Liberty Mutual v. SAC, Inc. ( 2015 )

J-S01012-15
NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
LIBERTY MUTUAL INSURANCE AS : IN THE SUPERIOR COURT OF
SUBROGEE ON BEHALF OF NATHAN : PENNSYLVANIA
MIHALCIK, AS PLAINTIFF, :
:
Appellant :
:
v. :
:
SAC, INC., :
:
Appellee : No. 483 WDA 2014
Appeal from the Order entered on February 19, 2014
in the Court of Common Pleas of Bedford County,
Civil Division, No. 712-2009
BEFORE: GANTMAN, P.J., JENKINS and MUSMANNO, JJ.
MEMORANDUM BY MUSMANNO, J.: FILED OCTOBER 19, 2015
Liberty Mutual Insurance (“Liberty Mutual”), as subrogee on behalf of
Nathan Mihalcik (“Mihalcik”), appeals from the Order granting SAC, Inc.’s
(“SAC”) Renewed Motion for Reconsideration of Motion for Summary
Judgment, and dismissing Liberty Mutual’s Complaint with prejudice. We
affirm.
Liberty Mutual paid approximately $60,000 in worker’s compensation
benefits to Mihalcik, who, during the course of his employment for Schneider
National, was injured in 2007 at a convenience store owned by SAC Inc.
(“SAC”). Neither Mihalcik nor Schneider National filed a cause of action
against SAC. On July 3, 2009, Liberty Mutual, asserting its capacity “as
subrogee on behalf of [] Mihalcik,” filed a Complaint against SAC, asserting
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that the cause of Mihalcik’s injuries was a dangerous condition that SAC
negligently permitted to exist on its property.1 Liberty Mutual did not name
Mihalcik as a party to this action, and Mihalcik has not joined in this action.
SAC filed preliminary objections, including objections to Liberty Mutual’s
standing to bring suit against SAC, which were denied by the trial court.
Thereafter, SAC filed a Motion for Summary Judgment based on Liberty
Mutual’s lack of standing, which was denied by the trial court. SAC filed a
Motion for Reconsideration, which the trial court denied. SAC thereafter filed
a Renewed Motion for Reconsideration. On November 19, 2013, the trial
court granted SAC’s Renewed Motion for Reconsideration, and dismissed
Liberty Mutual’s Complaint, with prejudice, on the basis that Liberty Mutual
lacked standing to bring an action against SAC. Liberty Mutual filed a timely
Notice of Appeal, and a court-ordered Concise Statement of Errors
Complained of on Appeal.
On appeal, Liberty Mutual raises the following issue for our review:
“[Whether] section 319 of the Pennsylvania Workers’ Compensation Act
[hereinafter “PWCA”], 77 P.S. § 671[,] allow[s] the employer/insurer to step
into the shoes of the insured employee to subrogate against the tortfeasor?”
Brief for Appellant at 6 (capitalization omitted).
Under our standard of review of an order granting or
denying a motion for summary judgment, we view the record in
the light most favorable to the non-moving party, and all doubts
1
Although the Complaint is date-stamped August 3, 2009, the court docket
indicates that it was filed on July 3, 2009.
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as to the existence of a genuine issue of material fact must be
resolved against the moving party. Summary judgment is
properly entered only where there is no genuine issue as to any
material fact and it is clear that the moving party is entitled to
judgment as a matter of law. Our scope of review is plenary,
and our review of a question of law, as presented here, is de
novo.
Barnett v. SKF, USA, Inc., 38 A.3d 770, 776 n.6 (Pa. 2012) (internal
citations omitted).
Liberty Mutual contends that the question of whether a workers’
compensation insurer can be subrogated to the rights of the employee is
controlled by section 319 of the PWCA, 77 P.S. § 671 (hereinafter “section
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319”).2 Brief for Appellant at 12. Liberty Mutual points out section 319’s
provision that an employer “shall” have subrogation rights against the third
party tortfeasor, and discusses, at great length, an employer’s subrogation
rights against a third party under section 319. Id. at 13-20, 22-24, 27-28.
Nevertheless, Liberty Mutual claims, in conclusory fashion, that section 319
2
Section 319 provides as follows:
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 employee, his personal
representative, his estate or his dependents, against such third
party to the extent of the compensation payable under 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 employee, 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 employee, his personal representative, his
estate or his dependents, and shall be treated as an advance
payment by the employer on account of any future installments
of compensation.
Where an employee has received payments for the disability or
medical expense resulting from an injury in the course of his
employment paid by the employer or an insurance company on
the basis that the injury and disability were not compensable
under this act in the event of an agreement or award for that
injury the employer or insurance company who made the
payments shall be subrogated out of the agreement or award to
the amount so paid, if the right to subrogation is agreed to by
the parties or is established at the time of hearing before the
referee or the board.
77 P.S. § 671.
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was written to protect an insurer’s right to subrogate workers’ compensation
benefit payments, and “mandates a workers’ compensation carrier’s right to
subrogate in the shoes of the insured employee.” Id. at 14-15, 18, 32.
Liberty Mutual contends that the trial court erred by construing the word
“subrogated,” as used in section 319, to mean that that the workers’
compensation insurer may be “reimbursed if and only if the [injured
employee] sues [the third party tortfeasor] directly.” Id. at 14.
Liberty Mutual contends that the trial court’s interpretation of section
319 conflicts with the precedent established by the Pennsylvania Supreme
Court in Frazier v. Workers’ Compensation Appeal Board (Bayada
Nurses, Inc.), 52 A.3d 241, 248 (Pa. 2012), which, Liberty Mutual asserts,
recognizes an employer’s right to subrogation. Brief for Appellant at 19, 22-
23. Liberty Mutual also claims that, in denying standing to Liberty Mutual,
the trial court misapplied the dicta in Reliance Ins. Co. v. Richmond
Machine Co., 455 A.2d 686 (Pa. Super. 1983), because it “did not file an
action in its own right, but as subrogee of [] Mihalcik, the injured worker.”
Brief for Appellant at 20, 23. Liberty Mutual also contends that the trial
court erred by relying on Liberty Mut. Ins. Co. v. Domtar Paper Co., 77
A.3d 1282 (Pa. Super. 2013). Brief for Appellant at 22.
Liberty Mutual asserts that the trial court’s determination permits SAC
to escape liability for its negligence, and has caused Liberty Mutual to pay
Mihalcik’s hospital bills and other workers’ compensation benefits, in
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contravention of the purpose of subrogation. Id. at 25. Liberty Mutual
contends that, even if the injured employee elects not to file a lawsuit
against the third party tortfeasor, the insurer should not be denied its right
to recover against the tortfeasor the amounts that the insurer paid to the
employee in compensation benefits. Id. at 25-26.
Liberty Mutual contends that the trial court’s concern regarding
splitting a cause of action is contrary to the absolute right of subrogation
provided by section 319, contrary to the legislative intent regarding workers’
compensation subrogation, and will result in higher premiums for employers
and a loss of jobs. Id. at 28, 30. Liberty Mutual claims that, unless
reversed, the trial court’s Order will create a significant negative impact on
the Pennsylvania economy by causing an increase in workers’ compensation
premiums and a potential loss of jobs. Id. Finally, Liberty Mutual contends
that the trial court’s ruling prejudices workers’ compensation insurers
because other insurers, who underwrite home, auto and other risks, are
entitled to subrogate their entire book of business. Id. at 31.
The trial court addressed Liberty Mutual’s claim, set forth the relevant
law, and concluded that Liberty Mutual’s claim lacks merit. See Trial Court
Opinion, 2/19/14, 2-4; see also Liberty Mut. Ins. Co. v. Domtar Paper
Co., 113 A.3d 1230, 1240 (Pa. 2015) (holding that Liberty Mutual could not
assert an independent cause of action against the tortfeasor, either in its
own name or as subrogee of the insured/employee, when the
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insured/employee had not commenced an action against the tortfeasor, and
had not been named in or joined in the action brought by Liberty Mutual).
We agree with the sound reasoning of the trial court, and affirm on the basis
of the rationale set forth in its Opinion. See Trial Court Opinion, 2/19/14, 2-
4.
Order affirmed.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 10/19/2015
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IN THE COURT OF COI\11v10N PLEAS
OF BEDFORD COUNTY, PENNSYLVANIA
LIDERTY iVTUTUAL INSURANCE, AS NO: 712 FOR 2009
SUl3ROGEE ON BEHALF OF NATHAN
TvfJHALCIK, CIVIL DIVISION
PLAfNTlH
V.
SAC, fNC.,
DEFENDANT
iVIE!'v10RANDUM OPINION
I. Survll\.'1ARY OF CASE
The m atters before the Court <1r,2 Defendant's Renewer! A-fo!imr/or f:rcrn~idcrntiou
c(\fi_,1io_
/
1; tor S:11.1,'11:1,1,1
.• •
Ju1i~:M·nt and SC:\'::>ral other \-lotions i11 U111ine filed prior lo tri al
- L •
The instant matter is .:i claim brought by Plaintiff Liberty lvlutual Insurance. who paid
out S59,St0..:1~1 in .vorkers compensation benefits on behalf of Nalh,m lvlihalcik's
\-iih,1icik [oir.ed ,,s a l~i1tty lo this suit. l"lc.intifl's Co1up!ni11t 21l!cgcs that S.,\C, Inc., was
subrozot.on.
\,,.) liable for the compensation benefits naid
t bv~· Plaintiff
Circulated 09/09/2015 03:00 PM
For the reasons set forth below, we grc1nt Defendant's 1'cnewc,-t ;\ !ofio;1 for 1
F:.cco,1.~iduMim; o/Afol:io;ifor Swm1111ry furf.~incnl and dismiss Pluintiff's Complain! with
prejudice.
JL DrsCUSS!ON
l)lainLitf argues that the Pennsylvania Supreme Court's opinion in Frn zicr v.
IV.C.A.B. (Bayada Nurses, Iuc.). stands for the proposition that Plaintiff may proceed in
their claim without \Jih.::ilcik, the originnl injured party I employee. Trrnier, S'.2 A.3ci 241
lP,1. 2012). Plaintiff primarily points to the portion of the Traz icr opinion that st.1tes, " .
lht: employer I compensation insurer 111m; step ln!o i/1c shoes of t/w cuiimnn! to recover
clircct!y ,1gainsl a third party tortleasor ... " Id. at 2,13 (emphasis added). Wh.ile we
believe that Fn1:ier is certainly instructive, we Iind that this statement is, al most, dicta.'
it w2s intended to be :1 \cg;:\I standard+ is indefinite and unclear. Even if we \\'E're to
t1cce1-1t Plaintilfs interpretation of this indefinite dicta in Fra xiev, it vrnu\d be in direct
contradiction lo lhc clear holdings in <1 line of several cases.
l.n Scaiis« v. F.:\:f. \'c11zic fr Co .. the Pennsylvania Supreme Court held that:
"The ;1,d·,t ,_:if action remains in the inJ:urcd crnolovee: suit. is !o be lntJ:;,)/,t'> in
~.. • .,. t
:1is nnu:c; dw ernplovcr rn,1y "PfX'i\r as an .cddiLiun2i pcirty plaintif] . or, .-1:=:
=.1se:pL1i1,l'iff .. [or] ... may intervene for the purpose of protection.
I lie· true holding in Frn z i ar vvas not whether the insurer r::ny proceed in <1 cli'!in:
·... ·ilhout J,e injured emulovce. but whether subro,0.·c1lion i'.-:·,s barred bv sovereivn
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Circulated 09/09/2015 03:00 PM
Scalise, 152 A. 90, 92 (Pi1. 1930) (emphasis added; citations omitted). Shortly 2fler
Scalise. the Pennsylvania Superior Court reiterated that "[tlhe 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."
Afofrz, to Use of Roynl Indcmniti] Co. ·u. Slievuioott Oros. T11c., 176 ;\. 842, S,D (Pa.Super.
!935). Sec also Reliance Insurance Co. v. Ricl1111011d Mnclii11c Co., ~55 A.2d 686
(P_=1.Super. 1983) ::1nd 1V/1il-ley [11d11slries l nc. cJ. Scgcf, 0\62 A.2ci 800, 802 (Pa.Super. 1983)
(slc1ting that "[l']he action c1gc1inst the third party tortfcasor must be brought by the
injured employee."). And, just recently, in a case that is nearly identical in bets to the
prtsen t case. the Superior Court c1gain held that " . . section 319 ( of the Pennsvlv ania
\\'c,rker's Compensation Act] does not provide employers with the ability to bri,1g suit
L, the 1:'.r<2Sent case, Plaintiff has proceeded under c1 caption "on bch,df of ~-foth,1n
H1halcik,'' the injured employee. \Ve believe that such action is iPsignificant to the issue
at h<1nd and. as the trial court held in nonil.-n.r, '' ... me\·cly identifies its status ns a
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rt: ... · , ·1· !f· ,\,1 I/.t r·,.S.LO.
rclU(;I , ~- -(I,
Oom/,1r Poper Co., 2012 \VL 9500572 (T\1.Cc,rn.Pl. '.2.012\. Herc. the the i11J1YCd employee
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Circulated 09/09/2015 03:00 PM
requirements to establish Plaintiffs standing to assert a claim. In short, we find that the
indefinite Jictli from Frn zicr is insufficient to overcome a long precedent of clear
holdings from Scalise through Donitar.
111. OH.DER OF Courn
Ai\•D l\10\'V, this 14th dct)' of February, 2014, the Order of Court is as follows:
l. DefencL:mt's Renewed MMio11.f.'J1' Rcconsideratir.11 oflvloiionfor Sunnnnry J11ds1!icni is
gr<\nt\~d. Plaintiff's Comploint is dismissed with prejudice.
2. Inasmuch JS we have dismissed Plaintiff's Co1nplni11( with prejudice, the remaining
motions 2u-2. dismissed as moot
BY THE COURT
I
.... _,/
LiVENGOOD, J.
Counsel:
1:c,r the flr,intiff: Kevin Connors. [squire
For tl-,,:' D