Hartford Ins. Grp. Ex Rel. Chen v. Kamara ( 2018 )


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  •                                    [J-4-2018]
    IN THE SUPREME COURT OF PENNSYLVANIA
    EASTERN DISTRICT
    SAYLOR, C.J., BAER, TODD, DONOHUE, DOUGHERTY, WECHT, MUNDY, JJ.
    THE HARTFORD INSURANCE GROUP                    :   No. 24 EAP 2017
    ON BEHALF OF CHUNLI CHEN,                       :
    :   Appeal from the Judgment of Superior
    Appellee                  :   Court entered on February 10, 2017 at
    :   No. 976 EDA 2016 (reargument
    :   denied April 18, 2017) vacating and
    v.                                :   remanding the Order dated February
    :   25, 2016 in the Court of Common
    :   Pleas, Philadelphia County, Civil
    KAFUMBA KAMARA, THRIFTY CAR                     :   Division, at No. 1534 September
    RENTAL AND RENTAL CAR FINANCE                   :   Term 2015.
    GROUP,                                          :
    :   ARGUED: March 6, 2018
    Appellants                :
    OPINION
    JUSTICE BAER                                              DECIDED: November 21, 2018
    This appeal presents the issue of whether a workers’ compensation insurance
    carrier may bring a third-party action against an alleged tortfeasor on behalf of an injured
    employee to recoup the amount paid in workers’ compensation benefits where the
    employee did not independently sue the tortfeasor, did not join in the insurer’s action, and
    did not assign her cause of action to the insurer. Reaffirming the well-settled proposition
    that the right of action against the tortfeasor remains in the injured employee, we hold
    that, unless the injured employee assigns her cause of action or voluntarily joins the
    litigation as a party plaintiff, the insurer may not enforce its statutory right to subrogation
    by filing an action directly against the tortfeasor. Accordingly, we vacate the judgment of
    the Superior Court and reinstate the order of the trial court, which sustained the
    preliminary objections filed by the tortfeasor and dismissed the insurer’s complaint with
    prejudice.
    On October 10, 2013, Chunli Chen was standing in the parking lot of Thrifty Rental
    Car when she was struck by a rental vehicle operated by Kafumba Kamara. Appellee’s
    Complaint, Dec. 8, 2015, at ¶ 8.1 As a result, Chen sustained injuries to her head, back,
    and neck. Id. When the accident occurred, Chen was in the course of her employment
    with Reliance Sourcing, Inc., which maintained workers’ compensation coverage through
    The Hartford Insurance Group (“Appellee” or “Insurer”). Id. at ¶ ¶ 7, 8. As a result of the
    accident, Insurer had paid $59,424.71 in medical and wage benefits to Chen pursuant to
    her employer’s workers’ compensation insurance policy. Id. at ¶ 9. Chen did not seek to
    recover damages for her injuries by filing an action against Kamara and/or Thrifty Rental
    Car (collectively referred to herein as “Appellants” or “Tortfeasors”) and did not assign her
    cause of action against Tortfeasors to Insurer.
    On September 15, 2015, when the two-year statute of limitations was about to
    expire on Chen’s cause of action, Insurer sought to effectuate its subrogation right under
    Section 319 of the Workers’ Compensation Act (“WCA”),2 77 P.S. §671, by filing a
    praecipe for a writ of summons against Tortfeasors.3 In its subsequently filed complaint,
    1 As explained infra, the facts set forth herein are based upon the assertions set forth in
    the civil complaint filed by Appellee, The Hartford Insurance Group. Because this appeal
    emanates from an order sustaining preliminary objections in the nature of a demurrer, we
    accept as true the material facts set forth in the complaint along with any reasonable
    inferences therefrom. Lord Corp. v. Pollard, 
    695 A.2d 767
    , 768 (Pa. 1997).
    2   Act of June 2, 1915, P.L. 736, as amended, 77 P.S. §§ 1-1041.1, 2501-2708.
    3   Section 319 of the Workers’ Compensation Act (“WCA”) provides, in relevant part:
    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
    [J-4-2018] - 2
    Insurer captioned the plaintiff as “The Hartford Group on behalf of Chunli Chen.”
    Appellee’s Complaint, at Caption. The complaint contained two negligence counts, which
    asserted that each of the defendants were liable to Insurer and to Chen for injuries the
    defendants caused to Chen. The complaint was not verified by Chen, but rather by “Jaime
    Young[;] Workers Compensation Subrogation Specialist[;] The Hartford.”               Id., at
    Verification. The verification stated that the averments and allegations of fact made in
    the civil complaint “are true and correct to the best of [Young’s] information and belief.”
    Id.
    Tortfeasors filed preliminary objections to Insurer’s complaint in the nature of a
    demurrer, claiming that the complaint should be dismissed on two grounds.             First,
    Tortfeasors alleged that Insurer’s attempt to enforce its subrogation rights in an action
    filed directly against the alleged third-party tortfeasors was prohibited by this Court’s
    decision in Liberty Mutual Insurance Co. v. Domtar Paper Co. (“Domtar Paper”), 
    113 A.3d 1230
     (Pa. 2015), which reaffirmed that “the right of action against a third-party tortfeasor
    under Section 319 of the WCA remains in the injured employee, and that the
    employer[’s]/insurer’s right of subrogation under Section 319 must be achieved through
    this article by the employer; reasonable attorney’s fees and other proper
    disbursements incurred in obtaining a recovery or in effecting a compromise
    settlement shall be prorated between the employer and employe, his
    personal representative, his estate or his dependents. The employer shall
    pay that proportion of the attorney’s fees and other proper disbursements
    that the amount of compensation paid or payable at the time of recovery or
    settlement bears to the total recovery or settlement. Any recovery against
    such third person in excess of the compensation theretofore paid by the
    employer shall be paid forthwith to the employe, his personal
    representative, his estate or his dependents, and shall be treated as an
    advance payment by the employer on account of any future instalments of
    compensation.
    77 P.S. § 671.
    [J-4-2018] - 3
    a single action brought in the name of the injured employee or joined by the injured
    employee.”4 Id. at 1240. Because Chen was not a party to Insurer’s action, Tortfeasors
    alleged that Insurer had no independent ability to commence a subrogation claim directly
    against them.      Second, Tortfeasors posited that the complaint must be stricken for
    noncompliance with Pa.R.C.P. 1024(c) because the verification was not signed by Chen
    but, rather, a representative of Insurer who was not present at the accident scene and
    had no first-hand knowledge of the accident from which to plead the facts alleged in
    Insurer’s complaint.5
    In response to the preliminary objections, Insurer contended that it complied with
    Domtar Paper’s requirement that the action against the tortfeasor be brought “in the name
    of the injured employee” because it captioned its complaint as being filed “on behalf of”
    Chen, rather than as “the subrogee” of Chen, which Domtar Paper precluded. Insurer
    also posited that the verification by Insurer’s workers’ compensation subrogation
    specialist, Jaime Young, was proper even though Young was not present at the scene of
    the accident because she had knowledge of the facts contained in the complaint through
    her work on Chen’s workers’ compensation claim. Insurer emphasized that Pa.R.C.P.
    4 As discussed in detail infra, this Court in Domtar Paper rejected an insurer’s attempt to
    enforce its subrogation rights through an action it filed directly against the alleged third-
    party tortfeasor “as subrogee” of the injured employee.
    5   Pa.R.C.P. 1024(c) states:
    The verification shall be made by one or more of the parties filing the
    pleading unless all the parties (1) lack sufficient knowledge or information,
    or (2) are outside the jurisdiction of the court and the verification of none of
    them can be obtained within the time allowed for filing the pleading. In such
    cases, the verification may be made by any person having sufficient
    knowledge or information and belief and shall set forth the source of the
    person's information as to matters not stated upon his or her own knowledge
    and the reason why the verification is not made by a party.
    [J-4-2018] - 4
    1024(a) permits verification on personal knowledge or information and belief, and that its
    verification was based on the latter.
    On February 25, 2016, the trial court issued an order sustaining both of
    Tortfeasors’ preliminary objections and dismissing Insurer’s complaint with prejudice. In
    its opinion dated June 23, 2016, the trial court relied upon Whirley Indus., Inc. v. Segel,
    
    462 A.2d 800
     (Pa. Super. 1983), for the proposition that “actions against a third-party
    tortfeasor must be brought by the injured employee; the workers’ compensation insurance
    carrier has no independent cause of action against the tortfeasor under Section 319 of
    the Workers’ Compensation Act.” Trial Court Opinion, Jun. 23, 2016, at 4. The trial court
    interpreted this Court’s decision in Domtar Paper as reaffirming that principle. Id. at 4-5.
    Accordingly, the trial court concluded that, absent Chen filing a complaint against
    Tortfeasors, Insurer lacked a legally cognizable cause of action against them in its own
    name or on behalf of Chen. Id. at 5. The trial court further held that Insurer’s verification
    failed to comply with Pa.R.C.P. 1024 because Young had no first-hand knowledge of
    Chen’s accident and the complaint did not state the source of Young’s information. Id. at
    6. Finally, the trial court noted that because Insurer failed to assert a legally cognizable
    cause of action against Tortfeasors, granting Insurer leave to attach a sufficient
    verification would have been futile. Id.
    The Superior Court subsequently vacated the trial court’s order and remanded the
    matter for further proceedings, finding that the trial court erred in sustaining Tortfeasors’
    preliminary objections and dismissing Insurer’s complaint. Hartford Ins. Group ex rel.
    Chen v. Kamara, 
    155 A.3d 1108
     (Pa. Super. 2017). First, the Superior Court held that
    Insurer’s action was not precluded by this Court’s decision in Domtar Paper because
    Insurer was not pursuing a subrogation claim directly against the third-party tortfeasors,
    [J-4-2018] - 5
    as was the case in Domtar Paper, but, rather, Insurers filed an action to establish the
    liability of Tortfeasors to Chen. Id. at 1111.
    The intermediate appellate court found it well-settled that the right to sue a third-
    party tortfeasor remains in the injured employee and the employer’s/insurer’s right of
    subrogation under Section 319 of the WCA must be achieved through a single action
    brought in the name of the injured employee or joined by the injured employee. Id. at
    1112 (citing Domtar Paper, 113 A.3d at 1240; Scalise v. F.M. Venzie & Co., 
    152 A. 90
    ,
    92 (Pa. 1930) (stating that an employer “is not to be denied his right of suit because the
    employee does not sue, but may institute an action in the latter’s name”); Moltz v.
    Sherwood Bros., 
    176 A. 842
    , 843 (Pa. Super. 1935) (providing that “[t]he employer’s right
    of subrogation must be worked out through an action brought in the name of the injured
    employee, either by joining the employer as a party plaintiff or as a use plaintiff”) (citations
    omitted); and Reliance Ins. Co. v. Richmond Mach. Co., 
    455 A.2d 686
    , 690 (Pa. Super.
    1983) (holding that Section 319 does not provide the employer/insurer with a cause of
    action against a third party in its own right; rather, the employer/insurer “must proceed in
    an action brought on behalf of the injured employee in order to determine the liability of
    the third party to the employee”)).
    Notably, the Superior Court found that Insurer complied with this jurisprudence
    requiring the insurer to bring an action “in the name of” the injured employee by filing its
    action “on behalf of” Chen. Hartford Ins. Group ex rel. Chen, 155 A.3d at 1113. The court
    emphasized that Insurer was not attempting to “split” Chen’s cause of action as it sought
    the full amount of recovery due to Chen and not merely the amount representing its
    subrogation interest.    Thus, the Superior Court concluded that Insurer’s complaint
    comported with the procedure sanctioned by Domtar Paper to enforce an insurer’s
    Section 319 subrogation right. Id.
    [J-4-2018] - 6
    The Superior Court further held that the verification of the complaint by Young,
    Insurer’s workers’ compensation subrogation specialist, was proper because Insurer is a
    party to the action, as it filed the suit on Chen’s behalf after Chen declined to sue, and,
    concomitantly, Insurer has a real interest in the lawsuit due to its statutory subrogation
    right to Chen’s recovery against Tortfeasors. Id. at 1115. Highlighting Young’s averment
    that the assertions in the complaint were “true and correct to the best of [her] information
    and belief,” Appellee’s Complaint, at Verification, the intermediate appellate court found
    the verification proper even absent Young having first-hand knowledge of the accident.
    Id.
    We granted allowance of appeal to examine whether our decision in Domtar Paper
    permits a workers’ compensation insurance carrier to enforce its subrogation rights under
    Section 319 of the WCA by filing an action against the alleged third-party tortfeasors “on
    behalf of” the injured employee when that employee has not assigned her cause of action
    or voluntarily joined the litigation as a party plaintiff. In the event such action is deemed
    valid, we granted review to determine the propriety of the workers’ compensation
    insurance carrier’s verification of its complaint by a company representative, rather than
    by the injured employee. These issues present questions of law, thus, our standard of
    review is de novo and our scope of review is plenary. Sernovitz v. Dershaw, 
    127 A.3d 783
    , 788 (Pa. 2015).6
    The arguments set forth in the parties’ appellate briefs filed in this Court mirror the
    positions they asserted below. To reiterate, Tortfeasors, as appellants, contend that the
    Superior Court’s decision sanctioning Insurer’s direct action against them conflicts with
    6Similarly, we exercise de novo review of a lower tribunal’s order sustaining preliminary
    objections in the nature of a demurrer. Bruno v. Erie Ins. Co., 
    106 A.3d 48
    , 56 (2014). A
    demurrer should only be sustained if, on the facts averred, the law says with certainty that
    no recovery is possible. Shafer Electric & Constr. v. Mantia, 
    96 A.3d 989
    , 984 (Pa. 2014).
    [J-4-2018] - 7
    Domtar Paper’s reaffirmation that the right of action against a third-party tortfeasor under
    Section 319 of the WCA remains in the injured employee. They argue that while Section
    319 grants an employer/insurer the right to subrogate against any settlement received by
    the injured employee from the alleged third-party tortfeasor, it does not grant the insurer
    the independent right to sue the third-party tortfeasor directly unless the employee is a
    party to the action. See Brief for Appellants at 16 (citing Whirley Industries, Inc., 462 A.2d
    at 802 (recognizing that an action against the third-party tortfeasor must be brought by
    the injured employee and the employer’s carrier is subrogated to the employee’s claim;
    the workers’ compensation insurance carrier has no independent cause of action for
    indemnification by and contribution from the negligent party who caused the insurance
    carrier to pay out benefits)).
    Tortfeasors submit that the instant matter is governed by Domtar Paper, as both
    cases involved a subrogation action by the insurer against the alleged third-party
    tortfeasor without the involvement of the injured employee. They emphasize that as in
    Domtar Paper, the injured employee here did not assign her cause of action to Insurer,
    did not join in Insurer’s action, and did not sue Tortfeasors independently.           Thus,
    Tortfeasors contend, merely captioning the complaint as “on behalf of” the injured
    employee, rather than “as subrogee of” the injured employee, has no legal significance
    because such action offers no protection to the injured worker’s independent claims.
    According to Tortfeasors, the intent of the Court in Domtar Paper was to require workers’
    compensation carriers to join the injured employee in the single action against the alleged
    third-party tortfeasor to preserve the employee’s independent claims for pain and
    suffering as well as to provide for enforcement of the insurer’s subrogation rights.
    Regarding the second issue challenging the propriety of Insurer’s verification of its
    complaint, Tortfeasors reiterate that the verification by Insurer’s workers’ compensation
    [J-4-2018] - 8
    specialist fails to comport with Pa.R.C.P. 1024(c) because it does not set forth the source
    of Young’s information as to the matters alleged in the complaint. See Pa.R.C.P. 1024(c)
    (providing that “the verification may be made by any person having sufficient knowledge
    or information and belief and shall set forth the source of the person’s information as to
    matters not stated upon his or her own knowledge and the reason why the verification is
    not made by the party”). They argue that absent first-hand knowledge of the accident,
    Young could not verify any assertions relating to Chen’s claims against them.                In
    Tortfeasor’s view, the verification of Insurer’s complaint by Young illustrates that this
    action is nothing more than an improper subrogation action filed directly against them by
    Insurer. Finally, they reject any suggestion that the trial court should have offered Insurer
    an opportunity to cure the defective verification as Insurer would have been unable to do
    so considering Chen’s non-party status.
    The Pennsylvania Association for Justice (“PAJ”) has filed an amicus brief in
    support of Tortfeasors, contending that Tortfeasors’ litigation posture in this case is
    aligned with protecting the interests of injured workers. Therein, the PAJ reiterates the
    arguments set forth by Tortfeasors and opines that the trial court properly dismissed
    Insurer’s complaint because a workers’ compensation insurance carrier should never be
    permitted to sue the alleged third-party tortfeasor directly without the joinder of the injured
    employee. To do so, the PAJ asserts, would be detrimental to the employee’s interests
    because the insurer is faced with an insurmountable conflict of interest as it has no
    incentive to expend time and resources to prosecute vigorously the injured employee’s
    independent claims for pain and suffering because it will receive no benefit from such
    effort.
    Further, the PAJ posits, an injured employee’s independent claims will be
    precluded if the insurer files its subrogation claim quickly without the employee’s
    [J-4-2018] - 9
    involvement and settles the action before the employee determines whether to pursue an
    independent third-party suit. The PAJ asserts that whether the claim is brought by Insurer
    “as subrogee” of the injured employee or “on behalf of” the injured employee, the result
    is the same, i.e., the employee whose claim is being asserted is not the entity bringing
    the action and is not the party who will benefit from such action. 7 Accordingly, the PAJ
    urges this Court to reverse the Superior Court’s judgment and reinstate the trial court’s
    dismissal of Insurer’s action.
    In response, Insurer contends that the Superior Court was correct in concluding
    that it complied with Domtar Paper and the cases relied upon therein when it filed a single
    action “on behalf of” Chen and sought damages, not only to satisfy its subrogation interest
    by recovering the amount paid in workers’ compensation benefits, but to obtain the entire
    amount to which Chen was entitled. It was on this basis, Insurer asserts, that the Superior
    Court concluded that the instant case was filed “in the name of” the injured employee and
    was a not an impermissible subrogation action filed by an insurer directly against the
    alleged third-party tortfeasor. Brief of Appellee at 7 (citing Scalise, 152 A. at 92 (providing
    that “[t]he employer, moreover, 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”)). Insurer contends that
    this case is unlike Domtar Paper where this Court rejected the insurer’s attempt to sue
    the alleged third-party tortfeasor “as subrogee of” the injured employee and sought
    recovery only of the insurer’s subrogation interest.
    Contrary to the assertions of Tortfeasors and their amicus, Insurer does not
    interpret Domtar Paper as holding that an insurer may only enforce its statutory right to
    7 Alternatively, the PAJ suggests that if this Court permits insurers to sue alleged third-
    party tortfeasors “for the use of” injured employees, we should require that formal notice
    of the action be given to the injured employee so as to allow for protection of the injured
    employee’s independent claims for pain and suffering, which did not occur here.
    [J-4-2018] - 10
    subrogation under Section 319 of the WCA where the injured employee independently
    filed suit against the alleged tortfeasor and obtained a recovery, assigned the cause of
    action to the insurer, or joined in the latter’s action. Insurer posits that there is no
    requirement, statutory or otherwise, requiring a workers’ compensation insurance carrier
    to demonstrate that the injured employee is aware of and involved in the insurer’s action
    against the alleged tortfeasor.8 Insurer reasons that because its complaint addresses
    Chen’s independent claims, such claims are preserved if Chen desires to intervene in the
    action. Thus, Insurer concludes, no injustice results from this manner of enforcement of
    Section 319 subrogation rights, as suggested by the PAJ. Insurer concedes that it needs
    Chen’s cooperation in discovery and testimony at trial to recover, but contends that the
    issue here concerns an insurer’s right to bring the action against the alleged tortfeasor
    and not whether the case can successfully be proven.
    As to the second issue for which we granted allowance of appeal, Insurer argues
    that the Superior Court was correct in holding that Insurer’s complaint was properly
    verified by Young, Insurer’s workers’ compensation subrogation specialist. Because
    Chen chose not to sue Tortfeasors, Insurer submits that it was the party controlling the
    litigation, and, thus, could verify the complaint.      Insurer contends that there is no
    requirement of first-hand knowledge under Pa.R.C.P. 1024(a) when the verification is
    based on the “information and belief” as to the source of the facts verified.
    8  Insurer asserts that although it contacted Chen and discussed the filing of the lawsuit,
    “[c]ounsel for [a workers’ compensation insurance carrier] cannot also represent the
    employee in a civil suit against tortfeasors, so employee is not listed as a separate party.”
    Brief for Appellee at 7. In its reply brief, the PAJ maintains that Insurer’s concession in
    this regard illustrates why an employer’s workers’ compensation carrier “cannot ethically
    bring suit in [the injured employee’s] name, with averments that purport to make claims
    for damages that may exceed any amount to which [the insurer] has a claim as subrogee,
    and belong to the employee.” Reply Brief for PAJ, at 2.
    [J-4-2018] - 11
    In analyzing the parties’ arguments, we begin with the most basic notion that the
    purpose of the WCA is “to provide the employee an exclusive right to benefits without the
    necessity of proving fault in exchange for abrogation of the employee’s common law
    negligence remedies.” Winfree v. Philadelphia Electric Co., 
    554 A.2d 485
    , 487 (Pa.
    1989). Under this statutory scheme, the injured employee receives prompt payment of
    certain, statutorily-defined benefits regardless of the employer’s fault, while the employer
    is given the exclusivity of the remedy of workers’ compensation benefits and, notably, the
    right of subrogation of any recovery from third-party tortfeasors who were responsible for
    the injured employee’s compensable injuries. Thompson v. Workers’ Compensation
    Appeal Board (USF&G Co.), 
    781 A.2d 1146
    , 1153 (Pa. 2001).
    The doctrine of subrogation has its origin in common law where it served as an
    equitable device that prevented the injured party from receiving double recovery and
    ensured that the party at fault, and not the innocent party, was held responsible for the
    claimed injury. Dale Mfg. Co. v. Workers’ Compensation Appeal Board (Bressi), 
    421 A.2d 653
    , 654 (Pa. 1980).       An employer’s/insurer’s right to subrogation in a workers’
    compensation case, however, is not derived from common law, but is afforded expressly
    by statute in Section 319 of the WCA.9 As referenced supra at n.3, Section 319 provides
    that “[w]here the compensable injury is caused in whole or in part by the act or omission
    9 The rationale for an employer’s right of subrogation under Section 319 is aligned with
    the purpose of the common law doctrine. See Gillette v. Wurst, 
    937 A.2d 430
    , 436 (Pa.
    2007) (holding that Section 319’s right of subrogation has the following three purposes:
    (1) to prevent double recovery for the same injury by the claimant; (2) to ensure that the
    employer is not compelled to make compensation payments made necessary by the
    negligence of a third party; and (3) to prevent a third party from escaping liability for his
    negligence).
    [J-4-2018] - 12
    of a third party, the employer shall be subrogated to the right of the employe. . . to the
    extent of the compensation payable under this article by employer.” 77 P.S. § 671.10
    We are not examining this language for the first time as Section 319 has been
    historically interpreted as providing that the right of action against the tortfeasor lies
    exclusively in the injured employee. See Scalise, 152 A. at 92 (construing Section 319
    as providing that “[t]he right of action remains in the injured employee”); Moltz, 176 A. at
    843 (citation omitted) (acknowledging that the right of action against the tortfeasor abides
    in the injured worker); Whirley Indus. Inc., 462 A.2d at 802 (holding that “[t]he action
    against the third party tortfeasor must be brought by the injured employee”); Reliance Ins.
    Co., 
    455 A.2d at 690
     (holding that “[o]ur appellate courts have not hitherto construed
    section 319 as providing the employer or its insurer with a cause of action against a third
    party in its own right”); and Domtar Paper, 113 A.3d at 1240 (reaffirming that “the right of
    action against a third-party tortfeasor under Section 319 of the WCA remains in the injured
    employee”). This interpretation of Section 319 is based upon the realization that granting
    an employer an independent cause of action against the tortfeasor would impermissibly
    split the employee’s cause of action, thereby subjecting the tortfeasor to multiple suits for
    the same harm. See Moltz, 176 A. at 843 (explaining that because the tortfeasor’s act is
    single and indivisible, it can give rise to but one liability, thus, the right of the insurer
    against the tortfeasor is derived from the injured employee alone, and can be enforced
    only in his right).
    10 In considering the General Assembly’s intentions in enacting Section 319, we apply
    the conventional principles of statutory construction, which require “close adherence to
    terms of a statute that are plain and clear and resort to other approaches of discernment
    only in the presence of ambiguity or inexplicitness.” Williams v. City of Philadelphia, 
    188 A.3d 421
    , 428 (Pa. 2018). Where ambiguity arises, we may consider, inter alia, the
    occasion and necessity for the statute, the object to be attained by the statute under
    examination, and the consequences of a particular interpretation. See 1 Pa.C.S. §
    1921(c).
    [J-4-2018] - 13
    The mere recognition that the cause of action against the tortfeasor remains in the
    injured worker does not resolve this appeal as both the Superior Court below and Insurer,
    as Appellee, agree with such proposition, but rely on case law suggesting that where the
    injured employee refuses or otherwise fails to commence an action against the third-party
    tortfeasor, the employer or insurer may enforce its Section 319 subrogation right by filing
    an action “in the name of” the injured employee. Thus, reduced to its essence, this appeal
    requires us to determine whether the instant action commenced by Insurer “on behalf of
    Chunli Chen,” absent Chen’s voluntary joinder or assignment, constitutes an action
    brought “in the name of the injured employee” so as to effectuate Insurer’s Section 319
    subrogation right.
    We answer this inquiry in the negative as Insurer has offered no authority, statutory
    or otherwise, permitting it to pursue Chen’s cause of action against Tortfeasor without
    Chen’s voluntary participation as a party plaintiff or the contractual assignment of her
    claim. The precedent relied upon by Insurer, i.e., this Court’s previous decisions in
    Scalise and Domtar Paper, does not support the proposition that an employer or workers’
    compensation carrier can seize the injured employee’s cause of action against the
    tortfeasor by merely captioning the complaint “on behalf of” the employee and/or by
    including in the complaint independent claims of the employee in addition to the claim for
    subrogation of workers’ compensation benefits. Rather, as detailed infra, those cases
    confirm that the cause of action belongs to the injured employee and that Section 319
    grants the employer/insurer an automatic right of subrogation of any recovery that the
    injured employee obtains from the third-party tortfeasor who was responsible for the
    compensable injuries. Because there was no recovery by Chen from which Insurer could
    subrogate and Chen did not join Insurer’s cause of action or assign her cause of action
    [J-4-2018] - 14
    to Insurer, the trial court was correct in sustaining the preliminary objections filed by
    Tortfeasors and dismissing Insurer’s complaint with prejudice.
    We agree with Tortfeasors that this conclusion flows from our recent decision in
    Domtar Paper, upon which both the parties and the lower courts rely for their respective
    positions. There, George Lawrence, while employed by Schneider National Inc., suffered
    a work-related injury when he slipped and fell in a parking lot leased by Domtar Paper
    Company (“Domtar Paper”).        Accordingly, the employer’s insurance carrier, Liberty
    Mutual Insurance Company (“Liberty Mutual”), paid Lawrence $33,929 in workers’
    compensation benefits. Lawrence did not sue or settle with Domtar Paper and did not
    assign his cause of action to Liberty Mutual.       Nevertheless, Liberty Mutual filed a
    complaint against Domtar Paper “as Subrogee of George Lawrence,” in which Lawrence
    did not join. Therein, Liberty Mutual contended that Lawrence’s work-related injuries were
    caused by Domtar Paper’s negligent maintenance of the parking lot and that Liberty
    Mutual was entitled to recover its subrogation interest under Section 319 of the WCA,
    regardless of Lawrence’s refusal to participate in the action.
    Similar to the instant case, Domtar Paper filed preliminary objections, alleging that
    in the absence of an injured employee suing in his own right, a workers’ compensation
    carrier has no independent ability to bring a subrogation claim directly against the third
    party tortfeasor.   The trial court agreed and granted Domtar Paper’s preliminary
    objections.   The Superior Court affirmed, rejecting Liberty Mutual’s contention that
    Section 319 conferred upon it a right to pursue separately its subrogation claims against
    the tortfeasor when Lawrence, as claimant, took no action of his own.
    This Court granted allowance of appeal to determine “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
    [J-4-2018] - 15
    employee who was injured has taken no action against the tortfeasor.” Domtar Paper,
    113 A.2d at 1234. In holding that Section 319 did not confer such a right in Domtar Paper,
    we rejected nearly all of the arguments set forth by Insurer in the instant appeal.
    First, we rejected Liberty Mutual’s contention that prior decisions of this Court
    authorized an employer/insurer to commence suit directly against a third-party tortfeasor
    to enforce its Section 319 subrogation right to recover paid workers’ compensation
    benefits. Specifically, we held that the language employed by this Court in our 1930
    decision in Scalise, i.e., that an employer “is not to be denied his right of suit because the
    employee does not sue, but may institute an action in the latter’s name,” Id., at 92, was
    dicta because the employee there had sued the third-party tortfeasor, thus, any reference
    to an insurer’s ability to file suit in the absence of the employee’s participation was
    inconsequential to the central holding of the case, which was that under Section 319, the
    cause of action lies in the employee. Domtar Paper, 13 A.3d at 1237-38.11
    Second, we held in Domtar Paper that several cases of the Superior Court had
    addressed the precise inquiry and concluded that Section 319 did not afford
    employers/insurers an independent right to sue third-party tortfeasors. Id. at 1238-40
    (citing Moltz, 176 A. at 843 (holding that an insurance carrier could not file an action
    directly against the tortfeasor to enforce its subrogation rights; only one action could be
    11 In Domtar Paper, we further distinguished as non-binding dicta language employed in
    Frazier v. Workers’ Compensation Appeal Board (Bayuda Nurses), 
    52 A.3d 241
     (Pa.
    2012), a decision not relied upon or cited by Insurer herein. In Frazier, this Court had
    referenced the aforementioned language from Scalise and further stated that the
    employer’s right to subrogation under Section 319 permits it to “step into the shoes of the
    claimant to recover directly against a third-party.” Frazier, 52 A.3d at 248. We clarified in
    Domtar Paper that such language in Frazier conferred no right of direct action upon the
    employer/insurer because the employee in Frazier had obtained a judgment against the
    tortfeasor and the issue in the case had nothing to do with the employer’s/insurer’s ability
    to file suit directly against the tortfeasor. Domtar Paper, 13 A.3d at 1237.
    [J-4-2018] - 16
    brought and the employer’s right of subrogation “must be worked out through an action
    brought in the name of the injured employee, either by joining the employer as a party
    plaintiff or as a use plaintiff”) (internal citations omitted);12 Reliance Ins. Co., 
    455 A.2d at 688, 690
     (holding that “the statutory remedy in Section 319 of the WCA provided the
    exclusive means for an employer or its insurer to recover amounts it paid in workers’
    compensation benefits to an injured employee and that there was no common law right
    of action for indemnity/contribution against the third-party tortfeasor as the employee
    holds the right of action); and Whirley Indus., Inc., 462 A.2d at 802 (invalidating an
    employer’s direct cause of action against a tortfeasor to recover the amount of increase
    in insurance premiums that it contended was attributable to the tortfeasor’s negligence
    on the grounds that the action against the third-party tortfeasor must be brought by the
    injured employee)).
    We found no persuasive reason in Domtar Paper to stray from the aforementioned
    Superior Court jurisprudence, which was consistent with the Court’s ruling in Scalise that
    the right of action against the tortfeasor is indivisible and remains in the employee who
    suffered the loss. Id. at 1240. Recognizing that Pennsylvania courts disfavor splitting
    causes of action, we opined that preventing insurers from asserting independent actions
    against tortfeasors accomplished two laudable goals: (1) eliminating the prospect that the
    tortfeasor could be exposed to multiple suits; and, (2) preserving the rights of the injured
    worker who retains the beneficial interest in the cause of action against the tortfeasor. Id.
    Both of these considerations come into play in the instant case.
    12 Moltz did not suggest that a workers’ compensation insurance carrier could sue the
    tortfeasor “for the use of” the injured employee. Rather, it held that an employer’s Section
    319 subrogation right could be enforced by joining the employer as a use plaintiff in the
    employee’s action against the tortfeasor. This is a distinction with a difference as allowing
    an employer to be joined in the employee’s action as a use plaintiff does not abrogate the
    well-settled proposition that the right of action lies in the employee.
    [J-4-2018] - 17
    Accordingly, the Domtar Paper Court “reaffirm[ed] that the right of action against a
    third-party tortfeasor under Section 319 of the WCA remains in the injured employee, and
    that the employer[’s]/insurer’s right of subrogation under Section 319 must be achieved
    through a single action brought in the name of the injured employee or joined by the
    injured employee.” Domtar Paper, 13 A.3d at 1240. Significant to the instant appeal, we
    reasoned that because Lawrence did not commence an action against Domtar Paper and
    was not named or joined in Liberty Mutual’s action, the Superior Court properly affirmed
    the grant of Domtar Paper’s preliminary objections. Id.13 14
    Overlooking the basis of the Domtar Paper decision, which was to reaffirm that
    under Section 319 the injured worker retains the cause of action against the tortfeasor,
    13  We declined expressly in Domtar Paper to elaborate on the propriety of the practice
    by which an insurer could commence an action “for the use of” the injured employee,
    finding such issue beyond the grant of allocatur. Id. at n.7. Further discussion of the
    antiquated “for use” practice in workers’ compensation cases governed by Section 319 is
    unnecessary as our decision herein makes clear that for an employer/insurer to enforce
    its Section 319 subrogation right, any action filed by the employer/insurer directly against
    the third-party tortfeasor must proceed with the injured employee’s assignment or
    voluntary participation as a party plaintiff.
    14Then Justice, now Chief Justice Saylor filed a dissenting opinion, wherein he asserted
    that by captioning the complaint as “Liberty Mutual as the subrogee of George Lawrence,”
    Liberty Mutual effectively rendered the injured employee a use plaintiff, and thereby
    satisfied the requisite that the action be filed “in the name of” the injured employee. Thus,
    he concluded that there was little danger that the cause of action would be divided
    because any subsequent action by Lawrence would have been barred by res judicata.
    Justice Saylor opined that even if the Court would accept only phraseology such as “for
    the use of” or “in the name of,” as opposed to “as subrogee of,” form should not affect the
    substantive rights of the parties, and the trial court should have allowed Liberty Mutual to
    amend its complaint to use such phraseology.
    Justice Todd also filed a dissenting opinion in which she agreed with Justice Saylor
    that the manner in which Liberty Mutual captioned its complaint was not fatal to its claim.
    Because Section 319 precludes a subrogee from recovering damages in excess of what
    it paid the injured employee in benefits, Justice Todd found it critical that the subrogee
    serve the injured employee a copy of its complaint to allow the injured employee to retain
    counsel and participate in the litigation to preserve independent claims for damages.
    [J-4-2018] - 18
    Insurer proffers a more literal interpretation of our holding, suggesting that by
    commencing the action “on behalf of” Chen, Insurer filed the action “in the name of” Chen,
    thereby utilizing an accepted method to enforce its Section 319 subrogation rights. We
    decline Insurer’s invitation to facilitate an employer’s/insurer’s ability to recoup workers’
    compensation benefits at the expense of placing the injured worker’s independent cause
    of action in peril. The WCA is remedial in nature and should be interpreted for the benefit
    of the worker and liberally construed to effectuate its humanitarian interests. Peterson v.
    Workers’ Compensation Appeal Board, (PRN Nursing Agency), 
    597 A.2d 1116
    , 1120 (Pa.
    1991).
    Recognizing this notion, the PAJ, as amicus advocating for the rights of injured
    workers, cogently observes that an employer’s workers’ compensation insurance carrier
    has every incentive to limit its focus of the litigation against a third-party tortfeasor to the
    amount it is due in subrogation, and has no incentive or obligation to pursue vigorously
    the injured employee’s independent claims, such as those seeking compensation for pain
    and suffering. To elucidate, upon receiving an offer from the tortfeasor that satisfies the
    subrogation lien, but does not compensate the injured employee sufficiently for pain and
    suffering or the like, the Insurer would have no obligation, nor, indeed, incentive, to decline
    the offer and proceed to trial so that the injured worker has the opportunity to be made
    whole. In fact, Insurer concedes in its brief to this Court that it is not representing the
    interests of Chen, the injured worker, in this litigation.      See Brief for Appellee at 7
    (asserting that although it contacted Chen and discussed the filing of the lawsuit,
    “[c]ounsel for [a workers’ compensation insurance carrier] cannot also represent the
    employee in a civil suit against tortfeasors, so employee is not listed as a separate party”).
    Additionally, the current statutory scheme does not require that the workers’
    compensation insurance carrier provide notice to the injured worker of any lawsuits
    [J-4-2018] - 19
    commenced by insurers on the worker’s behalf. Consequently, an insurer could swiftly
    file a lawsuit on behalf of the injured employee without her knowledge and obtain a
    settlement from the third-party tortfeasor before the employee has decided whether to
    pursue an action to recover sums for noneconomic damages, thereby extinguishing the
    injured worker’s independent claims. While it would further the purpose of Section 319
    to allow for a principled method by which a workers’ compensation insurance carrier could
    sue the third-party tortfeasor without detrimentally affecting the injured employee’s
    independent cause of action, it is not for this Court to create a remedy to cure a possible
    deficiency in the WCA. See Burke ex rel. Burke v. Indep. Blue Cross, 
    103 A.3d 1267
    ,
    1274 (Pa. 2014) (providing that “we are mindful of the precept that courts cannot insert
    words into a statute. Thus, we may not, under the guise of statutory construction, simply
    rewrite [the statute].”).
    Under these circumstances, we find it apparent that sanctioning a workers’
    compensation carrier to pursue litigation of the injured employee merely by captioning the
    complaint as “on behalf of” the employee and including a bald assertion seeking any
    recovery due the employee, contravenes the very jurisprudence establishing that it is the
    injured worker who retains the cause of action against the tortfeasor. It is for these
    reasons that we reiterate our holding in Domtar Paper and clarify that absent the injured
    employee’s assignment or voluntary participation as a party plaintiff, the insurer may not
    enforce its Section 319 right to subrogation by filing an action directly against the
    tortfeasor.15
    15Because we conclude that Insurer failed to assert a legally cognizant cause of action
    against Tortfeasors, we need not address the second issue in this appeal regarding the
    propriety of the verification of Insurer’s complaint.
    [J-4-2018] - 20
    Accordingly, we vacate the judgment of the Superior Court and reinstate the order
    of the trial court, which sustained the preliminary objections filed by Tortfeasors and
    dismissed Insurer’s complaint with prejudice.
    Justice Donohue, Dougherty, Wecht and Mundy join the opinion.
    Chief Justice Saylor files a dissenting opinion in which Justice Todd joins.
    Justice Todd files a dissenting opinion.
    [J-4-2018] - 21
    

Document Info

Docket Number: 24 EAP 2017

Judges: Baer, Saylor, Todd

Filed Date: 11/21/2018

Precedential Status: Precedential

Modified Date: 10/19/2024