Thursday, November 21, 2013

First Party Carrier's Subrogation Claim Against Workers' Comp Carrier Denied

In its recent decision in the case of Liberty Mut. Ins. Co. v. Excalibur Management Services, No. 1792 C.D. 2012 (Pa.Cmwlth. Nov. 8, 2013 Leadbetter, J.), the Pennsylvania Commonwealth Court addressed a first party auto carrier's subrogation rights against a workers' compensation carrier.

Liberty Mutual, the first party auto carrier, had paid out first party medical benefits to its insured as a result of a work-related motor vehicle accident.  The first party carrier was seeing reimbursement from the injured party's workers' compensation carrier for the medical benefits the first party carrier had paid out during times when the worker's compensation claim was in a denied status. 

The injured party eventually did secure workers' compensation benefits and that workers' compensation claim was eventually resolved by way of a compromise and release agreement.  Thereafter, the first party auto carrier filed suit on its subrogation/reimbursement claim against the workers's compensation carrier.

The worker's compensation carrier countered with preliminary objections putting forth the primary argument that the first party auto carrier had failed to exhaust its statutory remedies during the pendency of the worker's compensation matter and prior to filing this suit.

The Commonwealth Court ultimately ruled because Liberty Mutual, the injured claimant's auto insurer, failed to establish its subrogation or right of reimbursement interests for having paid its insured's medical bills during the pendency of its insured's workers' compensation claim, the trial court was correct in dismissing Liberty's complaint against the workers' compensation insurer.

The Commonwealth Court found that not only did Liberty pursue its claim in the wrong forum, it waited too long.  In so ruling the court stated that subrogation under the second paragraph of 77 P.S. § 671 is not self-executing.  Rather, the language in § 671 is clear and mandatory and, in applying this language, the Commonwealth Court found that Liberty Mutual had failed to exercise reasonable diligence in seeking reimbursement.  As such, the subrogation/reimbursement claim was dismissed.

I send thanks to Attorney Bill Mabius of the Pennsylvania Association for Justice for bringing this case to my attention.
Anyone wishing to review this decision may click HERE.

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