Subrogation is Solely in the Hands of the Injured Worker

By Michael A. Farrell, Esquire

In a recBy Michael A. Farrell, Esquire ent case decided by the Pennsylvania Supreme Court, the question of whether or not an insurance company or an employer can stand in the shoes of an injured employee for the purpose of suing a third party tortfeasor in order to have its subrogation lien satisfied was addressed. The answer is no.

On April 27, 2015, the Pennsylvania Supreme Court decided on a 3 to 2 vote that Liberty Mutual Insurance Company could not sue the owner of a parking lot where George Lawrence, an insured employee, slipped and fell. The Pennsylvania Supreme Court affirmed the holding of the State Superior Court that the right to a cause of action rests with the injured party.

Justice Max Baer wrote the majority opinion for the Court in Liberty Mutual Insurance v. Domtar Paper, PICS, Case No. 15-0684 (PA. April 27, 2015), stated that the holding of the Court eliminates the possibility that the third party tortfeasor could be exposed to multiple suits by both the employer and the injured employee. Further, it preserves the preferred right of the injured employee who retains a beneficial interest in the cause of action against the tortfeasor. In this case, because the injured employee did not commence an action against the tortfeasor and was not named in the action, or joined in the action, the Superior Court properly affirmed the Decision of the lower court, which granted the Appellee's Preliminary Objections.

Justice Baer focused on the language of the Workers' Compensation Act, as well as 2 Superior Court holdings from 1935 and 1983, in which the Court maintained that the right of action against the tortfeasor relies with the injured party alone.

Dissenting Opinions were filed by Chief Justice Thomas G. Saylor and Justice Debra Todd. Chief Justice Saylor focused on the caption of the Complaint, and indicated that by naming the injured employee in the caption of the Complaint, he was specifically brought into the lawsuit. As such, there was little danger that the cause of action might be divided, since any separate lawsuit, brought directly by the injured employee, would have been barred under doctrine of res judicata.

Justice Todd also would have allowed the lawsuit to proceed, but cautioned that the insurance carrier should make sure the injured party is properly notified before the filing of any subrogation action to allow the injured party sufficient time to file a direct lawsuit against the third party tortfeasor, before the insurance carrier proceeds with its own lawsuit in an attempt to have its subrogation interest satisfied.

The Decision of the Pennsylvania Supreme Court closes the door on an insurance company being able to sue a third party tortfeasor directly to have its subrogation lien satisfied. However, the open question is whether or not there are other procedural avenues available for workers' compensation carriers to maintain a third party action against the tortfeasor, such as Compulsory Joinder under Pennsylvania Rule of Civil Procedure 2227(b).