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GOLD STAR SERVICE v. WORKMEN'S COMPENSATION APPEAL BOARD AND ALBERT TULLIO (08/05/75)

decided: August 5, 1975.

GOLD STAR SERVICE, INC. AND PENNSYLVANIA MANUFACTURERS ASSOCIATION INSURANCE COMPANY, INSURANCE CARRIER, APPELLANTS,
v.
WORKMEN'S COMPENSATION APPEAL BOARD AND ALBERT TULLIO, APPELLEES



Appeal from the Order of the Workmen's Compensation Appeal Board in case of Albert Tullio v. Gold Star Service, Inc., No. A-66516.

COUNSEL

David J. Reedy, Jr., for appellant.

J. Brian Foley, with him James N. Diefenderfer, for appellees.

President Judge Bowman and Judges Crumlish, Jr., Kramer, Wilkinson, Jr., Mencer, Rogers and Blatt. Opinion by Judge Rogers. President Judge Bowman dissents. Dissenting Opinion by Judge Wilkinson. Judge Kramer joins in this dissent.

Author: Rogers

[ 21 Pa. Commw. Page 2]

The facts of this workmen's compensation case are as follows: The claimant, Albert Tullio, slipped and fell at his place of employment. He was paid compensation for total disability under an agreement for about four months. The employer (by which word we mean to include its carrier) then filed a petition to modify and by agreement, confirmed by decision of the referee, payments were thereafter made for 55% partial disability. The instant proceedings were a consolidation of the employer's petition to terminate and Tullio's application for modification claiming recurrence of total disability. A referee found that total disability had recurred and awarded the claimant compensation for total disability. The propriety of this finding and this conclusion, affirmed by the Workmen's Compensation Appeal Board, is not questioned in this appeal.

That which is in question is the Board's disposition of the employer's claim for subrogation to a recovery by the

[ 21 Pa. Commw. Page 3]

    claimant in litigation against a third party. At the referee's hearing the parties entered into a brief stipulation of the following facts: that Tullio recovered against the third party at the hands of a jury the sum of $37,219; that of this sum the employer received $7702.51 for compensation theretofore paid; that the employer paid Tullio's attorney, pursuant to an agreement between the employer and the attorney, a fee in the amount of $2567.50 for the recovery of this amount of $7702.51; that Tullio paid the attorney the sum of $15,967.06, $14,887.66 of which was for counsel fee and the balance of $1079.40 for trial costs advanced; that $7702.51 having been paid to the employer, Tullio was entitled to receive from the verdict the sum of $29,516.49, subject to the payment of his attorney's fees and expenses; that after paying the fees and costs due his attorney in the amount of $15,967.06, Tullio received the amount of $13,549.49. There is nothing in the stipulation or elsewhere in the record showing that Tullio's agreement with the attorney was that he would pay fees based on only the amount due him after the payment of the employer's claim for subrogation for past compensation -- that is, on the sum of only $29,516.49. Nor is there any evidence that the employer's and Tullio's agreements with the attorney were other than completely separate arrangements.

The referee and the Workmen's Compensation Appeal Board were required to determine on these facts the proper application of Section 319 of the Workmen's Compensation Act, Act of June 2, 1915, P.L. 736, as amended, 77 P.S. ยง 671 which, at the time relevant to the proceedings, provided as follows:

"When 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

[ 21 Pa. Commw. Page 4]

    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 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."

The Workmen's Compensation Appeal Board concluded that the proper application of that section to these facts required the following: (1) that the employer's liability for future compensation payments, payable for life, could exceed $37,219 and that therefore the employer was entitled to subrogation against the entire recovery;*fn1 (2) that the employer having recovered past compensation paid in the amout of $7702.51, was therefore entitled to a credit against future payments of compensation in the amount of $29,516.49, subject to reimbursing Tullio for counsel fees and costs paid by him on this amount; (3) that the $15,967.06 paid by Tullio to his attorney was 42.9% of the total recovery of $37,219; that the carrier should therefore pay to Tullio 42.9% of weekly compensation during each week it thereafter took credit against future payments of compensation on the amount of ...


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