Gleason, J. v. Alfred I. Dupont Hospital

J-A17042-21
2021 PA Super 156JOHN GLEASON AND ELAINE : IN THE SUPERIOR COURT OF
GLEASON, H/W : PENNSYLVANIA
:
:
v. :
:
:
ALFRED I. DUPONT HOSPITAL FOR :
CHILDREN AND NEMOURS : No. 1872 EDA 2020
FOUNDATION :
:
:
JOHN GLEASON AND ELAINE :
GLEASON, H/W :
:
:
v. :
:
:
HSC BUILDERS & CONSTRUCTION :
MANAGERS :
:
:
APPEAL OF: THE HARTFORD :
INSURANCE GROUP, WORKER’S :
COMPENSATION LIENHOLDER
Appeal from the Order Entered August 20, 2020
In the Court of Common Pleas of Philadelphia County Civil Division at
No(s): No. 160502115,
No. 170503992
BEFORE: McLAUGHLIN, J., KING, J., and PELLEGRINI, J.*
OPINION BY PELLEGRINI, J.: Filed: August 5, 2021
The Hartford Insurance Group, workers’ compensation lienholder, (The
Hartford) appeals from the order entered in the Court of Common Pleas of
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* Retired Senior Judge assigned to the Superior Court.
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Philadelphia County (trial court) denying its second petition to intervene in
this personal injury action between John and Elaine Gleason, H/W
(collectively, the Gleasons) and Alfred I. DuPont Hospital for Children, et al.
(Dupont Hospital). The Hartford challenges the trial court’s determination that
this appeal is premature and claims that the court erred in denying it party
status. We reverse the trial court’s order and remand with instructions to
allow the requested intervention.
I.
A.
The relevant facts and procedural history of this case are as follows. Mr.
Gleason was employed as an MRI Field Service Technician by Medical Imaging
Group (MIG). The Hartford provides workers’ compensation insurance to MIG.
On May 29, 2015, while Mr. Gleason was performing maintenance on an MRI
machine at Dupont Hospital, a fire and explosion occurred in the main
distribution panel. Mr. Gleason’s hair, skin and clothing caught fire and he
suffered severe burns, scarring, disfigurement and temporary blindness. The
Gleasons filed two actions against various defendants in 2016 and 2017,
alleging negligence and loss of consortium. The defendants answered the
complaints and filed cross-claims and the actions were consolidated in
February 2018.
The Gleasons reached a proposed settlement agreement with the
defendants and they filed a petition seeking the trial court’s approval of its
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terms on December 12, 2019. The agreement provided for a total settlement
payment of $1.45 million dollars. That sum was allocated between the
Gleasons, with $580,000 to Mr. Gleason and $870,000 to Mrs. Gleason for the
loss of consortium claim. On December 25, 2019, all defendants joined in
support of the Gleasons’ petition without taking a position on the allocation
between the spouses. The trial court approved the unopposed settlement on
January 27, 2020, after oral argument.1 Because the cross-claims were not
disposed of by the settlement agreement, the case remained listed for trial.
B.
The Hartford has paid $988,474 to and on behalf of Mr. Gleason in
medical expenses, wage loss benefits and to fund a medical set aside account
for his future medical expenses. The Gleasons offered to pay The Hartford
$352,287, representing the amount remaining from Mr. Gleason’s settlement
after deduction of attorneys’ fees and costs.2
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1 Although it was not a party to the litigation, The Hartford filed an appeal
from the trial court’s order approving settlement, which this Court quashed.
(See Gleasons’ Brief, at 4-5).
2 Because a loss of consortium claim is derivative in nature and arises from
the impact of the spouse’s physical injuries on the marriage rather than from
the injuries themselves, there is no identity of funds. An employer, therefore,
has no subrogation interest in a spouse’s recovery for loss of consortium. See
Thompson v. W.C.A.B. (USF&G Co.), 781 A.2d 1146, 1154–55 (Pa. 2001).
Our Courts have recognized the potential for abuse in this context because
settlement agreements can be fraudulently structured to defeat a valid
subrogation interest. See id.-3-
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On April 20, 2020, The Hartford filed a petition to intervene, seeking
protection of its statutory lien interest under Section 319 of the Pennsylvania
Workers’ Compensation Act (WCA).3 The trial court entered an order denying
The Hartford’s request to intervene on May 14, 2020.
The Hartford filed a second petition to intervene, which the trial court
denied on August 20, 2020. This timely appeal followed. The trial court filed
a Rule 1925(a) opinion on February 9, 2021, stating that The Hartford’s appeal
is premature and not ripe for our review. See Pa.P.A.P. 1925. The court
requested that the appeal “be suspended until the conclusion of trial on the
outstanding cross-claims.” (Trial Court Opinion, 2/09/21, at 2).4
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3 Section 319 of the WCA is codified at 77 P.S. § 671 and governs the
subrogation rights of an employer and its insurance carrier. See Suburban
Delivery v. W.C.A.B. (Fitzgerald), 858 A.2d 219, 222 (Pa. Cmwlth. 2004).
The Act requires subscribing employers to provide compensation to injured
employees, regardless of fault, either through insurance or self-insurance.
See Thompson, supra at 1153. In exchange, employers are vested with
“the absolute right of subrogation respecting recovery from third-party
tortfeasors who bear responsibility for the employee’s compensable injuries.”
Id. (citation omitted).
4 The cross-claims remained outstanding at the time the trial court filed its
opinion. (See Trial Ct. Op., at 2). The court’s March 19, 2021 trial work sheet
indicates that the last remaining cross-claim proceeded to binding arbitration
and all other claims have been resolved. (See Trial Work Sheet, 3/19/21).
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II.
A.
On appeal, The Hartford contends that the trial court’s order denying
intervention is final and appealable because the ruling denies it party status
and prevents it from receiving notice of all filings in this case. It maintains
that the order has the practical effect of denying it the ability to fully protect
its subrogation rights, and that it impacts its standing to appeal the January
2020 order approving settlement. The Hartford argues that party status is
necessary to adequately protect its lien rights by challenging the unfair
40/60% apportionment of the settlement proceeds between Mr. and Mrs.
Gleason. It claims that the higher allocation to Mrs. Gleason for her loss of
consortium claim is designed to shield the settlement proceeds from its
recovery of the statutory lien.
B.
It is well settled that, “[i]n order for this Court to have jurisdiction, an
appeal must be from an appealable order.” Commonwealth v. Mitchell, 72
A.3d 715, 717 (Pa. Super. 2013) (citation omitted). Generally, an appellate
court only has jurisdiction to review final orders. See Pa.R.A.P. 341.
With regard to orders denying intervention, “Pennsylvania law does
allow for an appeal as of right from [such orders] in circumstances that meet
the requirements of the collateral order doctrine as embodied in Pennsylvania
Rule of Appellate Procedure 313. See Pa.R.A.P. 341 (note).” In re Barnes
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Found, 871 A.2d 792, 794 (Pa. 2005).5 “A collateral order is an order
separable from and collateral to the main cause of action where the right
involved is too important to be denied review and the question presented is
such that if review is postponed until final judgment in the case, the claim will
be irreparably lost.” Pa.R.A.P. 313(b). Thus, the collateral order doctrine
permits an appeal from an order that satisfies the three requirements of
separability, importance and irreparability. See Shearer, supra at 858. We
construe this doctrine narrowly to “avoid undue corrosion of the final order
rule, and to prevent delay resulting from piecemeal review of trial court
decisions. ” Id. (citation omitted).
With regard to the first prong of the collateral order doctrine,
an order is separable from the main cause of action if it is entirely
distinct from the underlying issue in the case and if it can be
resolved without an analysis of the merits of the underlying
dispute. With regard to the second prong, a right is important if
the interests that would go unprotected without immediate appeal
are significant relative to the efficiency interests served by the
final order rule. Notably, the rights must be deeply rooted in
public policy going beyond the particular litigation at hand. With
regard to the third prong, a right sought to be asserted on appeal
will be ‘irreparably lost’ if, as a practical matter, forcing the
putative appellant to wait until final judgment before obtaining
appellate review will deprive the appellant of a meaningful
remedy.
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5 “Whether an order is appealable under the collateral order doctrine under
Pa.R.A.P. 313 is a question of law, subject to a de novo standard of review,
and the scope of review is plenary.” Shearer v. Hafer, 177 A.3d 850, 855
(Pa. 2018) (citation omitted).
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Keesee v. Dougherty, 230 A.3d 1128, 1132 (Pa. Super. 2020) (citation
omitted).
In the instant case, the issue of whether The Hartford has the right to
be granted party status is a discrete claim that has no bearing on the
underlying negligence and loss of consortium dispute. The order is, therefore,
separable from the main cause of action. Turning to the second prong, the
ability of an insurance carrier that has paid substantial workers’ compensation
benefits to and on behalf of an employee to recover its statutory lien from the
award of money the employee has received in a civil lawsuit is too important
to be denied review, as the carrier has an absolute right to recovery and its
interest outweighs any efficiency interest in discouraging piecemeal litigation.
Furthermore, as previously noted, our Courts have recognized the potential
for fraud in this context where a derivative loss of consortium claim is
involved. As to the third prong, we find that denying review of the court’s
decision on intervention would impact The Hartford’s standing and ability to
ever challenge the 60% apportionment of the settlement proceeds to the loss
of consortium claim, which it asserts is unfair and designed to shield the
settlement funds.
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Having found that the requirements of the collateral order doctrine have
been met and that this Court has jurisdiction over this appeal, we turn to the
merits of The Hartford’s claim it is entitled to intervention.6
C.
As we previously noted, under Section 319 of the WCA, an employer or
insurance carrier that pays workers’ compensation benefits to an injured
employee is entitled to recover a portion of the benefits from any award of
money the employee receives in a civil lawsuit. Section 319 provides specific
direction for the distribution of an employee’s settlement from a third-party
tortfeasor between the employee and the employer or insurance carrier. See
Dep't of Labor & Indus. Bureau of Workers' Comp. v. Workers’
Compensation Appeal Board (Excelsior Ins.), 58 A.3d 18, 20 (Pa. 2012).
“At its most basic, Section 319 provides that the employer [or carrier] shall
recover from the settlement the amount it previously paid to the claimant,
minus the claimant’s legal costs of recovering that amount.” Id.Additionally, Pennsylvania Rule of Civil Procedure 2327 governs
intervenor status. This Rule provides: “At any time during the pendency of
an action, a person not a party thereto shall be permitted to intervene therein
[if] . . . (2) such person is so situated as to be adversely affected by a
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6 We review a trial court’s decision whether to allow intervention for an abuse
of discretion. See Johnson v. Tele-Media Co. of McKean Cty., 90 A.3d
736, 739 (Pa. Super. 2014).
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distribution or other disposition of property in the custody of the court or of
an officer thereof; or . . . (4) the determination of such action may affect any
legally enforceable interest of such person whether or not such person may
be bound by a judgment in the action.” Pa.R.C.P. 2327 (emphasis added).
“Under this rule, an insurance carrier who has paid workers’
compensation benefits may intervene in an employee’s third party
action in order to protect and preserve the carrier’s right of subrogation.”
Van Den Heuval v. Wallace, 555 A.2d 162, 163 (Pa. Super. 1989) (citations
omitted; emphasis added).
In Van Den Heuval, this Court determined that a workers’
compensation carrier was entitled to intervene in a third-party tort action to
the extent of the workers’ compensation benefits which it had paid to the
employee. The Court noted that it was unrealistic to suggest that the carrier’s
interest could be adequately protected by a subsequent action against the
employee. It observed that if the third-party action settled without notice to
the carrier, the subrogation claim would essentially be “at the mercy of the
employee who, having received payment, can dispose of the settlement
proceeds as he chooses.” Id. at 163. The panel concluded that the trial
court’s order denying intervention had “the practical effect of denying relief to
[the carrier], which cannot fully protect its subrogation interest in any other
way [and therefore] that the order denying intervention in this case is an
appealable order.” Id.-9-
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Likewise, in this case, lack of party status denies The Harford the ability
to fully protect its subrogation interest and left it without recourse to
effectively challenge the consortium apportionment contained in the
unopposed settlement agreement. Although The Hartford paid nearly one
million dollars to and on behalf of Mr. Gleason as a result of the workplace
accident, the settlement agreement was structured in a manner that limited
its lien to approximately $350,000.
In sum, based on the foregoing legal authority and our review of the
certified record, we conclude that the trial court’s order denying The Hartford
intervention in this action was final and appealable as a collateral order. We
further conclude that the trial court abused its discretion when it disallowed
intervention by The Hartford, which was necessary to fully protect its
subrogation rights and to challenge the apportionment of the settlement
proceeds between Mr. and Mrs. Gleason for the loss of consortium claim.
Order reversed. Case remanded with instructions to allow the requested
intervention. Jurisdiction relinquished.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 8/5/21
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