Third-Party Subrogation in Pennsylvania Workers’ Comp

What happens when a third party’s actions contribute to a work injury? This post will look into third-party subrogation under the Pennsylvania Workers’ Compensation Act. It will address key forms, legal principles, and specific considerations to help injured workers understand their rights and obligations.

What Is Third-Party Subrogation?

Third-party subrogation occurs when a third party causes an injured employee’s compensable injury. This includes injuries caused, in whole or in part, by the act or omission of the third party. The PA Workers’ Compensation Act lays this out clearly.

The employer shall be subrogated to the rights of the injured worker, their personal representatives, estate, or dependents against such third party to the extent of the compensation payable under the law. 

Meaning, the employer or their insurance company can recover the amount paid in workers’ comp benefits from the third party responsible for the injury. The employer can also do this on behalf of the injured worker’s personal representatives, estate, or dependents.

Example

A malfunctioning piece of machinery injures a worker. The injured worker sues the manufacturer of the machinery and receives a settlement.

The employer or their workers’ compensation insurance provider can claim a portion of that settlement. This claim would equal the compensation benefits already paid to the injured worker.

Why Is Subrogation Important?

Subrogation serves three main purposes under the PA Workers’ Compensation Act:

Preventing Double Recovery

It ensures that the injured worker does not receive a double recovery. Meaning, receiving both full compensation from workers’ comp and a third-party settlement for the same injury.

Employer Protection

It ensures the employer does not unfairly pay compensation because of a third party’s wrongful act or omission.

Third-Party Accountability

It prevents a third party from escaping liability for their wrongful conduct.

Key Forms

Third Party Settlement Agreement (LIBC-380)

This form lays out the details of settlements from third-party recoveries and ensures all parties agree on the terms.

Compromise and Release Agreement by Stipulation (LIBC-755)

This form outlines the terms of the settlement and the release of claims. Commonly known as a C&R Agreement.

Supplemental Agreement for Compensation for Disability or Permanent Injury (LIBC-337)

This form adjusts the injured worker’s comp benefits when changes in their condition or circumstances arise.

Death Claim Supplement to Compromise and Release Agreement (LIBC-749)

Used specifically for settlements related to death claims. This ensures that dependents receive their due benefits.

Legal Principles

PA Workers’ Comp Act, Section 319

Section 319 mainly governs workers’ compensation subrogation. This section clearly outlines the employer’s right to reimbursement from third-party recoveries.

Whitmoyer v. WCAB (2018)

This case made it clear that “future installments of compensation” only cover indemnity benefits like lost wages. They do not include future medical expenses.

Dale Mfg. Co. v. WCAB (1980)

The court identified three main purposes of subrogation: preventing double recovery, protecting employers from unfair financial burdens, and ensuring third-party accountability.

Kamp v. Green Acres Contracting Co. (2022)

The court affirmed the constitutionality of subrogation liens. Finding, it constitutional even if it equals or exceeds the employee’s third-party recovery.

Handling Recoveries and Liens

To calculate the employer’s subrogation interest accurately, consider reasonable attorney’s fees and other proper disbursements. This ensures a fair distribution of the recovery amount between the injured worker and the employer.

Example

An injured employee recovers $100,000 from a third-party settlement. The employer paid $50,000 in workers’ compensation benefits. The employer can reclaim that $50,000, adjusted for a share of the legal fees.

Things To Consider

Medical Expenses And Future Benefits

The law distinguishes between indemnity benefits and medical expenses. Employers can claim a lien on past medical expenses, but they cannot offset future medical costs through subrogation. This ensures that injured workers receive their necessary medical care without any interruption.

Disputes

Disputes over the amounts and validity of subrogation claims can come up. When they do, the Workers’ Compensation Judge (WCJ) hears these disputes to find a fair outcome. Injured employees and their attorneys may present evidence and arguments showing the the subrogation claim was appropriate.

Can Employers Waive Their Subrogation Rights?

Employers can waive their subrogation rights through explicit agreements. Such waivers must show clear documentation. This avoids confusion and ensures all parties agree to the terms. Without proper documentation, disputes may arise over the extent of the waiver and its impact on future claims.

Wrap Up

For injured workers looking to handle their recovery process in PA workers’ comp, they should understand third-party subrogation. By knowing your rights, you can ensure you receive the compensation you deserve.

Subrogation claims can get complicated. A workers’ comp lawyers can help to ensure that you do not end up with unfair financial burdens or without medical care. They can guide you through your workers’ compensation claim and protect your interests.

For advice on your case, let us help. Reach out to our offices 24/7 for a free case evaluation (215) 609-4183.