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Pennsylvania Court Affirms Employer’s Insurance Company Entitled to Subrogation Against Third Party Tortfeasor When Third Party Paid for Motor Vehicle Insurance Policy

In a recent case before the Pennsylvania Commonwealth Court, the issue centered on whether an employer was entitled to subrogation from a third party in an underlying workers’ compensation case.  Pennsylvania workers’ compensation law provides that an employer has the ability to subrogate, or recover as though they were in the position of the injured employee. The issue before the court was whether an employer has the right to subrogation when it did not pay for the insurance policy at issue.

Karen Davis, a claimant for workers’ compensation benefits, was a passenger in a car involved in an accident while in the course and scope of her employment with PA Social Services Union.  A co-employee, Vandalia Jarvie, had been operating the vehicle.  Ms. Davis suffered injuries to her cervical and lumbar spine as a result of the accident.

At the time of the accident, PA Social Services was insured by Netherlands Insurance Company. Netherlands paid Ms. Davis benefits in the amounts of $56,213.00 for wage loss and $33,572.22 for medical treatment. Ms. Davis then filed an uninsured motorist claim with Ms. Jarvie’s car insurance company, Allstate, eventually settling her claim for $25,000.00.

PA Social Services and Netherlands Insurance Company filed an offset petition. They contended their entitlement to assert a subrogation lien on the proceeds from Ms. Davis’ uninsured motorist settlement. The workers’ compensation judge held that Netherlands Insurance Company was entitled to subrogation. The judge noted that Ms. Jarvie, and not Ms. Davis, had purchased the car insurance with the uninsured motorist benefits in dispute.  Since the insurance had not been purchased by Ms. Davis, the claimant Netherlands was entitled to subrogation under Pennsylvania law. The Workers’ Compensation Appeals Board affirmed this decision. Ms. Davis then filed a petition for review with the Commonwealth Court.

The issue before the appellate court was whether Netherlands Insurance Company was entitled to subrogation against Ms. Davis’ recovery of benefits from Allstate Insurance Company. The court stated that his recovery was from a non-negligent co-employee’s car insurance policy.  PA Social Services did not pay for this automobile insurance policy.

Statutory law sets forth the right of subrogation, which provides that when a compensable injury is caused in whole or part by a third party, the employer shall be subrogated to the right of the employee against the third party. Ms. Davis argued that an employer such as PA Social Services should have the right to subrogation only when it paid for the uninsured/underinsured motorist coverage.  The court rejected this argument because  an employer has a right to subrogation when it paid for an insurance policy, as well as when a third party paid for a policy. Here, Ms. Davis’ co-employee paid for the uninsured motorist insurance policy.  PA Social Services was entitled to subrogate against Ms. Davis’ settlement proceeds.

The court affirmed the judgment of the lower court.

The workers’ compensation attorneys at Needle Law help injured workers understand their rights and pursue claims for benefits and compensation against employers.  For a free, confidential consultation, contact our office at 570-344-1266.

More Blog Posts:

Pennsylvania Appeals Court Holds Workers’ Compensation Insurer Cannot Bring Claim Against Tortfeasor, Scranton Personal Injury Lawyer Blog,  November 11, 2015

Pennsylvania Court Affirms Employer Entitled to Offset of Claimant’s Benefits, Scranton Personal Injury Lawyer Blog, October 17, 2015

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