Argued: October 19, 2017
BEFORE: HONORABLE MARY HANNAH LEAVITT, President Judge,
HONORABLE ROBERT SIMPSON, Judge, HONORABLE BONNIE BRIGANCE
LEADBETTER, Senior Judge.
OPINION
MARY
HANNAH LEAVITT, PRESIDENT JUDGE
The
City of Philadelphia (City) appeals an order of the Court of
Common Pleas of Philadelphia County, First Judicial District
(trial court) granting declaratory judgment in favor of a
City employee, Frank Zampogna. The trial court held that
Section 1720 of the Motor Vehicle Financial Responsibility
Law, 75 Pa. C.S. §1720, prohibited the City from
subrogating its payment of Heart and Lung Act[1] benefits to
Zampogna from his third-party tort recovery. For the reasons
that follow, we affirm the order of the trial court.
The
facts of this case are not in dispute. On November 1, 2007,
Zampogna, a City police officer, was a passenger in a police
cruiser participating in a roadblock at the intersection of
22nd Street and Lehigh Avenue in Philadelphia. A private
vehicle went through the police roadblock and collided with
the cruiser occupied by Zampogna. As a result, Zampogna
suffered serious injuries and was unable to work as a police
officer for several years. The City, which is self-insured
for workers' compensation, issued a Notice of
Compensation Payable (NCP) accepting liability for the
injury. The NCP also stated that the City was paying Zampogna
Heart and Lung Act benefits in lieu of workers'
compensation benefits. Reproduced Record at 46a (R.R. ___).
From November 2, 2007, to September 27, 2011, the City paid
Zampogna a total of $286, 447.77 in Heart and Lung
benefits.[2]
On
November 3, 2009, Zampogna filed a tort action against the
driver of the vehicle involved in the accident. The City
petitioned to intervene in Zampogna's tort action to
protect the subrogation lien it intended to assert against
any recovery. The third-party tort action settled in 2014 for
$245, 000, which was placed in escrow while the parties
litigated the City's entitlement to its asserted lien. On
April 9, 2015, the City initiated a declaratory judgment
action to establish its right to recover the Heart and Lung
Act benefits it paid to Zampogna from his settlement.
A trial
was conducted on August 1, 2016, after which the trial court
granted judgment in favor of Zampogna. It held that Section
1720 of the Motor Vehicle Financial Responsibility Law
prohibited the City's subrogation against Zampogna's
tort recovery. The City appealed the judgment.
We
begin with a review of the three statutes governing a public
employer's subrogation against an employee's
third-party recovery for his work injury caused by a motor
vehicle accident. The three statutes are: the Workers'
Compensation Act, [3] the Heart and Lung Act, and the Motor
Vehicle Financial Responsibility Law.[4]
The
Workers' Compensation Act compensates employees who are
injured at work for their medical bills and lost wages. Where
a work injury prevents an employee from performing his
pre-injury job, he is entitled to total disability benefits
in the amount of two-thirds of his pre-injury wages. Section
306(a) of the Workers' Compensation Act, 77 P.S.
§511. Both public and private employers are subject to
the requirements of the Workers' Compensation Act.
The
statute commonly referred to as the "Heart and Lung
Act" applies only to public employers. It requires the
payment of full salary to police officers and other public
safety employees who are temporarily unable to perform their
job because of a work injury. Section 1 of the Heart and Lung
Act, 53 P.S. §637. This more favorable wage loss benefit
assures "those undertaking dangerous employment in
certain institutions that they will continue to receive full
income when they are injured while performing their duties
[and] by offering such assurance, the Commonwealth can
attract employees to and keep them in the essential and
dangerous jobs." McWreath v. Department of Public
Welfare, 26 A.3d 1251, 1255 (Pa. Cmwlth. 2011). Police
officers and public safety employees are also entitled to
benefits under the Workers' Compensation Act. However,
"any workmen's compensation, received or
collected" by a public employee collecting Heart and
Lung benefits "shall be turned over to the [public
employer] and paid into the treasury thereof[.]" Section
1(a) of the Heart and Lung Act, 53 P.S. §637(a).
Self-insured public employers that pay Heart and Lung
benefits do not make workers' compensation payments
because they would simply be returned to the employer.
Wisniewski v. Workmen's Compensation Appeal Board
(City of Pittsburgh), 621 A.2d 1111, 1113 (Pa. Cmwlth.
1993). Nevertheless, self-insured public employers issue a
notice of compensation payable to employees receiving Heart
and Lung benefits. Stermel v. Workers' Compensation
Appeal Board (City of Philadelphia), 103 A.3d 876, 878
(Pa. Cmwlth. 2014).
Where a
work injury is caused by a third party, Section 319 of the
Workers' Compensation Act[5] states that "the employer
shall be subrogated to the right of the employee …
against [a] third party to the extent of compensation
payable" under the Act. 77 P.S. §671. The Heart and
Lung Act does not contain a similar provision, but it has
long been understood that the common law authorizes public
employers to subrogate their Heart and Lung payments from the
employee's third party tort recovery. See, e.g.,
Topelski v. Universal South Side Autos, Inc., 180 A.2d
414, 420 (Pa. 1962). The public policy for subrogation has
been explained as follows:
First, it prevents double recovery for the same injury by the
claimant. Second, it prevents the employer from having to
make compensation payments which resulted from the negligence
of a third party. Finally, it prevents a third party from
escaping liability for his negligence.
Murphy v. Workers' Compensation Appeal Board (City of
Philadelphia), 871 A.2d 312, 317 (Pa. Cmwlth. 2005).
The
1984 enactment of the Motor Vehicle Financial Responsibility
Law upended this paradigm on subrogation, at least with
respect to work injuries arising from motor vehicle
accidents. Section 1720 of the Law expressly abolished an
employer's ability to subrogate workers' compensation
payments. Section 1720, as enacted in 1984, stated as
follows:
In actions arising out of the maintenance or 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 required benefits),
1712 (relating to availability of benefits) or 1715 (relating
to availability of adequate limits) or benefits in lieu
thereof paid or payable under Section 1719 (relating to
coordination of benefits).
Act of
February 12, 1984, P.L. 53, No. 12, §3 (emphasis added).
As
noted, the goal of subrogation is to prevent double recovery
for a single loss. The Motor Vehicle Financial Responsibility
Law is also designed to prevent double recovery by those
involved in work-related motor vehicle accidents. Section
1722 of the Motor Vehicle Financial Responsibility Law
prohibits a plaintiff from including benefits, such as
workers' compensation, in his claim for damages from the
third party tortfeasor. Section 1722 states:
In any action for damages against a tortfeasor, or in any
uninsured or underinsured motorist proceeding, arising out of
the maintenance or 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.
75 Pa. C.S. §1722 (emphasis added). By precluding an
employee injured in a work-related motor vehicle accident
from pleading workers' compensation or Heart and Lung
benefits as an item of damages in his tort action, the
employee must look solely to the employer to be made whole.
Thus, the tort victim cannot recover twice.
In
short, Section 1720 and 1722 work in tandem to shift the cost
of work-related motor vehicle accidents from the motor
vehicle insurer to the workers' compensation insurer. The
object was to reduce the cost of motor vehicle insurance by
making the workers' compensation carrier the primary
insurer for injuries arising from work-related motor vehicle
accidents.
However,
in 1993, the legislature revisited this paradigm with the Act
of July 2, 1993, P.L. 190, No. 44 (Act 44), which amended the
Workers' Compensation Act and the Motor Vehicle Financial
Responsibility Law. Section 25(b) of Act 44 reinstated an
employer's right of subrogation for workers'
compensation benefits paid to a claimant whose work injury
resulted from a motor vehicle accident. Section 25(b) states:
The provisions of 75 Pa. C.S. §§1720 and 1722 are
repealed insofar as they relate to workers' compensation
payments or other benefits under the Workers'
Compensation Act.
Act of
July 2, 1993, P.L. 190, No. 44, §25(b). Accordingly,
under Act 44, a plaintiff injured in a work-related motor
vehicle accident may include workers' compensation
payments as an item of damages sought against the tortfeasor,
and his employer may subrogate the amount of workers'
compensation from that tort recovery. This shifted the cost
for work-related motor vehicle accidents from the
workers' compensation carrier back to the motor vehicle
insurer, as was the case prior to 1984.
Notably,
Act 44 reinstated a public employer's right to subrogate
workers' compensation benefits from third-party tort
recoveries by repealing the contrary language in Sections
1720 and 1722 of the Motor Vehicle Financial Responsibility
Law. However, Act 44 did not revise the language of Sections
1720 and 1722, which continue to read as though there is no
right to subrogation of workers' compensation benefits
against a tort recovery arising from a work-related motor
vehicle accident.
Act 44
expressly addressed workers' compensation benefits, not
Heart and Lung benefits. Act 44 is silent on Heart and Lung
payments and the public employer's ability to subrogate.
This silence led to litigation on whether a public employer
may subrogate Heart and Lung Act benefits from third-party
tort recoveries. We review the three leading cases ad
seriatim.
In
Fulmer v. Pennsylvania State Police, 647 A.2d 616
(Pa. Cmwlth. 1994), a Pennsylvania State Police trooper
sustained serious injuries in a motor vehicle accident while
on duty. During his temporary incapacitation, the trooper
received $22, 442.63 in Heart and Lung Act benefits from his
employer. In 1989, prior to the enactment of Act 44, the
trooper instituted a personal injury action against the
driver of the other vehicle in the accident and recovered a
settlement. The State Police sought to subrogate the amount
it paid the trooper in Heart and Lung benefits from the
trooper's tort settlement. In response, the trooper filed
a declaratory judgment action requesting this Court to rule
that Section 1720 of the Motor Vehicle Financial
Responsibility Law precluded the State Police from seeking
reimbursement of its payments made under the Heart and Lung
Act.
Notably,
in 1990, the legislature amended the 1984 version of Section
1720 to read as follows:
In actions arising out of the maintenance or 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 required benefits),
1712 (relating to availability of benefits) or 1715 (relating
to availability of adequate limits) or benefits paid or
payable by a program, group contract ...