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Pennsylvania Court Affirms Subrogation Rights of Employer Prevent Double Recovery For Injured Worker Receiving Medical Malpractice Proceeds

In a recent case before the Pennsylvania Commonwealth Court, the issue was whether an employer and its workers’ compensation insurance company were entitled to subrogation of the proceeds for a medical malpractice settlement awarded to an injured employee. Subrogation is a right to pursue a third party. In this case, the court focused on the policy behind denying double recovery to the victim recovering benefits.

Mary Ann Protz appealed the decision of the Workers’ Compensation Appeal Board, which affirmed the Workers’ Compensation Judge’s (WCJ’s) award of subrogation of a third party medical malpractice award to Derry Area School District and PSBA/Old Republic Insurance Company.  Ms. Protz had received the malpractice award in respect to treatment she underwent following a workplace injury.

Ms. Protz worked for the Derry Area School District and suffered an injury to her right knee. The School District accepted the injury and paid partial-disability benefits.  In time, Ms. Protz’s work injury required a total knee replacement, resulting in a transected popliteal artery.  Ms. Protz brought medical malpractice actions against the hospital and the doctor, and his practice. She alleged the defendants were negligent in performing their duties and did not obtain her informed consent. This lawsuit settled.

Derry School District and its insurer then filed a petition to review compensation benefits that indicated Ms. Protz received a third party recovery.  They sought to subrogate that recovery under the Workers’ Compensation Act, Section 319.

A hearing took place in which the WCJ issued a decision granting the Derry School District and its insurer subrogation benefits from the time of settlement forward.  The judge found they had established the settlement was for the malpractice injury resulting from treatment for the work injury.  Since Derry School District and its insurer paid medical and indemnity benefits, they were entitled to subrogation.

The WCJ held that Derry School and its insurer were not entitled to subrogation of malpractice proceeds for past expenses and earnings.  They found that Medicare Care Availability and Reduction of Error (MCARE) did not preclude subrogation for future payments.

On appeal, the Board argued that the right of subrogation is absolute and automatic.  They affirmed the WCJ order concerning subrogation rights for future payments of lost earnings and expenses.  Ms. Protz appealed.

The court affirmed the Board’s order, granting Derry School District and its insurer subrogation of Ms. Protz’s third party medical malpractice recovery for future wage loss and medical expenses.

The Commonwealth Court stated that the right of subrogation is absolute and applies when a debt is paid by one party although another is liable.  An employer’s right to subrogation is made clear in the Workers’ Compensation Act, and policy reasons dictate that subrogation rights prevent a double recovery by the claimant for the same injury.  Subrogation rights also ensure the employer does not make payments as a result of a third party’s negligence, and in the same vein, the third party cannot escape liability for its negligence.

Regarding the MCARE Act and the preclusion of recovery for past medical expenses and earnings, the court stated that the subsection does not address future medical expenses or future lost wages. The court relied on a plain-meaning interpretation, consistent with the purpose of subrogation.  In this case, Ms. Protz would receive a double recovery from workers’ compensation benefits and medical malpractice proceeds for the same injury.  She would not have experienced this injury but for the malpractice of the defendants. Additionally, subrogation ensures that Derry School and its insurer do not have to compensate Ms. Protz for injuries that were caused by the defendants in her malpractice lawsuit.

At Needle Law, our workers’ compensation attorneys provide guidance and representation to injured workers seeking compensation for their work-related injuries.  We provide personalized attention for all our clients.  Contact us today at for a free, no-obligation consultation by calling 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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