C. Chellis v. Delaware Valley Charter H.S. (WCAB)

IN THE COMMONWEALTH COURT OF PENNSYLVANIA
Cheryl Chellis, :
Petitioner :
:
v. :
:
Delaware Valley Charter High :
School (Workers’ Compensation :
Appeal Board), : No. 724 C.D. 2022
Respondent : Submitted: March 3, 2023
BEFORE: HONORABLE PATRICIA A. McCULLOUGH, Judge
HONORABLE ANNE E. COVEY, Judge
HONORABLE STACY WALLACE, Judge
OPINION NOT REPORTED
MEMORANDUM OPINION BY
JUDGE COVEY FILED: September 6, 2023
Cheryl Chellis (Claimant) petitions this Court for review of the
Workers’ Compensation (WC) Appeal Board’s (Board) June 14, 2022 order
affirming the WC Judge’s (WCJ) decision that denied Claimant’s Petition for
Penalties (Penalty Petition), Petition to Reinstate WC Benefits (Reinstatement
Petition), Petition to Review WC Benefits (Review Petition), and Petition to Review
WC Benefit Offset Petition (Review Offset Petition). Claimant presents two issues
for this Court’s review: (1) whether Delaware Valley Charter High School
(Employer) can take a subrogation credit when it did not sign the third-party
settlement agreement (TPSA), or file it with the WC Bureau (Bureau);1 and (2) when
the TPSA provides that the subrogation amount is fixed, whether Employer can
1
Although Claimant refers to the employer in her statement of issues, Claimant refers to
the employer’s WC carrier in her argument.
continue to take a future credit after that amount is paid. After review, this Court
affirms.
On April 20, 2015, Claimant sustained a left shoulder sprain and strain
when a car rear-ended a bus she was driving for Employer. On May 1, 2015,
Employer issued a Notice of Temporary Compensation Payable (NTCP). The NTCP
subsequently converted to a Notice of Compensation Payable.2 Thereafter, Claimant
settled her third-party claim. On June 22, 2018, Claimant signed the TPSA, which
set forth Claimant’s $370,000.00 recovery from the third-party’s insurance carrier
for her injuries. See Reproduced Record (R.R.) at 61a.3 The TPSA provided for
Employer’s WC carrier’s recovery of the WC lien paid to date, and for a reduction
of 40.5% of Claimant’s WC benefits to account for the ongoing credit. See id.
Attached to the TPSA was a Statement of Distribution (Distribution
Statement), which Claimant also signed. See R.R. at 62a. The Statement of
Distribution provided that the recovery expenses were $115,997.35 (contingent fee
of $114,127.41 plus costs of $1,869.94), and that Claimant received $114,127.41 in
two distributions. See R.R. at 62a. Before the WCJ, the parties stipulated that the
attorney who represented Claimant in the third-party case prepared the Distribution
Statement and sent the Distribution Statement with the TPSA and a check to
Employer’s WC carrier before either WC counsel was involved in the case. See
WCJ Dec. at 4, Finding of Fact 5.
2
On February 26, 2020, the WCJ denied Claimant’s petition for review to add additional
injuries, granted Employer’s petition to terminate WC benefits as of July 24, 2018, and granted
Employer’s petition for utilization review. Claimant appealed to the Board, and on January 27,
2021, the Board affirmed the WCJ’s decision.
3
Pennsylvania Rule of Appellate Procedure 2173 requires a reproduced record to “be
numbered . . . in Arabic figures . . . followed in the reproduced record by a small a[.]” Pa.R.A.P.
2173. Claimant did not include the small a in numbering the pages of her reproduced record.
Nevertheless, this Court’s references to specific pages in the Reproduced Record shall be followed
by an a.
2
On August 16, 2019, Claimant filed the Penalty Petition, therein
alleging that Employer violated the WC Act (Act)4 by failing to pay the full amount
of her medical bills. Claimant concurrently filed the Review, Reinstatement, and
Review Offset Petitions related to alleged mistakes in the TPSA concerning
Employer’s subrogation lien. The WCJ held hearings on September 23, October 30,
and November 27, 2019, February 24, April 20, and October 28, 2020, and February
1 and June 2, 2021. On October 14, 2021, the WCJ denied Claimant’s Penalty,
Review, Reinstatement, and Review Offset Petitions. Claimant appealed to the
Board. On June 14, 2022, the Board affirmed the WCJ’s decision. Claimant
appealed to this Court.5
Claimant first argues that a lien that is neither perfected nor agreed to
is not enforceable. Specifically, Claimant contends that the TPSA is invalid because
Employer’s WC carrier did not sign it or file it with the Bureau. Employer rejoins
that the fact that the TPSA was not signed by Employer or its WC carrier or filed
with the Bureau was inconsequential. Employer maintains that Claimant’s counsel
prepared the TPSA and transmitted the TPSA to its WC carrier, and its WC carrier
has complied with the TPSA. Employer further asserts that the TPSA memorialized
its WC carrier’s absolute subrogation rights and established the WC carrier’s
reimbursement for WC benefits paid to date, as well as the ongoing credit against
Claimant’s WC benefits to which Employer’s WC carrier was entitled in accordance
with the Act.
4
Act of June 2, 1915, P.L. 736, as amended, 77 P.S. §§ 1-1041.4, 2501-2710.
5
“Our review is limited to determining whether the WCJ’s findings of fact were supported
by substantial evidence, whether an error of law was committed[,] or whether constitutional rights
were violated.” DiLaqua v. City of Phila. Fire Dep’t (Workers’ Comp. Appeal Bd.), 268 A.3d 1,
4 n.5 (Pa. Cmwlth. 2021) (quoting Bristol Borough v. Workers’ Comp. Appeal Bd. (Burnett), 206
A.3d 585, 595 n.6 (Pa. Cmwlth. 2019)).
3
Section 319 of the Act 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 [the Act] 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.
Where an employe 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 [the 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 [WCJ] or the [B]oard.
77 P.S. § 671 (italic and bold emphasis added).
In the instant case, the parties offered the TPSA as a joint exhibit (JT-
1) and the WCJ admitted it into evidence. See Notes of Testimony, April 20, 2020;
4
Certified Record at 108.6 According to the TPSA, the “[t]otal amount of third-party
recovery [was] $370,000.00[,]” and the “[a]ccrued [WC] lien [was] $230,124.76[.]”7
R.R. at 61a. Importantly, Claimant signed the TPSA. See id.
Section 319 of the Act, entitled “Subrogation of employer to rights of
employe; against third persons; subrogation of employer or insurer to amount paid
prior to award,” 77 P.S. § 671, does not require an employer to sign or file a TPSA
with the Bureau to be entitled to subrogation. Indeed, the only time the parties’
agreement or establishment of subrogation before a WCJ or the Board is required is
when “an employe 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 the Act.” 77 P.S. § 671 (emphasis added).
Here, Claimant’s counsel prepared the TPSA and transmitted it to
Employer’s WC carrier with a check. The TPSA memorialized Employer’s WC
carrier’s absolute subrogation rights and established the WC carrier’s reimbursement
for WC benefits paid to date as well as the ongoing credit against Claimant’s WC
benefits to which Employer’s WC carrier was entitled in accordance with the Act.
Employer’s WC carrier complied with the TPSA. Accordingly, the TPSA is valid.
Claimant next argues that because the TPSA stated a fixed subrogation
amount, Employer could not continue to take a future credit after that amount was
paid. Employer responds that its WC carrier’s indemnity payment log indicates that
it received reimbursement pursuant to the TPSA for the WC benefits paid to date,
and Claimant’s WC benefits were reduced to $174.96 for the ongoing credit
6
Because the pages of the Certified Record are not numbered, this Court refers to electronic
pagination for page numbering herein.
7
The net amount of the WC lien that Employer received was “$137,265.31[.]” R.R. at
61a.
5
(beginning on or about July 3, 2018), and continued until Claimant’s WC benefits
were terminated.
Claimant asserts that, because, according to the TPSA, the net lien was
$137,265.31,8 and the total lien was $139,875.24, that Employer was only entitled
to $2,609.93 to exhaust its WC lien. However, a review of the TPSA reveals that
the total “[a]ccrued [WC] lien” was “$230,124.76[,]” and the expenses attributable
to the lien totaled “$93,204.15[.]” R.R. at 61a. The TPSA directed:
FUTURE DISTRIBUTION OF PROCEEDS – Complete
this section to calculate how much the employer must
reimburse the employee for expenses used to acquire the
third[-]party recovery on future compensation liability.
Note: This section is to be completed only if the total
amount of the third[-]party recovery ([$370,000.00]) is
greater than the amount of the accrued [WC] lien
([$230,124.76]).
Id. (emphasis in original). The TPSA further instructed that Employer/Insurer was
responsible for 40.5% of any future weekly benefit until the subrogation interest was
exhausted, i.e., the total third-party recovery minus the accrued WC lien,
“$139,875.24.” R.R. at 61a. According to the indemnity payment log - “Claim
Transaction Detail Report” - Employer paid “40.5[%] of 2 weeks TTD per[iod]
[$]349.92”9 from “7/13/18” through “10/8/18[.]” R.R. at 43a. Accordingly,
8
That figure should be $136,920.61. The WCJ concluded:
[I]t appears that due to a mathematical error in the [TPSA] Employer
was reimbursed $344.70 more than its lien, I conclude that Claimant
has failed to meet her burden of proving that this constitutes a
violation of the Act, inasmuch as it appears that the mathematical
error in question was committed by her own attorney (the attorney
who represented her in the third party case) rather than by Employer
or [its WC Carrier].
WCJ Dec. at 5.
9
Claimant’s WC benefits were reduced to $174.96 for the ongoing credit, however,
because she was paid every two weeks the temporary total disability amount totaled $349.92.
6
Employer’s deductions did not exceed “$139,875.24” - the amount specified in the
TPSA. R.R. at 61a.
For all of the above reasons, the Board’s order is affirmed.
_________________________________
ANNE E. COVEY, Judge
7
IN THE COMMONWEALTH COURT OF PENNSYLVANIA
Cheryl Chellis, :
Petitioner :
:
v. :
:
Delaware Valley Charter High :
School (Workers’ Compensation :
Appeal Board), : No. 724 C.D. 2022
Respondent :
ORDER
AND NOW, this 6th day of September, 2023, the Workers’
Compensation Appeal Board’s June 14, 2022 order is affirmed.
_________________________________
ANNE E. COVEY, Judge