Subrogation and Reimbursement In Automobile Injury Cases

December 17th, 2013 by Rieders Travis in Car Accidents

Depending on the circumstances of your accident and insurance coverage, your health care coverage provider may require you to reimburse them for the payments it has made on your medical bills out of the money you recover for your injuries. This is a process called “subrogation.” In a decision that had a huge and immediate impact on the way auto accident cases are litigated, the Pennsylvania Supreme Court has ruled that HMOs have the right under Pennsylvania law to assert a subrogation claim against an accident victim’s tort recovery. In Wirth v. Aetna U.S. Health Care, plaintiffs lawyers argued that the Pennsylvania Motor Vehicle Financial Responsibility Law (MVFRL) prohibits subrogation in all auto accident cases, and that their clients therefore shouldn’t be forced to dip into their settlements or verdicts to reimburse the insurers for any medical bills. But the HMOs argued that Pennsylvania’s HMO Act makes them exempt from MVFRL’s anti-subrogation provision. The Pennsylvania Supreme Court sided with the HMOs, holding that MVFRL’s anti-subrogation provision does not apply to them because the HMO Act exempts them from any insurance law that does not specifically state that it covers HMOs.

75 Pa. C.S. § 1720 states that in an action arising out of the maintenance or use of a motor vehicle, there shall be no right of subrogation or reimbursement from a claimant’s tort recovery with respect to workers’ compensation benefits, benefits available under Section 1711 (relating to required benefits), 1712 (relating to availability of benefits) or 1715 (relating to availability of adequate limits) or benefits paid or payable by a program, group contract or other arrangement whether primary or excess under Section 1719 (relating to coordination of benefits. However, this section was repealed in 1993 insofar as it relates to workers’ compensation payments or other benefits under the Workers’ Compensation Act. Workers’ compensation carrier may now seek subrogation or reimbursement out of a tort recovery received by an injured claimant.

Oliver v. City of Pittsburgh, 11 A.3d 960 (Pa. 2011) held that restoration of employer subrogation rights arising from payment of workers’ compensation benefits does not afford public employers a right of subrogation for benefits paid under the Heart and Lung Act. Section 25(b) of Act 44 reinstated an employer’s right of subrogation with respect to workers’ compensation benefits in actions arising out of motor vehicle accidents, which had previously existed under the WCA prior to the MVFRL’s enactment. These amendments, however, made no mention of the HLA. In summary, Section 25(b) repealed Section 1720 of the MVFRL insofar as it related to workers’ compensation payments or other benefits under the Workers’ Compensation Act. By its plain terms, such provision does not impact any anti-subrogation mandates pertaining to HLA benefits. This decision abrogated Brown v. Rosenberger, 723 A.2d 745 (Pa. Cmwlth. 1999).

A portion of Act 44, Section 23, provides that the Commonwealth together with the political subdivisions, officials and employees active within the scope of their duties shall enjoy the benefit from sovereign and official immunity from claims of subrogation and reimbursement from a claimant’s tort recovery with respect to workers’ compensation benefits. The immunity provisions of the act apply to subrogation and/or reimbursement claims sought against an employee who has entered into a third party settlement with a Commonwealth party such as the Southeastern Pennsylvania Transportation Authority (SEPTA). Therefore any claim made by a tort victim’s employer for recoupment of workers’ compensation benefits is barred. Lillian Frazier had fractured her ankle when a SEPTA operated bus on which she was a passenger was involved in a motor vehicle accident. At the time she was employed by Bayada Nurses, Inc., and the accident occurred in the course and scope of her employment. She was paid workers’ compensation and ultimately filed a successful tort suit against SEPTA. The release agreement with SEPTA provided SEPTA would defend, indemnify and hold claimant harmless with respect to any claim, suit, petition or other action brought against claimant for payment of workers’ compensation lien filed by Bayada Nurses. Frazier v. Workers’ Compensation Appeal Board, 52 A.3d. 241 (Pa. 2012).

Attorney Cliff Rieders

Attorney Cliff RiedersCliff Rieders is a Nationally Board Certified Trial Lawyer practicing personal injury law. A large part of his practice involves multi-district litigation, including cases related to pharmaceuticals, vitamin supplements and medical devices. He is admitted in several state and federal courts, as well as the Supreme Court of the United States. Rieders is the past regional president of the Federal Bar Association and is a life member of the distinguished American Law Institute, which promulgates proposed rules adopted by many state courts. He is a past president of the Pennsylvania Association for Justice, formerly Pennsylvania Trial Lawyers Association. As a founder of the Pennsylvania Patient Safety Authority, he served on the Board for 15 years.

Not only has Rieders held many highly esteemed, leadership positions, he authored legislation related to the Patient Safety Authority and the Mcare Act, which governs medical and hospital liability actions in Pennsylvania. He authored texts upon which both practitioners and judges rely, including Pennsylvania Malpractice Laws and Forms, and Financial Responsibility Law Issues in Pennsylvania, the latter governing auto and truck collisions in Pennsylvania. In addition, he wrote several books on the practice of law in Pennsylvania regarding wrongful death and survivor actions, insurance bad faith, legal malpractice claims and worker rights, among others. Rieders also serves as a resource to practitioners as a regular speaker for Celesq, an arm of the world’s largest legal publisher, Thomson Reuters West Publishing.

As recognition of his wide range of contribution to his profession and of his dedication to protecting the rights of his clients, he received numerous awards, among them the George F. Douglas Amicus Curiae Award, the Milton D. Rosenberg Award, the B’nai B’rith Justice Award, and awards of recognition from the Pennsylvania Trial Lawyers. [ Attorney Bio ]



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