PA Superior Court Rules that a Worker's Compensation Carrier Does Not Have a Right To Force a Plaintiff To Take Action Against a Third Party Tortfeasor To Recover a Lien

In the case of Loftus v. Decker, No. 611 WDA 2021 (Pa. Super. March 10, 2022 Olson, J., Murray, J., and Pellegrini, J.) (Op. by Pellegrini, J.), the Pennsylvania Superior Court quashed an appeal by a worker’s compensation carrier who had appealed the trial court’s denial of its Motion to Intervene in a personal injury case.

The record before the Court indicated that the injured party was a school bus driver who was injured during a motor vehicle accident.  During the course of the underlying matter, the injured party incurred a worker's compensation lien in excess of $196,000. 

According to the Opinion, the worker’s compensation carrier attempted to intervene after the Plaintiff-employee filed a Writ of Summons against an alleged tortfeasor.

The appellate court found that §319 of the Worker’s Compensation Act did not give a party any right, directly or indirectly, to take any action against a third-party tortfeasor. As such, the appellate court found that a worker’s compensation carrier could not force a Plaintiff employee to seek a recovery to satisfy a worker’s compensation statutory lien.

The Superior Court also noted that the Order from which the worker’s compensation carrier had appealed was not an appealable collateral Order.  Notably, the Pennsylvania Superior Court stated that it was addressing the issue of whether the Order at issue was an appealable collateral Order within its decision on the merits.  As such, the Court in this decision addressed the merits of the issues presented in this case relative to the ability of the worker's compensation carrier to intervene in the action.

As noted, this appeal was quashed.

Anyone wishing to review a copy of this decision may click this LINK.  The Dissenting Opinion written by Judge Murray can be viewed HERE.


Source: “Digest of Recent Opinions.” Pennsylvania Law Weekly (March 29, 2022).

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Corrected Link for case of M.M. a Minor v. The County of Carbon Highlighted on Tort Talk Yesterday

 Yesterday's Tort Talk post covered the case of M.M., a Minor v. The County of Carbon, No. 18-CV-2341 (C.P. Carbon Co. Dec. 29, 2021 Nanovic, J.).

Below is the corrrect Link for the decision.  I apologize for any confusion that may have been caused by the faulty Link.

In this decision, Judge Roger N. Nanovic addressed the issue of whether a minor Plaintiff was liable to pay a Department of Human Services/Medicaid lien arising out of a motor vehicle accident case in a matter where the Defendant had obtained a favorable ruling prior to trial on a Motion In Limine to exclude evidence at trial of all medical bills because it appeared that those medical bills were covered by a policy of insurance.

In the Opinion, Judge Nanovic found that the Medicaid payments were not paid under any policy of insurance and that, therefore, the lien must be paid back out of the Plaintiff’s settlement proceeds.

Anyone wishing to review a copy of this decision may click this LINK.

Court Rules on Court Approval of Settlement that Minor Plaintiff Must Satisfy Medicaid Lien

In the case of M.M., a Minor v. The County of Carbon, No. 18-CV-2341 (C.P. Carbon Co. Dec. 29, 2021 Nanovic, J.), Judge Roger N. Nanovic addressed the issue of whether a minor Plaintiff was liable to pay a Department of Human Services/Medicaid lien arising out of a motor vehicle accident case in a matter where the Defendant had obtained a favorable ruling prior to trial on a Motion In Limine to exclude evidence at trial of all medical bills because it appeared that those medical bills were covered by a policy of insurance.

According to the Opinion, the case ultimately settled and the Plaintiffs then pursued court approval of the settlement.

In that Petition for Court Approval of the Settlement, the Plaintiff asserted that, given the Motion In Limine result, which confirmed that the Plaintiff allegedly could not introduce the Medicaid payments at trial and recover on the same, the Plaintiff was not liable to pay the Medicaid lien following the court’s approval of the settlement.  The Plaintiff argued that, as such, the Medicaid lien did not have to be considered in terms of the settlement of the case.

In the Opinion, Judge Nanovic disagreed with the Plaintiff’s position and found that the Medicaid payments were not paid under any policy of insurance and that, therefore, the lien must be paid back out of the Plaintiff’s settlement proceeds.

Anyone wishing to review a copy of this decision may click this LINK.


I send thanks to Attorney Gerard J. Geiger of the Stroudsburg, PA law firm of Neuman Williams, P.C. for bringing this case to my attention.

Source of image:  Photo by Fabian Blank on www.unsplash.com.

Worker's Compensation Carrier Allowed to Intervene in Third Party Action to Recover Lien

 

In the case of Gleason v. Alfred I. Dupont Hospital, No. 1872 EDA 2020 (Pa. Super. Aug. 5, 2021 McLaughlin, J., King, J., Pellegrini, J.) (Op. by Pellegrini, J.), the Pennsylvania Superior Court permitted a worker’s compensation carrier to intervene in a third party personal injury litigation as part of the worker’s compensation carrier’s efforts to protect its subrogation rights on its lien by challenging the parties’ allocation of the settlement proceeds.

According to the Opinion, the Plaintiff-husband sustained burn injuries as a result of a work-related event.

During the course of the third party litigation, the injured Plaintiff entered into a sizeable settlement with one of the alleged tortfeasor Defendants. A petition was then filed by the Plaintiff with the court for court approval of that settlement, including the allocation of 60% of that settlement to the loss of consortium claim.

The worker’s compensation carrier filed a Petition to Intervene in order to protect its subrogation rights. The worker’s compensation carrier was asserting that the allocation of a substantial portion to the settlement funds to the loss of consortium claim was unfair and was designed to preclude the worker’s compensation carrier from fully recovering on its subrogation rights.

When that initial Petition to Intervene filed by the worker’s compensation carrier was denied, the worker’s compensation carrier eventually filed a second Petition to Intervene which was also denied. An appeal followed.

As noted above, on appeal, the Pennsylvania Superior Court ruled that the worker’s compensation should have been allowed to intervene in a third party action to protect its interests.

The court found that the requirements of the Collateral Order Doctrine had been met under the case presented such that the worker’s compensation carrier should be entitled to intervene.

The court noted that, where the worker’s compensation carrier had paid nearly a $1 million dollars on behalf of the injured party as a result of the workplace accident, justice required that it be allowed to intervene in a case where the settlement agreement against the third party tortfeasor was structured in a manner that limited the worker’s compensation lien to only about a third of the amount of the lien.

As such, the Superior Court found that the trial court had abused its discretion in denying the intervention sought by the worker’s compensation carrier as that intervention was necessary to fully protect the worker’s compensation carrier’s subrogation rights and rights to challenge the apportionment of the settlement proceeds in the third party matter relative to the loss of consortium claim.

Anyone wishing to review a copy of this decision may click this LINK.

I send thanks to Attorney Thomas B. Helbig of Helbig Mediation and Arbitration for bringing this case to my attention.

Source of Image (not of structure in question):  Photo by Markus Spiske on unsplash.com.

ERISA Plan Precluded From Pursuing Recovery From Third Party Settlement Due to Delay

In the case of Carpenter Technology Corp. v. Weida, 2018 W.L. 398297 (E.D. Pa. Jan. 11, 2018 Stengel, C.J.) (Mem. Op.), the court granted a Defendant’s Motion to Dismiss the Plaintiff’s action for equitable relief to enforce the terms and preserve the assets of an Employee Welfare Benefit Plan under the terms of the Employee Retirement Income Security Act (ERISA).  

The court explained that the Plaintiff, Carpenter Technology Corporation Health & Welfare Plan was a self-funded Employee Welfare Benefit Plan.   The plan contained a provision to fulfill ERISA’s requirement that such a plan be established and maintained by a written plan document.  That document contained an expressed provision indicating that Plan participants must fully reimburse the Plan from payments received from a settlement of personal injury claims against third parties.  

By way of further background, the Defendant in this matter was injured in a car accident. The Plan paid medical benefits on the injured party’s behalf.   The injured party filed suit against the tortfeasor and settled that action.  

The Plan then filed this suit asserting that the injured party was in possession of funds that belonged to the Plan and, through this lawsuit, the Plan was attempting to compel the injured party to reimburse the plan from the settlement proceeds.  

The Plan was seeking (1) an Order imposing a constructive trust and/or equitable lien in favor of the Plan against any settlement funds or any property into which the settlement funds had been converted by the injured party; (2) an Order enjoining the injured party from dissipating any of these settlement funds until the Plan’s rights could be adjudicated; (3) an Order enjoining the injured party from transferring or disposing of the settlement funds; and/or reasonable attorney’s fees and costs.  

In response, the injured party Defendant/Plan beneficiary filed the subject motion to dismiss which was granted by the court.  

In granting the Motion to Dismiss, the court noted that the ERISA Plan waited approximately nine (9) months after receiving notice from the injured party’s personal injury attorney of the pending third party settlement distribution before the Plan ever filed this Complaint for equitable relief.  

The Court also noted that, although the language of the Plan entitled the Plaintiff to relief, by the time the Plaintiff had filed this Complaint, the settlement proceeds, which had been deposited into a joint marital account, had already been dissipated.   The court additionally noted that, generally speaking, a joint property is protected from creditors for an individual spouse’s debt.  

Anyone wishing to review a copy of this decision may click this LINK.  The accompanying Order may be viewed HERE.

I send thanks to Attorney Scott Cooper of the Harrisburg law firm of Schmidt Kramer for bringing this case to my attention.

U.S. Supreme Court Addresses Important Reimbursement of Liens Question

The United States Supreme Court has issued an important ERISA lien decision in a case it acquired out of the Third Circuit Court of Appeals.  The case is viewed as a defeat by those in the Plaintiff's bar in terms of liens owed in third party personal injury matters. 

Here is a LINK to the SCOTUS Blog's write up on the case, including a link to the actual Opinion.

Judge Nealon Addresses Carriers' Efforts to Subrogate Against a Plaintiff's Third Party Recovery

In his May 25, 2012 Opinion in the case of Housing and Redevelopment Insurance Exchange v. Michaels, No. 2011-Civil-6121 (C.P. Lacka. Co. May 25, 2012 Nealon, J.), Lackawanna County Court of Common Pleas Judge Terrence R. Nealon addressed issues that arose in a case where an insurer and a claims administrator, who had both paid medical expense benefits to a police officer injured in a motor vehicle accident, filed against the officer seeking to recover subrogation liens and claims against the officer’s third party settlement with the negligent motorist.

The injured police office filed Preliminary Objections seeking to dismiss the subrogation claims for benefits paid under the Worker’s Compensation Act on the grounds that the Court of Common Pleas lacked jurisdiction to decide workers’ compensation liens. The officer also filed a demurrer to any subrogation claim based upon the Heart and Lung Act since that lien was allegedly barred by §1720 of the Motor Vehicle Financial Responsibility Law, 75 Pa. C.S. §1720. The Defendant police officer also asserted that carriers' Complaint required more specificity with regards to the exact amount of the lien being claimed.

Judge Nealon ruled that the Court of Common Pleas courts do indeed retain jurisdiction to resolve subrogation lien disputes involving the injured party and the Workers’ Compensation Act and other state laws. The Court ruled that since the subrogation controversy revolved the construction of 75 Pa. C.S. §1720 as it related to the Workers’ Compensation Act (and in particular 77 P.S. §671), the Court held that it retained jurisdiction to decide this matter.

Judge Nealon also ruled that the police officer’s demurrer to the carrier’s subrogation claim for Heart and Lung payments should be sustained since §1720 did not grant to the municipal employer’s insurer a subrogation lien against the tort officer’s recovery in this context.

The Court did deny the Defendant police officer’s request for a more specific Complaint in that the Complaint adequately notified the police officer of the claims against which he must defend. With regards to the apparently unspecified gross amounts of any subrogation lien claimed for workers’ compensation benefits, Judge Nealon noted that there was a statutorily mandated method governing the computation of such subrogation interests. Judge Nealon found that more specific information in this regard could be ascertained during the course of discovery.

Anyone desiring a copy of Judge Nealon’s detailed Opinion in the case of Housing and Redeveloping Insurance Exchange vs. Michaels may click this link.

Important ERISA Reimbursement Decision from Third Circuit

In its recent November 16, 2011 decision in the case of U.S. Airways v. McCutchen, ___ F.3d ___,  2011 WL 5557411 (3d Cir. 2011Sloviter, Fuentes, and Vanaskie, JJ.)(Opinion by Fuentes, J.), the U.S. Court of Appeals for the Third Circuit just held that an insurer is not entitled to 100 percent reimbursement of paid medical expenses when an injured employee has recovered only a fraction of his damages from a third party. 

Commentators have noted that, with this decision, the Third Circuit became the first court in the country to place clear limits on employer-based insurers' ability to recover medical expenses from injury victims.

The plaintiff in U.S. Airways v. McCutchen was a mechanic for U.S. Airways who sustained serious injuries as result of a head-on collision that allegedly left him permanently disabled.

 U.S. Airways' health  insurer paid about $67,000 for the plaintiffs medical expenses.  The plaintiff thereafter recovered only a portion of his total alleged damages from third parties, including the driver who caused the accident.  The health insurer did not make any request for repayment during the pendency of the litigation.

Then a plaintiff's attorney's nightmare came true when the health insurer turned around and sued the injured party for all of the money the health insurer had paid out for the injured party's medical treatment, i.e., the carrier sought an ERISA reimbursement.

U.S. Airways' health insurance plan relied on contract language to argue that it was entitled to all of its money regardless of how much the plaintiff had recovered from third parties.   The health insurance plan refused a request to reduce its claim by the amount of attorney's fees and costs involved.

The Third Circuit rejected the health insurer's position under equitable principles of law and remanded the case back to the Federal District Court level for a further hearing on the appropriate amount of the reimbursement in light of this decision.

The U.S. Airways v. McCutchen decision can be viewed at this link:

 http://www.ca3.uscourts.gov/opinarch/103836p.pdf


I send thanks to Attorney Scott Cooper of the Harrisburg, PA law firm of Schmidt Kramer and Attorney Stephen Seach of the Drums, PA law firm of The Law Offices of Stephen Seach for bringing  this case to my attention.