Appeal, No. 277, Oct. T., 1959, from judgment of Court of Common Pleas of Clearfield County, Nov. T., 1958, No. 487, in case of James H. Bumbarger v. Harvey Bumbarger et al. Judgment reversed.
Joseph J. Lee, for appellants.
No argument was made nor brief submitted for appellee.
Before Rhodes, P.j., Gunther, Wright, Woodside, Ervin, and Watkins, JJ. (hirt, J., absent).
[ 190 Pa. Super. Page 572]
This appeal involves the extent to which a workmen's compensation insurance carrier is subrogated to a settlement made between the employe, to whom compensation was paid, and a third party tortfeasor who caused the injury. Appellants, Harvey Bumbarger and Pennsylvania Threshermen and Farmers' Mutual Casualty Insurance Company, appeal from a judgment for claimant in the Court of Common Pleas of Clearfield County. The court sustained a decision of the Workmen's Compensation Board that the insurance carrier was not subrogated to that part of the settlement between the employe and the third party which was designated in the settlement as being damages for pain and suffering.
[ 190 Pa. Super. Page 573]
Claimant, James H. Bumbarger, was injured in an automobile accident through the negligence of Ephraim S. Davis. At the time of the accident claimant was on the business of his employer, Harvey Bumbarger. He filed for and was awarded compensation which was paid by appellant insurance carrier.Thereafter claimant filed an action of trespass against the executrix of the estate of Ephraim S. Davis, deceased; neither the employer nor the insurance carrier intervened. The trespass action was settled for $2,929.14, and claimant gave a release authorizing payment to the insurance carrier in the amount of $1,498.98, representing loss of wages to August 26, 1957, together with hospital and doctor bills previously paid by the insurance carrier. Settlement also included $1,430.16; of this amount $930.16 was for damages to his automobile, and $500 was "allotted for pain and suffering." The insurance carrier paid $374.74 as its proportionate share of the employe's attorney fees. Appellant, the insurance carrier, contended before the referee that its right of subrogation should apply to payments of compensation made to the employe up to January 28, 1958, in the total amount of $1,585.56, of which it was only reimbursed to the extent of $1,498.98, leaving a balance of $86.58 less 25 per cent for attorney fees, or $64.94, and that it was also entitled to subrogation on future payments of compensation to be made after January 28, 1958, in the sum of $413.42, less 25 per cent thereof for attorney fees leaving a balance of $310.07. Claimant having refused to agree, on February 26, 1958, a petition was filed by the insurance carrier with the workmen's compensation authorities to terminate or modify the compensation awarded because of claimant's settlement with the third party. The referee concluded that the insurance carrier was entitled to a credit by way of subrogation to the full amount of the
[ 190 Pa. Super. Page 574]
settlement for personal injuries including the damages for pain and suffering. On appeal, as we have indicated, the board reversed the decision of the referee and held the $500 allotted to pain and suffering was not subject to subrogation by the employer and his insurance carrier. The board reasoned that since the insurance carrier could not have received the item for pain and suffering from the third party tortfeasor if the insurance company had brought the action it was not entitled to benefit from this item of damages in the action brought by the claimant. The Court of Common Pleas of Clearfield County affirmed the board. The right of an employer and his insurance carrier to subrogation against the third party tortfeasor arises by virtue of section 319 of the Act of June 2, 1915, P.L. 736, as amended, 77 PS § 671. This section provides as follows: "Where the compensable injury is caused in whole or in part by the act or omission of a third party, the employer shall be subrogated to the right of the employe, his personal representative, his estate or his dependents, against such third party to the extent of the compensation payable under this article by the employer; reasonable attorney's fees and other proper disbursements incurred in obtaining a recovery or in effecting a compromise settlement shall be prorated between the employer and employe, his personal representative, his estate or his dependents. Any recovery against such third person in excess of the compensation theretofore paid by the e employer shall be paid forthwith to the employe, his personal representative, his estate or his dependents, and shall be treated as an advance payment by the employer on account of any future installments of compensation."
In Furia v. Philadelphia, 180 Pa. Superior Ct. 50, 54, 118 A.2d 236, 238, we said: "Subrogation is an equitable doctrine and ...