Griffis v. Workers’ Comp. Appeal Bd. (Albert Einstein Healthcare Network), 328 A.3d 538, LEXIS 846
(Pa. Commonwealth Ct., July 15, 2020) (J. Cohn Jubelirer)
Judges: BEFORE: HONORABLE RENÉE COHN JUBELIRER, Judge, HONORABLE ELLEN CEISLER, Judge (P.), HONORABLE BONNIE BRIGANCE LEADBETTER, Senior Judge.
The claimant appealed to this Court, asserting that the silence in Section 508 regarding the subrogation of future benefits should be construed as prohibiting that subrogation. Recounting the absolute right to and purpose of subrogation under the WC Act and the language of Section 508, we disagreed that the silence should be construed in that manner. Applying a plain meaning interpretation of that section, we affirmed the allowance of future subrogation of the third-party award in a medical malpractice action and noted that doing so was consistent with the purposes of subrogation to prevent double recovery by claimants and to prevent employers from having to compensate claimants for the negligence of third parties. Protz, 131 A.3d at 577-78. Further, we held, the General Assembly’s enactment of the MCARE Act changed the prior state of the law, which had allowed employers to subrogate both past and future benefits. Id. at 578. Accordingly, we affirmed the “order awarding [the e]mployer and [i]nsurer subrogation of [the c]laimant’s third[-]party medical malpractice recovery with respect to the award for her future medical expenses and wage loss.”
The Supreme Court held that “an employer is not permitted to seek reimbursement for future medical expenses from the [claimant’s] balance of recovery.”
Whether Employer has the right to recover any medical benefits it has paid or will pay on Claimant’s behalf through subrogation, and whether Claimant has an obligation to make any lump sum payment to reimburse Employer.
The parties do not dispute, nor could they reasonably do so following Protz, that Section 508(c) of the MCARE Act precludes an employer from recovering, pursuant to Section 319 of the WC Act, the indemnity and medical “benefits paid up until the time of trial.” Protz, 131 A.3d at 578. Protz stands for the proposition that an employer’s right to subrogation begins immediately after the date of third-party recovery. While the Pennsylvania Association For Justice argues that Section 508 of the MCARE Act precludes an employer from asserting any subrogation claim, this argument is contrary to our holding in Protz. There is no indication that Protz involved, as here, an employer seeking a lump sum repayment of the benefits it had paid between the time of the settlement of the third-party action and the resolution of the modification petition, perhaps because there the employer filed its review petition one month after the settlement. The WCJ in Protz ordered the recovery of the employer’s subrogation interest only through the use of the grace period entitling the employer to reduce the claimant’s “medical bills and disability benefits at the rate of 47% of the repriced amount for future medical bills and 47% of her weekly disability rate,” id. at 576, and did not order, as Employer seeks here, the claimant to pay a lump sum followed by the use of a grace period. As such, Protz does not directly resolve the question of how to treat payments made where there has been a lengthy delay between the resolution of the third-party action and the grant of a modification petition. Whitmoyer addressed the treatment of “future benefits” for subrogation purposes under Section 319 of the WC Act, but it did not involve a third-party settlement under the MCARE Act. Therefore, in Whitmoyer, the employer was not precluded from recovering all of the benefits it had paid prior to the date of the third-party recovery, both wage loss and medical, as an accrued subrogation lien, and the focus was on how the balance of recovery would be credited against the payment of the claimant’s future benefits. Accordingly, Whitmoyer, too, does not exactly answer, at least completely, the questions presently before the Court. Claimant appears to view the payments of indemnity and medical benefits made on her behalf between April 2013, the date of her third-party recovery, and the 2017 WCJ Decision as past, not future, payments of medical expenses and lost earnings that are not subrogable under Section 508 of the MCARE Act and Protz. She contends that Employer is entitled to recover its subrogation interest through a grace period beginning as of the 2017 WCJ Decision, during which time Employer can take a credit against her balance of recovery, as limited by Whitmoyer, but is obligated to continue to pay Claimant its pro rata share of the third-party litigation costs. In contrast, Employer appears to view, for the purposes of Claimant’s appeal, the payments between April 2013 and the 2017 WCJ Decision as “future” payments that can be subrogated under Section 508 of the MCARE Act and Protz, thereby allowing it to obtain immediate reimbursement of those amounts which include both medical and indemnity benefits. Conversely, Employer appears to view these payments, for the purposes of its own appeal, as not being “future” payments subject to Whitmoyer’s limitation on an employer’s ability to subrogate future medical benefits.
To summarize, Protz expressly allows, through Section 319 of the WC Act, for the recovery of payments that an employer makes on a claimant’s behalf following the resolution of the claimant’s third-party action. Benefits paid prior to the date of the third-party recovery are not subject to subrogation per Section 508(a) and (c) of the MCARE Act as they are not to be included in calculating the claimant’s damages.
Under Whitmoyer, an employer’s subrogation rights to a credit against a claimant’s “future instalments of compensation” are limited to recouping indemnity benefits and precludes the employer from recouping the medical benefits it pays on the claimant’s behalf because “an employer is not permitted to seek reimbursement for future medical expenses from the [claimant’s] balance of recovery.” Whitmoyer, 186 A.3d at 958.
Employer was entitled under Protz and Whitmoyer to assert its subrogation 328 A.3d 538, *555; 2020 Pa. Commw. LEXIS 846, Page 14 of 16 rights against the indemnity benefits it paid after the date of her third-party recovery because, at that point, Section 508’s prohibition was no longer in effect. Under these circumstances, the entirety of Claimant’s third-party recovery, per Whitmoyer, constituted an “advance payment” of her “future instalments of compensation,” 77 P.S. § 671, which commenced as of the date of the third-party settlement per Protz. In addition to this advance payment, Employer directly paid Claimant her normal indemnity benefits during that period. Thus, Claimant received a double payment of indemnity benefits during that time period. Recoupment of an overpayment of benefits directly from a claimant is available to prevent unjust enrichment or a double recovery. Commonwealth v. Workers’ Comp. Appeal Bd. (Noll), 80 A.3d 525, 530 (Pa. Cmwlth. 2013).
Because there was no error in suspending Claimant’s benefits until she repays Employer as set forth above, the WCJ did not abuse his discretion in declining to impose penalties despite finding a violation of the WC Act. A unilateral change by an employer does not always warrant the imposition of a penalty. In DeVore, this Court affirmed the decision not to award a penalty despite the employer unilaterally reducing its payments to the claimant based on its belief that it was statutorily entitled to subrogate the claimant’s third-party recovery. 645 A.2d at 918, 920. Upon consideration of the claimant’s penalty petition and the employer’s modification petition, the referee, as WCJs were then called, granted the modification of the claimant’s benefits to reflect the employer’s subrogation rights and denied the claimant’s request for penalties. Id. at 918. Although we recognized that the unilateral action was a violation of the WC Act, we found “no legal reason to reverse” the referee’s decision not to impose penalties because the WCJ ultimately ordered the reduction of the claimant’s benefits. Id. at 920. Here, even assuming that Employer unilaterally suspended Claimant’s benefits as of October 3, 2017, to recover its accrued lien in violation of the WC Act, the WCJ ultimately suspended Claimant’s benefits for that reason in the 2018 WCJ Decision. The WCJ recognized the violation of the WC Act, but, acting within his discretion, decided that this was a technical violation that did not warrant the imposition of a penalty particularly where “Claimant ha[d] retained a substantial windfall in failing to reimburse the accrued lien payable from the third-party settlement.” (2018 WCJ Decision, COL ¶ 6.) Substantial discretion is afforded to WCJs in making these determinations, and, as in DeVore, we find “no legal reason to reverse” the WCJ’s decision not to award penalties under these circumstances. 645 A.2d at 920. III.
For the foregoing reasons, the Board did not err in affirming the WCJ’s grant of the Penalty Petition without awarding penalties or in affirming, as modified, the grant of the Modification and Suspension Petition. Accordingly, we affirm.
