits. Thus, pursuant to the MVFRL, PSP does not have a right of subrogation against Claimant’s settlement with the third-party tortfeasors. Accordingly, we affirm the order of the Commonwealth Court.

1.   f this amount, $200,000 was apportioned to the Claimant’s spouse’s loss of consortium claim. Further, the contingent fee agreement between Claimant, his spouse, and their personal injury attorneys, Powell Law, provided that the firm would receive 33 1/3 % of the recovery, and that Claimant would be responsible for the costs incurred in connection with the prosecution of the third-party claim, which totaled $18,723.68.