A. Kalmanowicz v. WCAB (Eastern Industries, Inc.)
2017 Pa. Commw. LEXIS 441
| Pa. Commw. Ct. | 2017Background
- Claimant (Kalmanowicz), a truck driver, was injured in a 6/1/2009 vehicle accident (physical injuries and PTSD) and filed a workers’ compensation claim.
- Claimant settled a third-party tort claim for $15,000 (net $9,498.25) around 4/27/2011, prior to Employer accepting the workers’ compensation claim.
- WCJ Cummings awarded workers’ compensation benefits on 10/11/2011; Employer later filed a petition (6/13/2012) seeking subrogation/reimbursement under Section 319.
- Initial WCJ denied Employer’s suspension petition (finding no subrogation fund available at time of settlement); Board reversed in 2015, holding Section 319 gives an absolute subrogation right absent consent.
- Parties stipulated on remand to a $9,498.25 subrogation amount and a $65/week credit against Claimant’s indemnity benefits; Board affirmed the WCJ’s order and Claimant appealed to this Court.
Issues
| Issue | Plaintiff's Argument (Kalmanowicz) | Defendant's Argument (Eastern Industries) | Held |
|---|---|---|---|
| Whether Employer waived its Section 319 subrogation right by contesting the WC claim (i.e., before the third-party settlement was distributed) | Contesting the claim and not having accepted liability before the third-party settlement meant there was no fund available for Employer to subrogate; Employer effectively waived subrogation by its contest | Section 319 creates an automatic, absolute right to subrogation that is not negated by merely contesting a claim; Employer did not waive rights absent express waiver, bad faith, or dereliction | Court held Employer did not waive its subrogation right by contesting the claim; affirmed Board/WCJ and allowed subrogation per stipulation |
| What conduct can abrogate employer’s statutory subrogation right under Section 319 | Impliedly argued contest could bar subrogation (practical unfairness) | Waiver is narrowly construed: only express contractual waiver, failure to exercise due diligence in certain cases, or bad faith/dereliction will defeat subrogation | Court reiterated narrow limits: express waiver, due-diligence failures, or bad faith required to abrogate subrogation; no evidence of bad faith here |
Key Cases Cited
- Serrano v. Workers’ Comp. Appeal Bd. (Ametek, Inc.), 154 A.3d 445 (Pa. Cmwlth. 2017) (subrogation under Section 319 is automatic and admits no express exceptions)
- Young v. Workers’ Comp. Appeal Bd. (Chubb Corp.), 88 A.3d 295 (Pa. Cmwlth.) (employer bears burden to show payments were due to third-party negligence and recovery fund relates to same injury)
- Dale Mfg. Co. v. Bressi, 421 A.2d 653 (Pa. 1980) (purposes of workers’ compensation subrogation: prevent double recovery, protect employer, hold third party accountable)
- Fortwangler v. Workers’ Comp. Appeal Bd. (Quest Diagnostics), 113 A.3d 28 (Pa. Cmwlth. 2015) (contractual waiver of subrogation must be express to be effective)
- Independence Blue Cross v. Workers’ Comp. Appeal Bd. (Frankford Hosp.), 820 A.2d 868 (Pa. Cmwlth. 2003) (failure to exercise due diligence in pursuing subrogation may constitute waiver in certain circumstances)
- Glass v. Workers’ Comp. Appeal Bd. (City of Philadelphia), 61 A.3d 318 (Pa. Cmwlth. 2013) (absent bad faith or dereliction, courts will not find waiver of statutory subrogation)
- Thompson v. Workers’ Comp. Appeal Bd. (USF & G), 781 A.2d 1146 (Pa. 2001) (Supreme Court recognized limits to absolute subrogation where employer bad faith might affect subrogation rights)