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FREDERICK H. HOLGATE v. WORKMEN'S COMPENSATION APPEAL BOARD (CITY PHILADELPHIA) (02/17/87)

COMMONWEALTH COURT OF PENNSYLVANIA


decided: February 17, 1987.

FREDERICK H. HOLGATE, PETITIONER
v.
WORKMEN'S COMPENSATION APPEAL BOARD (CITY OF PHILADELPHIA), RESPONDENTS

Appeal from the Order of the Workmen's Compensation Appeal Board in the case of Frederick H. Holgate v. City of Philadelphia, No. A-86523.

COUNSEL

Michael Anthony De Fino, for petitioner.

Carlton L. Johnson, with him, Michael David Eiss, for respondent, City of Philadelphia.

Judges MacPhail and Colins, and Senior Judge Kalish, sitting as a panel of three. Opinion by Judge MacPhail.

Author: Macphail

[ 104 Pa. Commw. Page 33]

Frederick H. Holgate (Petitioner) has filed a petition for review in which the sole issue raised is whether the Workmen's Compensation Appeal Board (Board) and referee correctly decided that the Police and Fire Medical Association (Association) has no subrogation rights under Section 319 of The Pennsylvania Workmen's Compensation Act (Act),*fn1 77 P.S. § 671. We vacate and remand.

Petitioner, who worked for twenty-six years for the City of Philadelphia (Employer) as a fire fighter, filed a claim petition for compensation on December 2, 1982 in which he alleged that he was disabled by an occupational disease under Section 108(o) of the Act, 77 P.S. § 27.1(o). Following a hearing on the petition, a supplemental agreement was entered in which it was agreed that Petitioner became partially disabled due to a work-related lung condition on October 30, 1982. The agreement further provided that "the referee is to determine defendant's [Employer's] liability, if any, for payment of the Police and Fire Medical Association bill in the amount of $1,785.00." It is undisputed that the $1,785.00 bill represents charges paid by the Association for in-patient care of Petitioner at John F. Kennedy Memorial Hospital from October 31, 1982 through November 2, 1982. Employer's Brief at 3.

Without conducting a further evidentiary hearing, the referee subsequently rendered a decision denying the Association's subrogation claim. The referee's pertinent fact findings were as follows:

3. Still at issue for the Referee's decision as noted in the Supplemental Agreement, is the subrogation claim of the Police and Fire Medical

[ 104 Pa. Commw. Page 34]

Association, an adjunct of the Firemen's union, for medical services in the amount of $1,785.00.

4. The referee finds that said association does not have the rights [sic] of subrogation under the provisions of Section 319 of the Act, since it is neither the employer nor an insurance Carrier. See Workmen's Compensation Appeal Board and Burgerhoff v. Brauch [sic] Motor Express, 334 A.2d 847 (1975).

The Board affirmed the referee's decision, and the instant appeal followed.*fn2

The portion of Section 319 of the Act applicable to the instant case provides as follows:

Where an employe has received payments for the disability or medical expense resulting from an injury in the course of his employment paid by the employer or an insurance company on the basis that the injury and disability were not compensable under this act in the event of an agreement or award for that injury the employer or insurance company who made the payments shall be subrogated out of the agreement or award to the amount so paid, if the right to subrogation is agreed to by the parties or is established at the time of hearing before the referee or the board. (Emphasis added.)

As noted by the Board, we have recognized that Section 319 only affords enforceable subrogation rights to employers and insurance companies. Workmen's Compensation Appeal Board (Burgerhoff) v. Branch Motor Express, 18 Pa. Commonwealth Ct. 262, 334 A.2d 847

[ 104 Pa. Commw. Page 35]

(1975). The issue in this case is whether the Association qualifies as an insurance company.

Petitioner contends that the Association is a nonprofit organization which provides health insurance to Philadelphia firemen who elect its coverage. As a health care insurer, Petitioner argues that the Association qualifies for subrogation rights under Section 319. The referee, however, found as fact that the Association is "an adjunct of the Firemen's union" and is "neither the employer nor an insurance Carrier." Unfortunately, the record lacks substantial evidence to support either of these views of the nature of the Association. The evidentiary hearing before the referee only addressed the issue of whether Petitioner suffers from a compensable disability and includes no evidence regarding the nature of the Association.

Assuming arguendo that the Association does qualify as an insurance company, its right to subrogation would seem to be clear in light of Employer's recognition that the $1,785.00 claimed by the Association represents the charge for Petitioner's in-patient care for treatment of his work-related lung condition. The concept of subrogation is based on "the right of one, who has paid an obligation which another should have paid, to be indemnified by the other." Olin Corp. v. Workmen's Compensation Appeal Board, 14 Pa. Commonwealth Ct. 603, 608, 324 A.2d 813, 816 (1974). Thus, the Association's admitted payment of the subject hospital bill would appear to create an enforceable right to subrogation if the Association qualifies as an insurance company. See Pennsylvania Manufacturers' Ass'n. Insurance Co. v. Workmen's Compensation Appeal Board, 52 Pa. Commonwealth Ct. 588, 418 A.2d 780 (1980). We also note that Petitioner alleges in his brief that he has signed a subrogation agreement. Petitioner's Brief at 4.

[ 104 Pa. Commw. Page 36]

We, accordingly, must remand for an evidentiary hearing*fn3 and decision to determine whether the Association qualifies as an insurance company for purposes of Section 319 of the Act.*fn4

Order

The order of the Workmen's Compensation Appeal Board in the above-captioned matter is hereby vacated and remanded for further proceedings consistent with the foregoing opinion.

Jurisdiction relinquished.

Disposition

Vacated and remanded.


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