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Young v. Workers' Compensation Appeal Bd. (Chubb Corp.)

Commonwealth Court of Pennsylvania

March 10, 2014

Natasha Young, Petitioner
v.
Workers' Compensation Appeal Board (Chubb Corporation and Federal Insurance Company), Respondents

Submitted: January 10, 2014.

Page 296

Appealed from No. A11-1942. State Agency: Workers' Compensation Appeal Board.

Andrew R. Spirt, Philadelphia, for petitioner.

Lee S. Fiederer, Philadelphia, for respondents Chubb Corporation and Federal Insurance Company.

BEFORE: HONORABLE RENÉ E COHN JUBELIRER, Judge, HONORABLE P. KEVIN BROBSON, Judge, HONORABLE ANNE E. COVEY, Judge. OPINION BY JUDGE COHN JUBELIRER.

OPINION

Page 297

RENÉ E COHN JUBELIRER, Judge.

Natasha Young (Claimant), a Pennsylvania resident, was injured in a motor vehicle accident while in Delaware in the course and scope of her employment and received Workers' Compensation (WC) benefits pursuant to the Pennsylvania Workers' Compensation Act (Act)[1] as a result. Thereafter, Claimant filed a third-party action, in Delaware, against the Delaware driver and received $160,000.00 to settle that action. The Chubb Corporation and Federal Insurance Company (together, Employer) filed a Review Petition, asserting that they were entitled to subrogation pursuant to Section 319 of the Act, 77 P.S. § 671. The Workers' Compensation Judge (WCJ) granted the Review Petition and directed Claimant to pay Employer $101,381.94 to satisfy Employer's WC lien. The Workers' Compensation Appeal Board (Board) affirmed, and Claimant now petitions this Court for review. On appeal, Claimant argues that the Board erred in: (1) applying Pennsylvania law instead of the more equitable Delaware law to determine Employer's subrogation rights, particularly since the amount of her third-party recovery was limited by Delaware law; (2) holding that Employer met its burden of proving the amount of its subrogation lien; and (3) ordering Claimant to reimburse Employer the entire amount of its subrogation lien. Because the Board properly determined that Pennsylvania law applies here and that Employer met its burden of proving its entitlement to subrogation, we affirm.

Claimant sustained injuries when she was involved in a motor vehicle accident while driving in Delaware on a work assignment on December 19, 2003. (WCJ Decision, Findings of Fact (FOF) ¶ 1.)[2] Employer accepted Claimant's injuries pursuant to a Notice of Compensation Payable (NCP)[3] and began paying Claimant wage loss and medical benefits under the Act. (FOF ¶ 1; Board Op. at 1.) Thereafter,

Page 298

Claimant and Employer engaged in WC litigation, including Petitions to Suspend and Terminate Claimant's benefits, and two Utilization Review Petitions. (FOF ¶ 2.) On May 19, 2006, Claimant and Employer executed a Compromise and Release Agreement (C& R Agreement) wherein Claimant agreed to settle all of her future WC benefits in exchange for $85,000. (FOF ¶ 2.) In the C& R Agreement, Employer asserted a subrogation lien pursuant to Section 319 of the Act. (FOF ¶ 2.)

Claimant subsequently settled her third-party action against the Delaware driver for $160,000.00, from which Claimant's counsel (Counsel) placed one third of the settlement, $53,333.33, in an escrow account to resolve Employer's WC lien, which Counsel indicated was the " customary" way of handling a WC lien. (FOF ¶ ¶ 5, 7(b)-(c); WCJ Decision at 5.) There is no indication that either Claimant or Counsel advised Employer of the third-party settlement or asked for it to compromise its lien. (FOF ¶ 5; WCJ Decision at 5.) Employer filed a Review Petition asserting that Claimant and Counsel settled Claimant's third-party action without adequately protecting Employer's subrogation lien. (FOF ¶ 3.) Employer presented evidence consisting of, inter alia, a list of all its payments made to Claimant and on Claimant's behalf associated with Claimant's work-related injuries. (FOF ¶ 4; Employer Ex. E-3, S.R.R. at 15b-32b.) Based on that list, Employer asserted a total WC lien of $219,101.77, $101,381.94 of which Employer contends it is entitled to recover. (FOF ¶ ¶ 3, 5, 7(d).) The WCJ found that Employer maintained its full lien on an ongoing basis. (FOF ¶ 7(a).)

The WCJ held, inter alia, that Employer was entitled to subrogation under Section 319 of the Act because Employer's right to subrogation was absolute and Employer did not agree to compromise the amount of its lien. (WCJ Decision at 4-5.) The WCJ rejected Claimant's assertion that Delaware law, not the Act, governed Employer's request for subrogation because Pennsylvania had more significant contacts with this WC matter than did Delaware, relying on Allstate Insurance Co. v. McFadden, 407 Pa.Super. 537, 595 A.2d 1277, 1279 (Pa. Super. 1991) (applying a significant contacts test to determine whether Pennsylvania or New Jersey law would apply to a WC subrogation matter), and Byard F. Brogan, Inc. v. Workmen's Compensation Appeal Board (Morrissey), 161 Pa.Cmwlth. 453, 637 A.2d 689, 692 (Pa. Cmwlth. 1994) (adopting the Allstate rationale to determine whether Pennsylvania or West Virginia law would apply to a WC subrogation matter). (WCJ Decision at 3-4.) The WCJ struck several of the listed expenses as either duplicate entries or items not subject to subrogation, reducing the lien amount by $16,567.29. (WCJ Decision at 4.) However, the WCJ concluded that striking these expenses did not alter the result because Employer's total lien still exceeded the amount of Claimant's third-party recovery. (WCJ Decision at 4.) Finally, the WCJ disagreed with Employer that Counsel and Claimant were jointly and severally liable for repaying Employer its lien from the third-party recovery. (WCJ Decision ...


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