- The Pennsylvania Supreme Court Rules that Absent Assignment or Voluntarily Joinder by an Injured Employee, a Workers’ Compensation Insurer May not Enforce its Statutory Right to Subrogation by Filing an Action Directly against a Tortfeasor.
- December 10, 2018 | Author: Ryan C. Blazure
- Law Firm: Thomas, Thomas & Hafer LLP - Wilkes-Barre Office
Background: On October 10, 2013, Chen was injured while in the parking lot of Thrifty Rental Car when she was struck by a rental vehicle operated by Kamara. At the time of the incident, Chen was working for Reliance Sourcing, which maintained workers’ compensation coverage through the Hartford Insurance Group. Hartford paid workers compensation medical and wage benefits to Chen as a result of the incident.
Subsequently, Chen did not file an action against Kamara or Thrifty Rental Car, nor did she assign any relevant cause of action to Hartford. Nonetheless, Hartford brought a cause of action against Kamara and Thrifty Car Rental “on behalf of” Chen. The complaint was objected to by the Defendants, who alleged that Hartford improperly filed a suit which could only have been brought by the injured employee. Accepting that argument, the Trial Court dismissed the complaint, with prejudice. The matter was then appealed to the Superior Court, which vacated the Trial Court’s order and remanded the matter for further proceedings. In so ruling, the Superior Court emphasized that Hartford was not attempting to “split” Chen’s cause of action, as it sought the full amount of recovery due to Chen, not merely the amount representing its own subrogation interest.
Holding: On further appeal to the Pennsylvania Supreme Court, the Superior Court’s ruling was vacated and the Trial court’s order was reinstated. The Court found that an action brought by an insurer could be detrimental to the injured employee’s interests because the insurer would be faced with an “insurmountable conflict of interest,” as it has no incentive to expend time or resources to prosecute an injured employee’s independent claims for pain and suffering.
Recognizing § 319 of the Workers’ Compensation Act, which provides for the subrogation right of a workers’ compensation insurer, the Court discussed the dichotomy presented where an injured worker declines to file a third-party claim. The Court noted that a procedure allowing a workers’ compensation insurer to sue a third-party tortfeasor, without detrimentally affecting an injured employee’s independent cause of action, would further the purposes of § 319. However, the Court also noted that it was not in a position to create a “remedy to cure a possible deficiency in the Workers’ Compensation Act.” Thus, the Court explicitly held that unless the injured employee assigns his/her cause of action, or voluntarily joins the litigation as a party plaintiff, the insurer may not enforce its statutory right to subrogation by filing an action directly against a tortfeasor.Takeaway: In light of the Supreme Court’s decision, workers’ compensation insurers seeking to pursue subrogation would be wise to seek the active participation of the injured worker. Alternatively, efforts should be made to obtain an assignment of the claim from the injured worker.