LIBERTY MUTUAL INSURANCE COMPANY, AS SUBROGEE OF GEORGE LAWRENCE, Appellant
DOMTAR PAPER CO., Appellee
COMMERCIAL NET LEASE REALTY SERVICES, INC., AND COMMERCIAL NET LEASE REALTY TRUST, AND COMMERCIAL NET LEASE REALTY, INC., AND NATIONAL RETAIL PROPERTIES, INC., AND NATIONAL RETAIL PROPERTIES TRUST, Appellees
Argued October 8, 2014
Appeal from the Order of the Superior Court entered September 27, 2013 at No. 1052 WDA 2012, affirming the Order of the Court of Common Pleas of Elk County, entered May 22, 2012 at No. C.P. 2011-485. Trial Court Judge: Fornelli, Francis J., Judge; Intermediate Ct. Judges: Shogan, Jacqueline O., Lazarus, Anne E. and Musmanno, John L., Judges.
For Lawrence, George, APPELLANT: Kevin L. Connors, Esq.
For George Lawrence and Liberty Mutual Insurance Company, APPELLANT: Robert F. Horn, Esq.
For PSIA and GPECC, APPELLANT AMICUS CURIAE: Thomas Joseph Bailey, Esq., Joseph Edward Vaughan, Esq.
For National Association of Subrogation Professionals, APPELLANT AMICUS CURIAE: Patrick C. Timoney, Esq., Schwartz & Mongeluzzi LLP.
For Domtar Paper Co., APPELLEE: Patricia Erin Antezana, Esq., Reed Smith LLP.
For National Retail Properties, Inc. and National Retail Properties Trust, APPELLEES: Nadia Vanessa Lazo, Esq., Law Office of Joseph S. Weimer.
For National Retail Properties, et al., APPELLEE: Joseph S. Weimer, Esq.
For PA Association for Justice, APPELLEE AMICUS CURIAE: Paul Timothy Kelly, Esq., Mattise & Kelly, P.C.
For Commercial Net Lease Realty Services, Inc., et al, APPELLEE: Commercial Net Lease Realty Services, Inc, et al, PRO SE.
MR. JUSTICE BAER. CASTILLE, C.J., SAYLOR, EAKIN, BAER, TODD, McCAFFERY, STEVENS, JJ. Messrs. Justice Eakin and Stevens join the opinion. Mr. Chief Justice Saylor files a dissenting opinion. Madame Justice Todd files a dissenting opinion.
MR. BAER, JUSTICE
We granted allowance of appeal to determine whether Section 319 of the Pennsylvania Workers' Compensation Act (" WCA" ), 77 P.S. § 671, confers on employers or their workers' compensation insurers a right to pursue a subrogation claim directly against a third-party tortfeasor when the compensated employee who was injured has taken no action against the tortfeasor. Based on established precedent, the Superior Court held that Section 319 does not permit employers/insurers to commence an action directly against the third-party tortfeasor, and affirmed the trial court's grant of preliminary objections in favor of the tortfeasors. For the reasons set forth herein, we affirm.
The record establishes that on December 13, 2009, George Lawrence (" Lawrence" ), while in the employment of Schneider National Inc. (" Schneider" ), suffered a work-related injury when he slipped and fell in a parking lot leased by Domtar Paper Company, and allegedly owned and maintained by Commercial Net Lease Realty Services, Inc., Commercial Net Lease Realty Trust, Commercial Net Lease Realty, Inc., National Retail Properties, Inc., and National Retail Properties Trust (collectively " Appellees" ). As a result of this injury, Schneider's workers' compensation carrier, Liberty Mutual Insurance Company (" Liberty Mutual" ), paid Lawrence $33,929.23 in workers' compensation benefits.
Designating itself the subrogee of Lawrence in the caption " Liberty Mutual Insurance Company, As Subrogee of George Lawrence," Liberty Mutual filed a praecipe for writ of summons against Appellees on December 9, 2011, seeking to recover the amount it paid Lawrence in workers' compensation benefits. Notably, Lawrence did not file suit or pursue settlement with Appellees; nor did he either assign his cause of action to Liberty Mutual or join in Liberty Mutual's suit against Appellees.
In its subsequent complaint, Liberty Mutual alleged that Lawrence's work-related injuries were caused by Appellees' negligent ownership and maintenance of the parking lot in which Lawrence slipped and fell. Liberty Mutual contended it was entitled to recover from Appellees by virtue of Section 319 of the Workers' Compensation Act, 77 P.S. § 671, which provides that where a compensable injury is caused by a third-party tortfeasor, the employer shall be subrogated to the right of the employee against the third-party tortfeasor to the extent of compensation benefits paid under the WCA. Appellees filed
preliminary objections in the nature of a demurrer to the complaint, contending that in the absence of an injured employee electing to file a suit in his own right, a workers' compensation carrier has no independent ability to bring a subrogation claim directly against a third-party tortfeasor.
The trial court granted Appellees' preliminary objections. Based on the Superior Court's decision in Reliance Insurance Company v. Richmond Machine Company, 309 Pa.Super. 430, 455 A.2d 686 (Pa. Super. 1983), the trial court explained that only the injured employee has the right of action against a third-party tortfeasor and not the employer/insurer. Emphasizing that the cause of action against the third-party tortfeasor exists for one indivisible wrong, the trial court held that the employer's/insurer's right of subrogation under Section 319 of the WCA must be achieved through an action brought in the name of or joined by the injured employee. Trial Court Opinion at 2 (citing Moltz v. Sherwood Bros., Inc., et al., 116 Pa.Super. 231, 176 A. 842, 843 (Pa. Super. 1935) (holding that the right of the employer/insurer to subrogation against a tortfeasor must be achieved through a single action brought in the name of the injured employee, either by joining the employer or insurance carrier as a party plaintiff or as a use plaintiff); Scalise v. FM Venzie & Co., et al., 301 Pa. 315, 152 A. 90 (Pa. 1930) (holding that Section 319's mandate that the employer is " subrogated . . . to the extent of compensation payable" does not mean that the sole right to recover from the tortfeasor is in the employer; rather, the right of action against the tortfeasor remains in the injured employee and suit is to be commenced in his name).
In the case at bar, the trial court found that Lawrence had not sued Appellees, did not assign his cause of action against Appellees to Liberty Mutual, and was not joined or named in Liberty Mutual's suit. Instead, Liberty Mutual merely identified its status as subrogee of Lawrence in its independent action against Appellees. Accordingly, pursuant to the aforementioned cases, the trial court concluded that Liberty Mutual had no right to sue Appellees independently for Lawrence's alleged damages.
Liberty Mutual filed a timely appeal to the Superior Court, asserting, inter alia, that Section 319 the WCA provided an absolute right to subrogation for benefits paid to Lawrence, and that it should not be denied that right because Lawrence declined to bring an action against Appellees. Apparently overlooking that the instant action was not brought in Lawrence's name, Liberty Mutual relied on language in Scalise, supra, where this Court stated that the employer " is not to be denied his right of suit because the employee does not sue, but may institute the action in the latter's name." Scalise, 152 A. at 92.
On September 27, 2013, the Superior Court affirmed the trial court's order granting preliminary objections. Liberty Mut. Ins. Co. v. Domtar Paper Co., 2013 PA Super 262, 77 A.3d 1282 (Pa. Super. 2013). It rejected Liberty Mutual's contention that Section 319 of the WCA, along with the above-referenced language from Scalise, conferred upon it a right to pursue separately its subrogation claims against Appellees when Lawrence, as claimant, took no action of his own. The Superior Court
deemed Liberty Mutual's reliance on Scalise to be misplaced because Scalise did not hold that Section 319 provides insurers the right to sue third-party tortfeasors independently. The court viewed the language stating that an employer " is not to be denied his right of suit because the employee does not sue" as ambiguous and inconsequential to the central holding of the case, wherein this Court affirmed the right of an injured employee to bring suit against a third-party tortfeasor, notwithstanding the subrogation rights conferred on the employer/insurer by Section 319 of the WCA. Liberty Mut., 77 A.3d at 1287 (quoting Scalise, 152 A. at 92).
Relying on cases decided after Scalise, particularly Moltz and Reliance, the Superior Court explained that Pennsylvania courts strongly disfavor splitting causes of action between subrogors and subrogees and have held that such is not permissible in the context of a workers' compensation claim. See Moltz, 176 A. at 843; Reliance, 455 A.2d at 689-90. Accordingly, the Superior Court agreed with the trial court that an employer's right of subrogation conferred by Section 319 must be asserted through an action brought in the name of the injured employee either as a party plaintiff or use plaintiff. The Superior Court summarized its position as follows: " [S]ection 319 does not provide employers with the ability to bring suit directly against a third-party," but instead " [t]he action against the third party tortfeasor must be brought by the injured employee... i.e. the employee-victim must sue, and the employer's carrier is subrogated to the employee's claim." Liberty Mut., 77 A.3d at 1288-89 (quoting Whirley Indus., Inc. v. Segel, 316 Pa.Super. 75, 462 A.2d 800, 802 (Pa. Super. 1983)) (emphasis in original).
As noted, we granted allocatur to address whether Section 319 of the WCA confers on employers or their workers' compensation insurers a right to pursue a subrogation claim directly against a third-party tortfeasor when the compensated employee who was injured has taken no action against the tortfeasor. This inquiry presents a pure question of law, over which our standard of review is de novo and our scope of review is plenary. See Dep't of Labor & Indus. v. Workers' Compensation Appeal Board, 611 Pa. 10, 23 A.3d 511, 514 (Pa. 2011). Given that the underlying decision dismissed the case on preliminary objections, we further observe that " the standard of review for preliminary objections in the nature of a demurrer is limited; the question presented by the demurrer is ...