TTH eNotes: Workers’ Compensation: December, 2018
November 30, 2018
An Insurer and Employer Guide to Pennsylvania Act 111-Reinstatement of Impairment Rating Evaluations
By Justin D. Beck, Esquire
Questions about this guide can be directed to Justin D. Beck, at (412) 926-1441 or email@example.com
SIGNIFICANT PENNSYLVANIA CASE SUMMARIES
The Hartford Ins. Group on behalf of Chen v. Kamara
Pennsylvania Supreme Court
No. 24 EAP 2017, (November 21, 2018)
By: Ryan Blazure, Esquire
The Pennsylvania Supreme Court rules that absent assignment or voluntarily joinder by an injured employee, a workers’ compensation insurer may not enforce its statutory right to subrogation by filing an action directly against a tortfeasor.
Background: On October 10, 2013, Chen was injured while in the parking lot of Thrifty Rental Car when she was struck by a rental vehicle operated by Kamara. At the time of the incident, Chen was working for Reliance Sourcing, which maintained workers’ compensation coverage through the Hartford Insurance Group. Hartford paid workers compensation medical and wage benefits to Chen as a result of the incident.
Subsequently, Chen did not file an action against Kamara or Thrifty Rental Car, nor did she assign any relevant cause of action to Hartford. Nonetheless, Hartford brought a cause of action against Kamara and Thrifty Car Rental “on behalf of” Chen. The complaint was objected to by the Defendants, who alleged that Hartford improperly filed a suit which could only have been brought by the injured employee. Accepting that argument, the Trial Court dismissed the complaint, with prejudice. The matter was then appealed to the Superior Court, which vacated the Trial Court’s order and remanded the matter for further proceedings. In so ruling, the Superior Court emphasized that Hartford was not attempting to “split” Chen’s cause of action, as it sought the full amount of recovery due to Chen, not merely the amount representing its own subrogation interest.
Holding: On further appeal to the Pennsylvania Supreme Court, the Superior Court’s ruling was vacated and the Trial court’s order was reinstated. The Court found that an action brought by an insurer could be detrimental to the injured employee’s interests because the insurer would be faced with an “insurmountable conflict of interest,” as it has no incentive to expend time or resources to prosecute an injured employee’s independent claims for pain and suffering.
Recognizing § 319 of the Workers’ Compensation Act, which provides for the subrogation right of a workers’ compensation insurer, the Court discussed the dichotomy presented where an injured worker declines to file a third-party claim. The Court noted that a procedure allowing a workers’ compensation insurer to sue a third-party tortfeasor, without detrimentally affecting an injured employee’s independent cause of action, would further the purposes of § 319. However, the Court also noted that it was not in a position to create a “remedy to cure a possible deficiency in the Workers’ Compensation Act.” Thus, the Court explicitly held that unless the injured employee assigns his/her cause of action, or voluntarily joins the litigation as a party plaintiff, the insurer may not enforce its statutory right to subrogation by filing an action directly against a tortfeasor.
Takeaway: In light of the Supreme Court’s decision, workers’ compensation insurers seeking to pursue subrogation would be wise to seek the active participation of the injured worker. Alternatively, efforts should be made to obtain an assignment of the claim from the injured worker.
Questions about this case can be directed to Ryan Blazure, at (570) 820-0240 or firstname.lastname@example.org
Senate Bill 676 Amends and Improves Administration of UEGF Claims
By Paul A. Pauciulo, Esquire
Pennsylvania lawmakers created the Uninsured Employer Guaranty Fund (UEGF) to help injured workers with payment of wage loss and medical benefits in the instance where the Employer did not carry workers’ compensation insurance. Over the years, experience shows that there is a flaw in the funding mechanism for UEGF claims. As a result, the UEGF is chronically underfunded, and claimants sometimes wait many months to receive actual payment on an award.
Senate Bill 676, a companion piece of legislation to the recently passed implementation of a new Impairment Rating Evaluation (IRE) bill, provides for increased funding to the UEGF by more than doubling the assessment paid by workers’ compensation insurers. This provision is designed to alter the current state of affairs, and expedite and speed payment of claims against the Uninsured Employer Guaranty Fund. At the same time, Senate Bill 676, now enacted into law, makes it somewhat more difficult for the injured worker to collect wage loss benefits.
Bill Highlights Include:
- Injured worker must give notice to the UEGF within 45 days of learning his employer doesn’t have workers’ compensation insurance
- A claim petition shall be filed within 180 days after notice is given. If the time requirement for notice or the filing of the claim is not met the claim will be denied.
- Documentation will be required to support wage claims. The Judge’s power to rely on the testimony of the claimant alone is limited.
- The Department of Labor & Industry is empowered to establish medical panels for medical treatment in UEGF claims.
- Perhaps most importantly the Act provides for a change in the funding mechanism which will reduce backlogs of wage loss payments.
Questions about the new law can be directed to Paul A. Pauciulo, at (215) 564-2928 x 8510 or email@example.com