Fortwangler v. Workers' Compensation Appeal Board
113 A.3d 28
| Pa. Commw. Ct. | 2015Background
- Claimant was injured in a work-related car accident (1/25/2007); Employer/Insurer accepted liability and paid benefits.
- Claimant settled a third-party suit for $100,000 and entered an Original Settlement Agreement (Dec. 5, 2008) that expressly waived Employer’s past and future subrogation rights in exchange for $19,500 (net lien calculation present).
- A Corrected Settlement Agreement (Jan. 7, 2009) revised lien calculations and recited payment of $19,818.14 “in full satisfaction of [Employer’s] right to subrogate against the third party settlement,” but omitted the explicit future-waiver sentence from the Original SA.
- Claimant later petitioned to reinstate/review benefits, alleging Employer had waived future subrogation and thus could not take credits against ongoing benefits; a WCJ found Claimant credible and ruled Employer waived past and future rights.
- The Workers’ Compensation Appeal Board reversed, holding Claimant failed to prove Employer waived future subrogation rights because the Corrected SA was ambiguous and Claimant produced no extrinsic evidence of negotiations or consideration supporting a future waiver.
- The Commonwealth Court affirmed the Board: because the Corrected SA is reasonably susceptible to more than one interpretation, Claimant bore the burden to present sufficient extrinsic proof of a future waiver and failed to show consideration for such a waiver.
Issues
| Issue | Claimant's Argument | Employer's Argument | Held |
|---|---|---|---|
| Whether Employer waived future subrogation rights by the Corrected SA | The Corrected SA’s phrase “full satisfaction” (and Claimant’s credible testimony about counsel’s representations) shows Employer waived past and future rights | Corrected SA is ambiguous and contains no express future-waiver; the $19,818.14 equals the net accrued lien (no consideration for future waiver) | No waiver of future subrogation rights; Claimant failed to meet burden of proof |
| Whether extrinsic/parol evidence could be used to interpret the Corrected SA | Parol evidence (Claimant’s testimony re: negotiations) supports Claimant’s understanding | Absence of corroborating evidence from negotiations or counsel’s files means Claimant’s testimony is insufficient | Because the contract is ambiguous, parol evidence is allowed but Claimant produced insufficient extrinsic evidence; Board decision stands |
| Whether there was consideration for waiving future subrogation rights | Claimant implies settlement consideration supported waiver | The payment matched the exact net accrued lien; Claimant was legally obligated to that amount, so no new consideration for future waiver | No consideration shown for future waiver; waiver not effective |
| Standard of review and burden of proof on appeal | Claimant contends WCJ’s credibility finding was sufficient | Board and Court stress moving party bears burden to prove waiver; review limited to substantial evidence | Affirmed Board: sufficiency of evidence (not credibility) controls; Claimant failed her burden |
Key Cases Cited
- Dale Mfg. Co. v. Bressi, 421 A.2d 653 (Pa. 1980) (explains subrogation rationale and that employee should not obtain double recovery)
- Gorman v. Workers’ Compensation Appeal Board, 952 A.2d 748 (Pa. Cmwlth. 2008) (employer’s right to subrogation is automatic and absolute)
- Winfree v. Philadelphia Elec. Co., 554 A.2d 485 (Pa. 1989) (employer’s subrogation can be abrogated only by choice)
- Dasconio v. Workers’ Compensation Appeal Board, 559 A.2d 92 (Pa. Cmwlth. 1989) (distinguishes past (accrued lien) and future (credit against future benefits) aspects of subrogation; settlement of accrued lien generally does not affect future credit)
- Bayush v. Workers’ Compensation Appeal Board, 534 A.2d 858 (Pa. Cmwlth. 1987) (release of future credit is not contrary to Act/public policy when parties agree)
- Gingerich v. Workers’ Compensation Appeal Board, 825 A.2d 788 (Pa. Cmwlth. 2003) (employer must expressly agree to relinquish future subrogation rights)
- SKF USA, Inc. v. Workers’ Compensation Appeal Board (Smalls), 714 A.2d 496 (Pa. Cmwlth. 1998) (consideration and bargained-for exchange required for valid waiver; formalities like seal may affect enforceability)
- Reeder v. Workers’ Compensation Appeal Board, 871 A.2d 337 (Pa. Cmwlth. 2005) (agreement terms and credible testimony of negotiating representative supported finding on whether future waiver was intended)