PSP, Aplt. v. WCAB (Bushta) ( 2018 )

[J-71-2017]
IN THE SUPREME COURT OF PENNSYLVANIA
WESTERN DISTRICT
SAYLOR, C.J., BAER, TODD, DONOHUE, DOUGHERTY, WECHT, MUNDY, JJ.
PENNSYLVANIA STATE POLICE, : No. 14 WAP 2017
:
Appellant : Appeal from the Order of the
: Commonwealth Court entered October
: 26, 2016 at No. 2426 CD 2015,
v. : affirming the Order of the Workers'
: Compensation Appeal Board entered
: November 3, 2015 at No. A14-1335
WORKERS' COMPENSATION APPEAL :
BOARD (BUSHTA), : ARGUED: October 18, 2017
:
Appellee :
OPINION
JUSTICE TODD DECIDED: MAY 29, 2018
In this discretionary appeal, we consider whether Appellant, the Pennsylvania
State Police (“PSP”), is entitled to subrogation of benefits that a trooper – who was
injured in a motor vehicle accident – was eligible to receive under the Workers’
Compensation Act (“WCA”)1 against the trooper’s recovery from a third-party tortfeasor
pursuant to the Motor Vehicle Financial Responsibility Law (“MVFRL”).2 For the
reasons that follow, we conclude that PSP does not have a right of subrogation.
Accordingly, we affirm the order of the Commonwealth Court.
1 77 P.S. §§ 1-1041.4, 2501-2708.
2 75 Pa.C.S. §§ 1701-1799.7.
As the instant appeal involves the interplay between three Pennsylvania statutes
− the WCA, the Heart and Lung Act,3 and the MVFRL, we first review the applicable
language and background of these statutes. The WCA, which applies to both public
and private employees, provides compensation to employees who suffer work-related
injuries. Under the WCA, an employee who is totally disabled and experiences a
complete loss of earning power is entitled to receive benefits in the amount of 66-2/3%
of his or her average weekly wages. 77 P.S. § 511.
Under Section 319 of the WCA, benefits paid to an employee are subject to
subrogation by his or her employer:
Where the compensable injury is caused in whole or in part
by the act or omission of a third party, the employer shall be
subrogated to the right of the employe, his personal
representative, his estate or his dependents, against such
third party to the extent of the compensation payable under
[the WCA] by the employer.
77 P.S. § 671.
In contrast to the WCA’s provision of partial wages to employees who are injured
on the job, the Heart and Lung Act provides certain designated public employees,
primarily police and fire personnel, who are injured in the course of their duties, with
their full salary until their return to duty. Specifically, the Heart and Lung Act provides:
any member of the State Police Force[:]
***
who is injured in the performance of his duties including, in
the case of firemen, duty as special fire police, and by
reason thereof is temporarily incapacitated from performing
his duties, shall be paid by the Commonwealth of
Pennsylvania if an employe identified under paragraph (1),
(2), (3), (4), (5), (6), (7), (8) or (12) . . . his full rate of salary,
as fixed by ordinance or resolution, until the disability arising
therefrom has ceased. All medical and hospital bills,
3 53 P.S. § 637.
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incurred in connection with any such injury, shall be paid by
the Commonwealth of Pennsylvania . . . . During the time
salary for temporary incapacity shall be paid by the
Commonwealth of Pennsylvania . . ., any workmen's
compensation, received or collected by any such employe
for such period, shall be turned over to the Commonwealth
of Pennsylvania . . . and paid into the treasury thereof, and if
such payment shall not be so made by the employe the
amount so due the Commonwealth of Pennsylvania . . . shall
be deducted from any salary then or thereafter becoming
due and owing.
53 P.S. § 637(a)(1), (12).
As we explained in City of Erie v. W.C.A.B. (Annunziata), 838 A.3d 598, 603 (Pa.
2003), the primary consideration in enacting the Heart and Lung Act was not the best
interest of the disabled officer, but, rather, the interest of the municipality in attracting
qualified individuals to hazardous occupations. While the Heart and Lung Act is thus
often viewed as more generous than the WCA, the wages paid to an injured employee
pursuant to the WCA may also include vacation and overtime pay. Id. Further, unlike
the WCA, the Heart and Lung Act does not apply to work-related injuries which are
permanent, and, while the WCA is to be liberally construed in favor of the injured
employee, the Heart and Lung Act must be strictly construed. Id. at 604.
Finally, given that the Claimant’s injury in this case was caused by a motor
vehicle accident, the subrogation and recovery provisions of the MVFRL are implicated.
Section 1720 provides:
§ 1720. Subrogation
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 or other arrangement whether primary or
excess under section 1719 (relating to coordination of
benefits).
[J-71-2017] - 3
75 Pa.C.S. § 1720. Relatedly, Section 1722 provides:
§ 1722. Preclusion of recovering required benefits
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.
Critically, in 1993, the legislature repealed both Sections 1720 and 1722 insofar
as they pertained to WCA benefits, thus allowing for subrogation and recovery of such
benefits. See Act of July 2, 1993, P.L. 190, No. 44, § 25(b) (“Act 44”).4 By the express
language of Act 44, however, the legislature did not eliminate the prohibition on
subrogation and recovery of Heart and Lung benefits. See Oliver v. City of Pittsburgh,
11 A.3d 960, 966 (Pa. 2011) (“By its plain terms, [Act 44] does not impact any anti-
subrogation mandates pertaining to [Heart and Lung] benefits.”). Indeed, in Heller v.
Pennsylvania League of Cities and Municipalities, this Court recognized that the
purpose of Act 44 was to transfer costs associated with work-related automobile
accidents from the workers’ compensation system back to the automobile insurance
market. 32 A.3d 1213, 1127 (Pa. 2011). With this background in mind, we now turn to
a discussion of the facts of the instant case.
4Act 44 provides: “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).
[J-71-2017] - 4
On February 25, 2011, Pennsylvania State Trooper Joseph Bushta (“Claimant”)
was on duty when his police vehicle was hit by a tractor-trailer. As a result of the
collision, Claimant suffered various cervical, thoracic, and lumbar injuries which required
medical treatment and physical therapy, and which resulted in Claimant’s inability to
perform his job duties for approximately 16 months. On March 18, 2011, PSP, a self-
insured public employer, issued a notice of compensation payable (“NCP”) indicating a
weekly compensation rate of $858.08 under the WCA. The NCP contained the
following notation under the heading “Remarks”: “Paid Salary continuation. Heart &
Lung Benefits by the employer.” Notice of Compensation Payable, 3/18/11, at 2.
On January 21, 2014, Claimant and his spouse entered into a Settlement and
Indemnity Agreement and Release of all Claims (“Settlement Agreement”) with the
tractor-trailer driver, the driver’s employer, and the other responsible parties
(collectively, “third-party tortfeasors”) for $1,070.000.5 The Settlement Agreement
provided, inter alia, that Claimant would “reimburse any lien holder, known or unknown,
for any liens as a result of the . . . incident.” Settlement Agreement, 1/21/14, at 1 ¶ 3
(Reproduced Record (“R.R.”) at 43a). Claimant further acknowledged that he was
“solely responsible for the payment of any medical bills, hospital liens, MedPay liens,
worker[s’] compensation liens, attorney’s fees, taxes, withholding and all other fees,
costs and expenses they have incurred as a result of the Accident.” Id. at 1 ¶ 6.
On February 4, 2014, PSP filed a petition to review compensation benefits
pursuant to Section 771 of the WCA, asserting a right of subrogation against the
5 Of this amount, $200,000 was apportioned to the Claimant’s spouse’s loss of
consortium claim. Further, the contingent fee agreement between Claimant, his
spouse, and their personal injury attorneys, Powell Law, provided that the firm would
receive 33 1/3 % of the recovery, and that Claimant would be responsible for the costs
incurred in connection with the prosecution of the third-party claim, which totaled
$18,723.68.
[J-71-2017] - 5
proceeds of Claimant’s settlement with the third-party tortfeasors under Section 319 of
the WCA. On November 19, 2014, Claimant entered into a signed stipulation
(“Stipulation”) with PSP and PSP’s third-party administrator, Inservco Insurance
Services, Inc. (“Inservco”). The Stipulation indicated, in pertinent part, that, between the
date of Claimant’s injury on February 26, 2011 and the date he returned to work on
June 3, 2012, Claimant had been paid $56,873.13 under the WCA. Stipulation,
11/19/14, at 2-3 ¶ 6 (R.R. at 110-11a). Notably, PSP concedes that Claimant never
received any direct payment of benefits under the WCA, and that, instead, Inservco paid
Claimant’s wage loss benefits directly to PSP, thereby avoiding the need for Claimant to
remit these benefits back to the Commonwealth, as would have been required under
Section 637(a)(12) of the Heart and Lung Act. The Stipulation further indicated that
Claimant had been paid $94,166.64 under the Heart and Lung Act, and medical benefits
in the amount of $110,869.53. Id. Finally, the Stipulation contained an
acknowledgement that the parties had executed a “Third Party Settlement Agreement
calculation sheet,” reflecting that PSP was entitled to reimbursement of a net lien in the
amount of $109,021.32 based on the amount of WCA benefits and medical benefits
paid by PSP; the lien asserted did not include $37,293.51 in wage loss benefits payable
solely pursuant to the Heart and Lung Act. Id. at 3 ¶ 7. According to the Stipulation,
after the deduction of litigation expenses and attorneys’ fees, the total amount of PSP’s
lien against Claimant’s recovery from the tortfeasors was $108,895.18. Id. However,
as an alternative to litigation, PSP agreed to accept $98,895.18 as full payment of its
lien. Id. at 3-4 ¶ 8. Nevertheless, the Stipulation specifically stated: “Claimant denies
the existence of a lien given it is his contention that all benefits were paid pursuant to
the terms of the Heart and Lung Act.” Id. This stipulation was signed by PSP on
[J-71-2017] - 6
November 20, 2014, and, on December 2, 2014, it was approved by the Workers’
Compensation Judge (“WCJ”), Howard Spitzer, and adopted as an order.
Significantly, approximately one week prior to the execution of the Stipulation, the
Commonwealth Court, on November 13, 2014, issued its decision in Stermel v. WCAB
(City of Philadelphia), 103 A.3d 876 (Pa. Cmwlth. 2014). In Stermel, the claimant, a
Philadelphia police officer, suffered a back injury that rendered him unable to work for
21 weeks when his police cruiser was rear-ended by a drunk driver. The employer, the
City of Philadelphia, issued an NCP acknowledging that the claimant was entitled to
workers’ compensation payments, but indicating that “Claimant received salary
continuation in lieu of PA Workers’ compensation for period of lost time under the City of
Philadelphia’s Heart and Lung Act.” Id. at 881. Subsequently, the claimant recovered
$100,000 via a third-party tort claim against the drunk driver and the tavern that served
the driver while he was visibly intoxicated. The employer sought subrogation of its
payment of the claimant’s medical bills and wage loss. In holding that the employer was
entitled to subrogation, the Workers’ Compensation Appeal Board (“Board”), relying on
Bureau of Workers’ Compensation v. Workers’ Compensation Appeal Board (Excalibur
Insurance Management Service), 32 A.3d 291 (Pa. Cmwlth. 2011), and Wisniewski v.
Workmen’s Compensation Appeal Board (City of Pittsburgh), 621 A.2d 1111 (Pa.
Cmwlth. 1993), determined that “two-thirds of the Heart and Lung disability benefits paid
[to the claimant] represented workers’ compensation benefits.” Stermel, 103 A.3d at
881.
On appeal, the Commonwealth Court reversed and held that the employer was
not entitled to subrogation of its payment of the claimant’s medical bills and wage loss
against the claimant’s third-party tort recovery. In particular, the Commonwealth Court
rejected the Board’s reliance on Excalibur Insurance and Wisniewski, noting that neither
[J-71-2017] - 7
was a subrogation case involving the MVFRL. The Commonwealth Court observed that
the anti-subrogation provision in Section 1720 of the MVFRL has been construed to
include benefits paid under the Heart and Lung Act. Stermel, 103 A.3d at 885. The
court further acknowledged that, while the legislature, through Act 44, expressly
repealed both Sections 1720 and 1722 insofar as they pertained to subrogation of
benefits under the WCA, the legislature did not eliminate the prohibition against
subrogation of Heart and Lung benefits. Thus, the Commonwealth Court reasoned that
the claimant “continued to be ‘precluded’ from recovering the amount of benefits paid
under the Heart and Lung Act from the responsible tortfeasors,” and that there can be
no subrogation out of an award that does not include WCA benefits. Id.In the instant case, on December 22, 2014, conceding that he was unaware of
the Stermel decision at the time the Stipulation was signed, counsel for Claimant filed
an appeal with the Board, asserting that all the benefits Claimant had received had
been paid pursuant to the Heart and Lung Act, and, thus, under Stermel, were not
subrogable. On November 3, 2015, the Board determined that, because Stermel was
decided on November 13, 2014 − prior to the date PSP and Claimant signed the
Stipulation − Stermel was controlling and Claimant was not bound by his lien-related
concessions in the Stipulation, as they were based on an erroneous reading of the law
by his counsel. Accordingly, the Board held the Stipulation was void as contrary to law,
and reversed the WCJ’s order adopting the Stipulation as an order.
PSP petitioned the Commonwealth Court for review of the Board’s decision. In a
unanimous published opinion authored by Judge Ann Covey, a three-judge panel of the
court affirmed the Board’s decision. Pennsylvania State Police v. Workers’
Compensation Appeal Board (Bushta), 149 A.3d 118 (Pa. Cmwlth. 2016). The court
first agreed that, because Stermel was decided prior to the issuance of the WCJ’s order
[J-71-2017] - 8
approving and adopting the Stipulation, and prior to Claimant’s appeal to the Board,
Stermel was controlling law at the time the Board decided Claimant’s appeal, and,
therefore, the Board did not err in applying Stermel to the instant case. Id. at 121.6
The Commonwealth Court further determined that, pursuant to Stermel, PSP was
not entitled to subrogation of the lost wages paid to Claimant under the Heart and Lung
Act from the proceeds of Claimant’s settlement with the third-party tortfeasors.
Additionally, the Commonwealth Court recognized that, while the court in Stermel
appeared to limit its holding to lost wages, because the Heart and Lung Act requires
payment of all medical expenses in addition to full salary, PSP could not recover from
the proceeds of Claimant’s settlement with the third-party tortfeasors any portion of the
medical benefits paid to Claimant under the Heart and Lung Act.
PSP filed a petition for allowance of appeal, and this Court granted review to
consider the following issues:
(1) Is compensation payable pursuant to Article III of the
[WCA], when the Claimant suffers a work related injury and
is concurrently entitled to benefits under the [WCA] and the
Heart and Lung Act?
(2) Did the Commonwealth Court err in its determination that
a self-insured municipality . . . is not entitled to subrogation,
to the extent of the compensation payable pursuant to Article
III of the [WCA], when it has concurrent obligations to an
injured State Trooper under the [WCA] and the Heart and
Lung Act?
Pennsylvania State Police v. Workers’ Compensation Appeal Board (Bushta), 168 A.3d
1260 (Pa. 2017) (order).
In its brief to this Court, PSP insists that it is not challenging this Court’s
determination in Oliver that, pursuant to the MVFRL, employers are precluded from
6 This aspect of the Commonwealth Court’s decision is not before us.
[J-71-2017] - 9
obtaining subrogation of payments made to a claimant under to the Heart and Lung Act.
Rather, PSP maintains that, where an injured employee is entitled to concurrent
benefits under the WCA and the Heart and Lung Act, the benefits to which the
employee is entitled to under the WCA constitute “compensation payable” to which an
employer has a right of subrogation. Moreover, PSP contends that an employer has a
right of subrogation to “compensation payable” under the WCA regardless of whether
the employer actually pays workers’ compensation benefits to the claimant. Appellant’s
Brief at 18; 29 (“The issue is not the extent that the Claimant has received
compensation under the [WCA], but rather the extent to which compensation is actually
payable under the WCA on account of a work injury.”). 7 Claimant responds that PSP’s
argument not only ignores the plain language of the Heart and Lung Act, the WCA, and
the MVFRL, but also this Court’s decision in Oliver, and the Commonwealth Court’s
decision in Stermel.8
As support for its position, PSP cites, inter alia, this Court’s decision in
Annunziata, wherein we held that “there is ‘compensation payable’ for wage loss
benefits payable under the [WCA] even while the Claimant is receiving benefits under
the Heart and Lung Act.” Appellant’s Brief at 22. According to PSP, the language of
Section 637(a) of the Heart and Lung Act, which requires that any workers’
compensation benefits received or collected by an employee who is receiving Heart and
Lung benefits shall be turned over to the Commonwealth, further supports the
proposition that compensation is payable under the WCA and the Heart and Lung Act
concurrently. Id. at 17. In PSP’s view, the legislature would not require employers to
7 The Delaware Valley Workers’ Compensation Trust has submitted an amicus brief in
support of PSP.
8 The Pennsylvania Association for Justice and Patricia Hodge, a named plaintiff in a
class action suit involving individuals subjected to subrogation liens for Heart and Lung
benefits, have filed amicus briefs in support of Claimant.
[J-71-2017] - 10
provide concurrent workers’ compensation benefits to an employee who is receiving
Heart and Lung benefits without affording the employer corresponding rights under the
WCA − namely, the employer’s right to subrogation of the “compensation payable”
under the WCA. Id. at 19.
Moreover, in arguing that an employer has a right of subrogation to
“compensation payable” under the WCA − regardless of whether the employer actually
paid benefits to the claimant − PSP suggests that, if there is no “compensation payable”
under such circumstances, there would be no basis for an award of counsel fees to an
attorney for a claimant who is also receiving Heart and Lung benefits. See Organ v.
Pennsylvania State Police, 535 A.2d 713 (Pa. Cmwlth. 1988). PSP also posits that an
employer must be afforded a right to subrogation of compensation payable under the
WCA, whether or not benefits are actually paid by the employer, in order for the WCJ to
have jurisdiction to rule on petitions involving a claimant who is receiving benefits under
the Heart and Lung Act. Appellant’s Brief at 21.
PSP is correct in its observation that this Court has held that a claimant may be
entitled to concurrent benefits under the WCA and the Heart and Lung Act. In
Annunziata, the claimant, a police officer for the City of Erie, was injured while on duty
and received his full salary pursuant to the Heart and Lung Act. The claimant also
sought workers’ compensation benefits for his loss of earning power with respect to his
concurrent, supplemental employment as a part-time security guard and a part-time
maintenance worker. In denying an obligation to pay workers’ compensation benefits,
the city argued that the clear language of the Heart and Lung Act precluded the
claimant from recovering from a collateral source benefits for the same work injury,
even if the benefits relate to concurrent employment. This Court rejected that
[J-71-2017] - 11
argument, and determined that the claimant was entitled to seek workers’ compensation
for his concurrent employment, reasoning:
[t]he unambiguous language of Section 1(a) of the Heart and
Lung Act . . . clearly contemplates the ability of an injured
employee to seek workers’ compensation. That section
provides that any workmen’s compensation received or
collected by [the employee for the period of injury] shall be
turned over. . . . 53 P.S. 637(a) (emphasis added). . . . This
language does not estop an injured employee from seeking
workers’ compensation, only from retaining monies collected
pursuant to a workers’ compensation Claim Petition. While
the effect of this dichotomy may ultimately be rendered
hollow by the set-off, . . . nonetheless the Heart and Lung
Act does not relieve the employer from its ‘continuing
obligations to pay workers’ compensation benefits for the
work injury.’ Likewise, nothing in the [WCA] 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.
Annunziata, 838 A.2d at 604-05 (emphasis and some citations omitted).
However, although we recognized in Annunziata that an injured employee who is
receiving benefits under the Heart and Lung Act may seek benefits under the WCA for
concurrent employment, we stressed that our decision “should not be read to imply that
an injured employee can, in good faith, seek workers’ compensation benefits for the
same job that gives rise to Heart and Lung benefits.” Id. at 606 n.8. Moreover, we
cautioned that, while a claimant who is receiving Heart and Lung benefits may “seek
and receive worker’s compensation benefits for concurrent employment,” the Heart and
Lung Act requires the employee to turn over to the employer all workers’ compensation
benefits “received or collected.” Id. at 605-06 (emphasis original). It follows that, in
cases where the employee does not actually receive or collect workers’ compensation
benefits, such as in the instant case, there is no basis for subrogation.
[J-71-2017] - 12
Similarly, in Organ, the claimant, who was the recipient of benefits under both the
Heart and Lung Act and the WCA, challenged a salary deduction of 20% of his WCA
benefits that were paid directly to his attorney. The remaining 80% of the WCA benefits
was paid to the employer, as required under the Heart and Lung Act. Noting that the
claimant “never actually received the portion of the workmen’s compensation benefits
paid directly to his attorney,” the Commonwealth Court held that portion was not subject
to recovery by the Commonwealth. 535 A.2d at 714. Thus, neither this Court’s decision
in Annunziata, nor the Commonwealth Court’s decision in Organ, supports PSP’s
argument that an employer is entitled to subrogation of workers’ compensation benefits
which are “payable,” but not actually paid, to an employee.
Notwithstanding the above, PSP argues that, pursuant to Wisniewski and
Excalibur Insurance, a portion of the benefits actually paid to Claimant pursuant to the
Heart and Lung Act in the instant case do, in fact, constitute workers’ compensation
benefits to which PSP has a right of subrogation. In Wisniewski, the claimant was a
police officer who was injured on the job, and her self-insured employer issued an NCP
indicating the claimant’s weekly disability rate, and further noting that she was receiving
her full salary under the Heart and Lung Act. Thereafter, the employer filed a
termination petition based on the claimant's full recovery, and the petition was granted.
The claimant appealed, arguing that there could be no termination of workers'
compensation benefits because she had never actually received them; rather, she had
received her full salary under the Heart and Lung Act. The Commonwealth Court held
that, where a self-insured employer pays Heart and Lung benefits, two-thirds of those
payments represent workers' compensation benefits, and, therefore, the employer could
seek termination of workers' compensation benefits even while Heart and Lung benefits
continued.
[J-71-2017] - 13
Excalibur Insurance also involved a police officer who was injured on the job. His
self-insured employer acknowledged liability under the WCA, but paid the claimant his
full salary under the Heart and Lung Act. Subsequently, the employer filed a
termination petition and requested supersedeas, which was denied. Ultimately, the
termination was granted and the employer sought reimbursement from the supersedeas
fund. The Bureau of Workers' Compensation opposed the request, arguing that only
Heart and Lung benefits were paid. Relying on Wisniewski for the proposition that 2/3
of the benefits received by an employee from a self-insured employer who is obliged to
pay benefits under both the Heart and Lung Act and the WCA represent workers’
compensation benefits, and reasoning that it would be inequitable to treat a self-insured
employer differently than a third-party insurer, the Commonwealth Court held that the
employer was entitled to reimbursement from the supersedeas fund for the portion of
the Heart and Lung benefits paid in lieu of workers' compensation benefits. 32 A.3d at
295.
PSP argues that the Commonwealth’s Court’s decision below effectively
extinguishes an employer’s subrogation rights to workers’ compensation benefits by
classifying all benefits received by an injured public employee as Heart and Lung
benefits, in contravention of Wisniewski and Excalibur Insurance. However, we note
that PSP’s argument is the same argument made by the Board in Stermel, which was
rejected by the Commonwealth Court:
Wisniewski and Excalibur Insurance are not subrogation
cases. Wisniewski terminated the employer's liability for
workers' compensation, but it also held that the employer
had to pay the claimant full Heart and Lung benefits unless
and until those benefits were terminated in another
proceeding. Stated otherwise, Wisniewski expressly
acknowledged that Heart and Lung benefits and workers'
compensation benefits are subject to different statutory
regimes. Excalibur Insurance dealt with the employer's right
[J-71-2017] - 14
to recoup from the supersedeas fund. In both cases, the
Court decided the issues solely under the [WCA]. In neither
case was the [MVFRL] implicated.
By contrast, this case does involve the [MVFRL], and
it prohibits a plaintiff from including as an element of
damages payments received in the form of workers'
compensation or other “benefits paid or payable by a
program . . . or other arrangement.” 75 Pa.C.S. § 1720.
This language “benefits paid or payable by a program” has
been construed to include the program by which Heart and
Lung benefits are paid. Fulmer [v. Pennsylvania State
Police, 647 A.2d 616, 618-19 Pa. Cmwlth. 1994)]. Section
25(b) of Act 44 changed the Section 1720 paradigm only for
workers' compensation benefits, not Heart and Lung
benefits. This means Claimant continued to be “precluded”
from recovering the amount of benefits paid under the Heart
and Lung Act from the responsible tortfeasors. 75 Pa.C.S. §
1722. There can be no subrogation out of an award that
does not include [workers’ compensation benefits].
Likewise, because the tort recovery cannot, as a matter of
law, include a loss of wages covered by Heart and Lung
benefits, Claimant did not receive a double recovery of lost
wages or medical bills.
103 A.3d at 884-85.
PSP ignores the fact that, like Stermel, the instant case is distinguishable from
Wisniewski and Excalibur Insurance because it involves the MVFRL. Indeed, here, as
in Stermel, Claimant was precluded from recovering his lost wages and medical benefits
from the tortfeasors under the MVFRL because Claimant’s wages and medical benefits
were fully covered by the Heart and Lung Act. We agree with the Stermel court that, for
purposes of the MVFRL, Heart and Lung benefits subsume WCA benefits, and thus
subrogation of such benefits is barred.
Nevertheless, PSP argues that Stermel should be “limited solely to those
instances where there was no actual evidence offered showing what amount of
‘compensation payable’ the employer actually remitted based upon the obligations
imposed under the [WCA].” Appellant’s Brief at 27. Specifically, PSP highlights that the
[J-71-2017] - 15
NCP in Stermel indicated that the claimant’s Heart and Lung benefits were being paid
“in lieu of workers’ compensation,” whereas the NCP in the instant case contained no
such provision. Id. at 33. PSP further contends that the evidence it submitted
demonstrating that all medical bills were paid after “re-pricing” “means that all medical
bills were paid pursuant to the [WCA] and comprised the compensation payable for
medical benefits . . . under the WCA.” Id. at 34.9
PSP offers no support for its suggestion that, because the NCP issued to
Claimant identified a weekly compensation rate of $858.08 under the WCA, and did not
specifically provide that the Heart and Lung benefits provided to Claimant were in lieu of
workers’ compensation benefits, the benefits provided to Claimant must be considered,
at least in part, WCA benefits for the purposes of the MVFRL anti-subrogation provision.
As recognized in Stermel, self-insured public employers, such as PSP, that pay Heart
and Lung benefits
do not also make workers’ compensation payments because
they would simply be returned. Wisniewski, [621 A.3d at
113]. Nevertheless, self-insured employers paying Heart
and Lung benefits issue a notice of compensation payable to
acknowledge the work injury. See City of Philadelphia v.
Workers’ Compensation Appeal Board (Ford-Tilghman), 996
A.2d 569, 573 (Pa. Cmwlth. 2010).
Stermel, 103 A.3d at 877-78. We find no basis upon which to conclude that a mere
acknowledgement in an NCP of a work injury, and the specification of the amount of
9 Consistent with Act 44’s goal of cost containment, the legislature enacted Section
306(f.1)(3) of the WCA, which limits the amount a health care provider may charge or
accept as payment for health services to 113% of the prevailing charge payable by
Medicare. See 77 P.S. § 531(3)(i); Jaquay v. Workers’ Compensation Appeal Board
(Central Property Services), 717 A. 1075, 1077 (Pa. Cmwlth. 1998) (noting that the
General Assembly enacted 306(f.1)(3) of the WCA in an attempt to contain “the
escalating medical costs to employers in workers’ compensation cases”).
[J-71-2017] - 16
benefits to which an injured employee would be entitled under the WCA, transforms an
injured employee’s Heart and Lung benefits into WCA benefits under the MVFRL.
Finally, we reject PSP’s suggestion that, because Claimant’s medical bills were
paid using the “re-pricing” formula set forth in the WCA, such medical payments
constitute compensation payable under the WCA. As the Commonwealth Court
recognized below, the Heart and Lung Act provides for the payment of “[a]ll medical and
hospital bills, incurred in connection with any such injury.” 53 P.S. § 637(a)(12).
Further, in Oliver, this Court explained that the Heart and Lung Act:
applies to protect employees serving the public in essential,
high-risk professions. The design is to insure that, if they are
temporarily disabled in the performance of their duties, these
critical-services personnel do not suffer salary losses or
incur the expense of medical care and treatment. 53 P.S. §
637(a); see, e.g., [Annunziata, 838 A.2d 603-04 & n.6].
Although the WCA also embodies a similar remedial
scheme, the [Heart and Lung Act’s] more favorable
treatment of public-safety employees who are temporarily
disabled suggests against treating an overlap as an
equivalency.
Oliver, 11 A.3d at 966 (emphasis added). Payment of a claimant’s medical care and
treatment is required under the Heart and Lung Act, and, regardless of the pricing
schedule utilized, such payment constitutes a Heart and Lung benefit.
For all of the foregoing reasons, we conclude that all of the benefits Claimant
received were Heart and Lung benefits, not WCA benefits. Thus, pursuant to the
MVFRL, PSP does not have a right of subrogation against Claimant’s settlement with
the third-party tortfeasors. Accordingly, we affirm the order of the Commonwealth
Court.
Order affirmed.
Chief Justice Saylor and Justices Baer, Donohue, Dougherty, Wecht and Mundy
join the opinion.
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