Re: WORKMEN'S COMPENSATION SUBROGATION RECOVERY IN PENNSYLVANIA -- RECOVERY FROM THIRD-PARTY'S SETTLEMENT FUNDS

To The Companies In Interest:

You should be aware of a recent Pennsylvania Commonwealth Court decision allowing a carrier's subrogation recovery from a thirty party settlement fund which resulted from a suit against a homeowner for allowing his dog to chase the claimant. Superior Lawn Care and State Workers' Insurance Fund v. WCAB (Hoffer), Pa. Comm. Ct. (6/05) was a case that started with a Workmen's Compensation Judge's Ruling in favor of the subrogated carrier's lien, which was then reversed by the Workers' Compensation Appeal Board and then was appealed to the Commonwealth Court.

In the Hoffer case claimant was working as a lawn technician for his employer at a private residence. As he was setting up his equipment, he was chased by the homeowner's family dog and while running to his truck for safety he injured his left knee. Mr. Hoffer made a claim for workers' compensation benefits and more than $260,000.00 was paid for medical benefits and indemnity benefits.

Subsequently claimant brought suit against the homeowner and recovered in excess of $100,000.00 on the third party claim.

Eight years after the third party recovery the carrier asserted its claim for subrogation. Claimant resisted the lien contending that the Pennsylvania Motor Vehicle Financial Responsibility Law barred subrogation, as claimant was injured jumping into his company -- provided truck. Further claimant contended that the carrier was barred by the equitable doctrine of laches, as the carrier delayed eight years before asserting its lien.

The Workmen's Compensation Judge found that claimant's injury did not arise out the use or maintenance of a motor vehicle and, therefore, the MVFRL did not preclude subrogation. Accordingly, the judge found in favor of the subrogated carrier.

On appeal the Workers' Compensation Appeal Board reversed the judge's decision, finding that the subrogation claim was barred by the doctrine of laches, and that the carrier offered no reason for its delay in asserting its lien. The carrier then appealed to the Commonwealth Court.

On appeal the Commonwealth Court reversed the WCAB and reinstated the judge's decision. In its opinion the Court noted that the Pennsylvania Supreme Court decision in Thompson v. WCAB, (USF&G Co.), 781 A.2d 1146 (Pa. 2001) provided that an employer's right to subrogation in a workers' compensation case is absolute, so that the claimant may not assert an affirmative defense of laches. The court pointed out that an employer's right to subrogation is generally absolute, unless the employer engages in deliberate, bad faith conduct, which was not present in this case.

Should you have any questions about the above, please do not hesitate to contact me. For other "Companies In Interest Letters", on the subject of subrogation, please visit our website at www.bbs-law.com.

Very truly yours,

David E. Prewitt

For further information, please contact David E. Prewitt, Esquire.
Telephone: 215-665-3379
E-mail: prewitt@bbs-law.com