Stermel v. Workers' Compensation Appeal Board
103 A.3d 876
| Pa. Commw. Ct. | 2014Background
- Stermel (Claimant) seeks review of the Board's adjudication upholding subrogation of Heart and Lung benefits by the City of Philadelphia (Employer) against Claimant's third-party tort recovery.
- WCJ granted subrogation; the Pennsylvania Supreme Court later reversed the Court’s prior Heart and Lung subrogation ruling, and the Board nonetheless concluded some Heart and Lung payments were workers’ compensation and thus subject to subrogation.
- The three statutes governing the dispute are the Workers’ Compensation Act, the Heart and Lung Act, and the Motor Vehicle Financial Responsibility Law (MVFRL).
- The Heart and Lung Act provides full salary during temporary disability for public safety employees; any workers’ compensation disability is turned over to the public employer. Self-insured employers pay Heart and Lung benefits and may still seek subrogation in appropriate contexts.
- MVFRL § 1720 prohibits subrogation/reimbursement from a claimant’s motor vehicle tort recovery for workers’ compensation and Heart and Lung benefits under its broad “benefits paid or payable” language, and § 1722 bars recovery of benefits paid under MVFRL from tort recoveries. Act 44 amended these regimes, restoring subrogation for workers’ compensation benefits but not Heart and Lung benefits. Oliver v. City of Pittsburgh (Pa. 2011) held that Act 44’s § 25(b) revived WC subrogation but did not impact anti-subrogation for Heart and Lung benefits. The case at issue involves a 2006 injury in which Claimant received Heart and Lung benefits and later recovered $100,000 from third parties; the Employer sought subrogation totaling about $27,743.33. The Board’s decision to grant subrogation after Oliver is at issue, with questions of waiver and immunity also arising.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Employer waived subrogation by failing to raise it in its initial Board appeal. | Stermel argues waiver because Employer did not raise subrogation in its Board brief. | Employer contends Claimant appealed first and Employer raised the issue in its rehearing petition to the Board; waiver does not attach. | Waiver not established; Employer timely preserved the subrogation issue on rehearing. |
| Whether Heart and Lung benefits are subject to subrogation against a claimant’s third-party recovery under Oliver and related authorities. | Claimant asserts Oliver controls, denying subrogation for Heart and Lung benefits. | Employer relies on Wisniewski/Excalibur and the presence of WC eligibility to argue two-thirds of Heart and Lung benefits were WC benefits, permitting subrogation. | The Board erred; Oliver controls that Heart and Lung benefits are not subrogable against third-party recoveries in motor vehicle cases. |
| Whether Claimant is immune from subrogation under Section 23 of Act 44 as a government employee. | Section 23 provides sovereign/official immunity from subrogation claims. | Immunity does not apply when the public employer seeks subrogation against a private tortfeasor; issue not reached if subrogation not warranted. | Immunity not reached; Court reverses on subrogation, rendering immunity discussion moot. |
Key Cases Cited
- Oliver v. City of Pittsburgh, 608 Pa. 386, 11 A.3d 960 (Pa. 2011) (restores WC subrogation rights but preserves Heart and Lung anti-subrogation)
- Wisniewski v. Workmen’s Compensation Appeal Board (City of Pittsburgh), 621 A.2d 1111 (Pa. Cmwlth. 1993) (two-thirds of Heart and Lung payments may be WC benefits; distinct statutory regimes)
- Excalibur Insurance Management Service, 32 A.3d 291 (Pa. Cmwlth. 2011) (Supersedeas fund reimbursement; Heart and Lung vs WC distinctions)
- Fulmer v. Pennsylvania State Police, 647 A.2d 616 (Pa. Cmwlth. 1994) (construction of MVFRL § 1720/1722; Heart and Lung not subrogable via 1722)
- Tannenbaum v. Nationwide Insurance Co., 992 A.2d 859 (Pa. 2010) (legislative shift to reduce premiums; purpose of § 1722)
- Frazier v. Workers’ Compensation Appeal Board (Bayada Nurses, Inc.), 52 A.3d 241 (Pa. 2012) (sovereign immunity protects public fiscases in some settlements)