WORKERS’ COMPENSATION-SUBROGATION-DISABILITY BENEFITS AND MEDICAL EXPENSES

July 3rd, 2018 by Rieders Travis in Workers' Compensation

Whitmoyer v. Workers’ Compensation Appeal Board, 2018 Pa. LEXIS 2995 (June 19, 2018) Donohue, J.  The Pennsylvania Workers’ Compensation Act (“WCA”) makes an employer liable for paying the disability benefits and medical expenses of an employee who sustains an injury in the course of his or her employment. See 77 P.S. §§ 431 (disability), 531 (medical). This liability attaches without regard to the employer’s negligence. See id; see also Heckendorn v. Consolidated Rail Corp., 465 A.2d 609, 613 (Pa. 1983). Under section 319 of the WCA, however, employers (or their insurance carriers) are “subrogated to the right of the employe” and therefore entitled to reimbursement for certain expenses where a third party caused the employee’s injury. 77 P.S. § 671. The instant matter addresses a specific question about the scope of this reimbursement. Section 319 of the WCA provides, in pertinent part: 

Any recovery against such third person in excess of the compensation theretofore paid by the employer shall be paid forthwith to the employe, his personal representative, his estate or his dependents, and shall be treated as an advance payment by the employer on account of any future instalments of compensation. 

We granted allowance of appeal to determine whether the Commonwealth Court erred in concluding that the term “instalments of compensation” in section 319 encompasses both disability benefits and payment of medical expenses.

In sum, after satisfying the employer’s accrued subrogation lien, which encompasses “compensation” payments made by the employer toward both disability benefits and medical expenses prior to the third-party settlement, the General Assembly intended the excess recovery to be paid to the injured employee and to be treated as an advance payment only on account of any future disability benefits. See 77 P.S. 671. The fact that, in this case, Whitmoyer was not owed any outstanding disability benefits is wholly irrelevant to our analysis.

As to the other stated purposes of section 319, we note that the provision’s protection of “innocent” employers has its limits. The WCA’s default is to hold an employer liable for an employee’s work-related injury. See 77 P.S. §§ 431 (disability benefits), 531 (medical expenses). Indeed, in the instant matter, MCM concedes that even if we found in its favor, its liability would be circumscribed “only to the extent of [Whitmoyer’s] third party recovery.” Once that amount is exceeded, MCM (or Selective) would again be required to pay Whitmoyer’s medical expenses in full, “potentially for the lifetime of the injured worker[].” Id. Finally, it bears emphasizing that the conclusion we reach today is wholly consistent with the remedial nature of the WCA, which should be interpreted for the benefit of the worker and liberally construed to effectuate its humanitarian objectives. Peterson v. W.C.A.B (PRN Nursing Agency), 597 A.2d 1116 (Pa. 1991); 1 Pa.C.S. § 1928. 

The decision of the Commonwealth Court is reversed. 

Chief Justice Saylor and Justices Baer, Todd, Dougherty, Wecht and Mundy join the opinion.

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