Re: WORKMEN'S COMPENSATION SUBROGATION RECOVERY IN PENNSYLVANIA -- RECOVERY FROM CLAIM AGAINST THIRD PARTY'S UM/UIM MOTOR VEHICLE POLICY

To The Companies In Interest:

I wanted to make you aware of a recent Pennsylvania Commonwealth Court decision allowing an employer/carrier's subrogation recovery against uninsured/underinsured benefits paid to the injured employee pursuant to a motor vehicle policy maintained by a third party.

In the case of Hannigan v. WCAB, Pa. Comm. Ct. (10/04) the Commonwealth Court upheld the Workers' Compensation Appeal Board, finding that the carrier is entitled to subrogate against an employee's recovery from a third-party's UM/UIM motor vehicle policy.

In the Hannigan case claimant sustained a work related injury in an automobile accident with an uninsured driver while operating a customer's vehicle in the course of his employment. Claimant began receiving workmen's compensation benefits and later recovered $275,000.00 in UM benefits under the customer's auto insurance policy.

The employer then filed a petition for modification of payments of its workmen's compensation benefits to asserts its subrogation rights.

Initially the Workmen's Compensation Judge denied the employer/insurance carrier's subrogation rights. The Workers' Compensation Appeal Board reversed that decision, thus allowing the subrogation rights.

On appeal the Commonwealth Court affirmed the Workers' Compensation Appeal Board holding that the employer was entitled to assert its subrogation rights against the UM benefits, as they represented damages the third party tortfeasor would have paid had he been adequately insured.

The Commonwealth Court distinguished in its opinion those cases in which the claimant was seeking UM/UIM benefits from his own, personal insurance policy. American Red Cross v. WCAB (Romano), 745 A.2d 78 (Pa. Cmwlth. 2000). In the case of American Red Cross the court had held that the employer could not subrogate against benefits received from the claimant's own policy.

Should you have any questions about the above, please do not hesitate to contact me.

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