Young v. Workers' Compensation Appeal Board (Chubb Corp.)
2014 Pa. Commw. LEXIS 157
| Pa. Commw. Ct. | 2014Background
- Claimant injured in Delaware while performing work duties; received Pennsylvania WC benefits under the Act.
- Claimant settled a third-party action in Delaware for $160,000; $58,383.33 was placed in escrow by Claimant’s counsel to resolve Employer’s WC lien.
- Employer sought subrogation under Section 319 of the Act and raised a lien of $219,101.77, with $101,381.94 sought to be recovered.
- WCJ found subrogation under the Act was absolute and denied equitable reductions; adjusted expenses but kept lien above third-party recovery.
- Board affirmed; Claimant argues (a) Delaware law should govern subrogation due to Delaware damages/limits, (b) Employer failed to prove the lien amount, (c) equitable compromise should reduce recovery; Court affirms applying Pennsylvania law and the lien amount.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Applicable law for subrogation governs | Claimant—Delaware law should apply due to Delaware action and limits. | Employer—Pennsylvania law governs, with most significant contacts. | Pennsylvania law applies. |
| Employer’s burden to prove entitlement and amount of subrogation | Claimant contends the lien amount and list of expenses are unreliable or excessive. | Employer presented detailed, credible evidence of payments; expenses largely related to WC claim. | Employer satisfied entitlement and correctly calculated the lien. |
| Equitable considerations to limit subrogation or accept escrow compromise | One-third of the third-party recovery should be escrowed as a compromise to avoid double recovery. | Equitable compromises require Employer consent; no authority to limit subrogation through escrow. | Equity cannot override statutory subrogation; compromise not permitted without Employer consent. |
Key Cases Cited
- Allstate Ins. Co. v. McFadden, 407 Pa. Super. 537 (Pa. Super. 1991) (origin of significant-contacts approach in WC subrogation)
- Myers v. Commercial Union Assurance Cos., 506 Pa. 492 (Pa. 1984) (Illinois law governs WC subrogation where significant contacts favor Illinois)
- Byard F. Brogan, Inc. v. W.C.A.B. (Morrissey), 637 A.2d 693 (Pa. Super. 1994) (Pennsylvania law governs subrogation when applicable; adoption of Allstate rationale)
- Thompson v. W.C.A.B. (USF&G), 566 Pa. 420 (Pa. 2001) (no equitable exceptions to subrogation; absolute right unless chosen otherwise)