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Oliver v. City of Pittsburgh

July 17, 2009

CASANDRA OLIVER
v.
CITY OF PITTSBURGH, APPELLANT



The opinion of the court was delivered by: President Judge Leadbetter

Argued: May 6, 2009

BEFORE: HONORABLE BONNIE BRIGANCE LEADBETTER, President Judge, HONORABLE BERNARD L. McGINLEY, Judge, HONORABLE DORIS A. SMITH-RIBNER, Judge, HONORABLE RENÉE COHN JUBELIRER, Judge, HONORABLE ROBERT SIMPSON, Judge, HONORABLE MARY HANNAH LEAVITT, Judge, HONORABLE JOHNNY J. BUTLER, Judge.

OPINION

The City of Pittsburgh (City) appeals from the order of the Court of Common Pleas of Allegheny County (common pleas) that denied its motion for summary judgment and granted judgment on the pleadings in favor of Casandra Oliver. By granting judgment in favor of Oliver, common pleas precluded the City from asserting a subrogation lien for Heart and Lung Act*fn1 benefits paid to Oliver following her settlement of a civil action against a third party for injuries that she sustained in a work-related motor vehicle accident. After review, we reverse.

The underlying facts are not in dispute. In 1996, Oliver was injured in a motor vehicle accident while performing her duties as a City police officer. As a result, the City paid Oliver Heart and Lung Act benefits in the amount of approximately $848. In addition, Oliver pursued a civil claim against the third-party tortfeasor, which eventually settled for $2,300. Due to the City's interest in subrogating against Oliver's settlement proceeds, Oliver filed a complaint for declaratory judgment, seeking, inter alia, a declaration that under Section 1720 of the Motor Vehicle Financial Responsibility Law (MVFRL), 75 Pa. C.S. § 1720, the City could not seek reimbursement from her third-party recovery for benefits it paid pursuant to the Heart and Lung Act. In concluding that the City was not entitled to subrogate against Oliver's recovery, common pleas compared the Heart and Lung Act with the Workers' Compensation Act,*fn2 examined the changes to the statutory scheme for coordination of benefits following amendments to the MVFRL by Act 44 of 1993,*fn3 and considered various decisions of this court addressing the issue. While we engage in a similar analysis, we reach a contrary conclusion. In doing so, we reaffirm our decision in Brown v. Rosenberger, 723 A.2d 745 (Pa. Cmwlth. 1999).

Before addressing the arguments on appeal, we review the relevant statutory framework and decisional law. To begin, we note that the Workers' Compensation Act provides compensation for temporary and permanent injuries "'arising in the course of one's employment and related thereto.'" Allen v. Pa. State Police, 678 A.2d 436, 437-38 (Pa. Cmwlth. 1996) [quoting Section 301(c) of the Act, 77 P.S. § 411(1)]. The Heart and Lung Act provisions are more limited, however, permitting recovery only for a specified class of workers who sustain temporary injury "'in the performance of one's duties.'" Id. at 438 [quotingSection 1 of the Act, 53 P.S. § 637(a) (emphasis deleted)].

In City of Erie v. Workers' Compensation Appeal Board (Annunziata), 575 Pa. 594, 838 A.2d 598 (2003), our Supreme Court compared the Heart and Lung Act and the Workers' Compensation Act, particularly noting that the Workers' Compensation Act is similar to accident insurance and seeks to provide compensation commensurate with damage from accidental injury "as a fair exchange for relinquishing every other action against the employer." Id. at 601, 838 A.2d at 602 (internal quotation omitted). The Act is considered remedial legislation and is liberally construed in favor of the employee. Id. at 601-02, 838 A.2d at 602. However, under the Act, compensation for earnings loss is limited to 66 2 /3% of an employee's average weekly wage, which limitation "serves to [ameliorate the] potential unfairness to employers." Id. at 602, 838 A.2d at 602-03.

On the other hand, the Heart and Lung Act, which primarily covers police work, firefighting, and other jobs involving public safety, was created to "ensure that, if these employees were injured or otherwise disabled in the course of carrying out their hazardous duties, they would be guaranteed continued full income until their return to duty." Id. at 602, 838 A.2d at 603 (internal quotation and emphasis omitted). Unlike the Workers' Compensation Act, enactment was motivated by the best interest of the public employer, i.e., the promise of full income to employees in a hazardous industry could serve to attract qualified individuals to the profession. Id. at 602-03, 838 A.2d at 603. Unlike the Workers' Compensation Act, the Heart and Lung Act is strictly construed. Id. at 603, 838 A.2d at 604. In addition, the Act contemplates the current receipt of workers' compensation: "[N]othing in the Workers' Compensation Act eliminates the responsibility of an employer to pay workers' compensation to an injured employee who is receiving Heart and Lung benefits. . . . The [employer's] obligation to pay Heart and Lung benefits is concurrent with, not in lieu of, its obligation pursuant to the workers' compensation scheme." Id. at 605, 838 A.2d at 604-05 (quotation, citation and emphasis omitted). However, any workers' compensation received by an employee compensated under the Heart and Lung Act must be turned over to the employer. Section 1 of the Heart and Lung Act, 53 P.S. § 637(a).

Finally, while the Workers' Compensation Act provides the employer with the express right to subrogate against its employee's third-party recovery to the extent of benefits paid, no similar right is provided for in the Heart and Lung Act.*fn4 Notwithstanding the lack of express statutory authority to subrogate, an employer's right to subrogate has been recognized at common law. See Fulmer v. Pa. State Police, 647 A.2d 616 (Pa. Cmwlth. 1994) [citing Topelski v. Universal South Side Autos, Inc., 407 Pa. 339, 180 A.2d 414 (1962); Philadelphia v. Philadelphia Rapid Transit Co., 337 Pa. 1, 10 A.2d 434 (1940)].

While an employer's right to subrogation under the Workers' Compensation Act is otherwise absolute, see Thompson v. Workers' Compensation Appeal Board (USF&G), 566 Pa. 420, 781 A.2d 1146 (2001), prior to 1993 and the passage of Act 44, the MVFRL provided an exception to an employer's right to subrogate against an employee's third-party recovery. Specifically, the MVFRL precluded an injured employee from recovering in a third-party tort action amounts he or she received pursuant to the Workers' Compensation Act, and an employer was precluded from subrogating against its employee's tort proceeds to recover amounts paid as workers' compensation. See former75 Pa. C.S. § 1720 and 1722; see also Hannigan v. Workers' Comp. Appeal Bd. (O'Brien Ultra Serv. Station), 860 A.2d 632 (Pa. Cmwlth. 2004); Fulmer. Specifically, former Section 1720 of the MVFRL provided:

In actions arising out of the . . . use of a motor vehicle, there shall be no right of subrogation or reimbursement from a claimant's tort recovery with respect to workers' compensation benefits, benefits available under section 1711 [relating to, inter alia, the minimum required medical benefits], 1712 [relating to availability of, inter alia, medical, income loss, accidental death and funeral benefits], or 1715 (relating to availability of adequate limits) or benefits paid or payable by a program, group contract or other arrangement whether primary or excess under section 1719 (relating to coordination of benefits).*fn5

Former Section 1722 provided, in turn:

In any action for damages against a tortfeasor . . . arising out of the . . . use of a motor vehicle, a person who is eligible to receive benefits under the coverages set forth in this subchapter, or workers' compensation, or any program, group contract or other arrangement for payment of benefits as defined in section 1719 (relating to coordination of benefits) shall be precluded from recovering the amount of benefits paid or payable under this subchapter, or workers' compensation, or any program, group contract or other arrangement for payment of benefits as defined in section 1719.

Thus, we have observed that under the former statutory scheme, the "obvious legislative intent, was to mandate that the ultimate burden for payment of compensation payments remain with Workers' Compensation insurance and not be passed on to the automobile insurance carrier . . . ." Hannigan, 860 A.2d at 636 (internal quotation and citation omitted).

However, with Act 44, the legislature concurrently repealed Sections 1720 and 1722 with respect to the receipt and payment of workers' compensation benefits.*fn6 As a result, "in an action involving an automobile post-Act 44, an employee's third-party recovery is not reduced by the amount of workers' compensation benefits received, and the workers' compensation carrier has the right to subrogate against any benefits the claimant receives in connection with the third-party action." Id. Consequently, "the General Assembly preserved a scheme which allowed claimants to be made whole but prevented their double recoveries, while shifting the ultimate burden from innocent employers and their carriers to responsible tortfeasors and those insurers who pay in their stead." Id.

As to the relevant decisional law, we first turn to Fulmer. There, a state trooper commenced a declaratory judgment action in this court to determine whether former Section 1720 of the MVFRL precluded the State Police from seeking reimbursement from his tort recovery for benefits paid under the Heart and Lung Act. The petitioner argued that Heart and Lung Act benefits fell within the catch-all phrase "or benefits paid or payable by a program, group contract or other arrangement."*fn7 We agreed that Section 1720 applied to such benefits, stating:

[W]e believe that Heart and Lung Act benefits fall within the "benefits in lieu thereof paid or payable" [which was the statutory language that was in effect when the petitioner was injured and commenced his civil action] language of this section. Benefits received under the Heart and Lung Act effectively replace workmen's compensation benefits for those employees covered by its provisions. These benefits provided petitioner with a full rate of salary during his temporary incapacity and required him to turn over all workmen's compensation benefits he received to the [State Police]. 53 P.S. § 637(a). On its face, the contested language of Section 1720 attempts to include all those potential benefits which may have been too numerous to mention. Furthermore, it is a well-recognized rule that the Financial Responsibility Law is to be liberally construed.

647 A.2d at 619 (citation and quotations omitted). Accordingly, we concluded that, as with workers' compensation benefits, Section 1720 barred an employer from seeking reimbursement for Heart and Lung Act benefits paid to a claimant. We specifically acknowledged the changes wrought by Act 44 and declined to express any opinion as to the effect that Section 25(b), which partially repealed Sections 1720 and 1722 with respect to workers' compensation benefits, had on the issue. See Fulmer, 647 A.2d at 618 n.3.

Following the passage of Act 44, the court had the opportunity to address the same issue in Brown. There, Brown, a state trooper, was injured in a car accident while performing her duties in 1995. The Commonwealth paid Brown Heart and Lung Act benefits during her incapacity. Brown was also eligible to receive workers' compensation and those benefits were paid over to the Commonwealth. Brown, seeking to plead, prove and recover the amounts paid under the two statutes in her civil action against the other driver, argued before common pleas that since Act 44 restored an employee's right to recover workers' compensation benefits in a third-party action as well as an employer's right to subrogate against that recovery, the Commonwealth should be treated identically to a workers' compensation carrier with respect to benefits paid under the Heart and Lung Act. The defendant driver argued, however, that Act 44's repealer applied only to workers' compensation benefits and, therefore, Brown could not recover any benefits paid under that act.

In addressing the issue, common pleas noted that, although a plaintiff historically had the right to plead loss of wages and medical bills in an action to recover damages sustained in a car accident and the employer had a concurrent right to subrogation,*fn8 such common law rights were supplanted by the enactment of the MVFRL in 1984, including former Sections 1720 and 1722. According to common pleas:

Because the legislature was silent as to whether a benefit provider under the Heart and Lung Act was subject to the same preclusionary effect of [former Section 1720 of the MVFRL], the Commonwealth Court took up the issue in Fulmer . . . . There, [the Court] held that "benefits received under the Heart and Lung Act effectively replace workmen's compensation benefits for those employees covered by its provisions." The clear effect of this holding was to treat Heart and Lung Act benefits the same as workers' compensation benefits for purposes of the prohibitions to subrogation and pleading as found in sections 1720 and 1722 of the MVFRL.

Given the virtual common identity accorded to the above benefits (and by necessary inference the benefit providers) can defendants now claim that the common identity be severed and disparate treatment be accorded to injured employees who have different employers[?]

It is clear that by virtue of [the repeal of the prohibition of Sections 1720 and 1722 by Act 44], the pre-1984 principle of equity and unjust enrichment must again operate to allow recovery against a third-party tortfeasor for all losses sustained, and must also allow a benefit provider to be subrogated to any recovery of benefits. The distinction between an employer under the Heart and Lung Act and an employer under other benefit provider schemes is irrelevant for these purposes.

Brown v. Rosenberger, 40 Pa. D. & C. 4th 432, 438-39 (C.C.P. Phila. 1998) (emphasis added and citation omitted), affirmed on trial court opinion, 723 A.2d 745 (Pa. Cmwlth. 1999). As noted, this court affirmed in ...


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