Worker’s Compensation Law

In

Pennsylvania and New Jersey

Pennsylvania Workers’ Compensation Act

The Act provides:

“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 dependents, against such third party to the extent of the compensation payable under this article by the employer…”77 P.S. § 671.

IMPORTANT DECISIONS

REGARDING PENNSYLVANIA

WORKERS’ COMPENSATION

Legal Malpractice Claims

Poole v. WCAB (Warehouse Club, Inc.), 810 a.2d 1182 (Pa. 2002). A workers’ compensation carrier is entitled to subrogation in a legal malpractice action which arose out of a third party claim which would have been subject to subrogation.

Medical Malpractice Claims

Section 1303.508(c) of the Medical Care Availability and Reduction of Error (MCARE) Act, 40 P.S. 1303.101 et seq., provides that there shall be no right of subrogation from a claimant’s tort recovery in a medical professional liability action. Section 1303.508 was made immediately effective on March 20, 2002.

An Employee’s UninsuredMotorist Coverage

Standish v. Am. Mfrs. Mut. Ins. Co., 698 A.2d 599 (Pa. Super. Ct. 1997). A workers’ compensation carrier has no right to assert a subrogation lien against any proceeds an injured worker recovers from his personal uninsured motorist carrier since the uninsured coverage was insurance for the benefit of the claimant, not the third party tortfeasor.

An Employer’s UnderinsuredMotorist Coverage

Warner v. Continental/CNA Ins. Cos., 688 A.2d 177 (Pa. Super. Ct. 1996). An employee injured in the course of scope of his employment while operating his employer’s motor vehicle is able to recover benefits under the Workers’ Compensation Act. Allowing the injured employee to recover underinsured or uninsured benefits from his employer’s motor vehicle insurance created a fund against which the employer’s workers’ compensation carrier can exert its subrogation lien.

A Third Party’s UninsuredMotorist Coverage

Hannigan v. WCAB (O’Brien Ultra Service Station), 860 A.2d 632 (Pa. Commw. Ct. 2004). A workers’ compensation carrier is entitled to subrogate against uninsured motorist benefits which the injured worker receives under a motor vehicle policy purchased by someone other than the worker, the employer or the tortfeasor.

Employee’s ComparativeNegligence

Goldberg v. WCAB (Girard Provision Co.), 620 A.2d 550 (Pa. Commw. Ct. 1993). A carrier’s subrogation interest cannot be reduced by an employee’s comparative negligence.

Settlement of a Subrogation Lien

Rissmiller v. WCAB (Warminster Twp.), 768 A.2d 1212 (Pa. Commw. Ct. 2001). An oral agreement between a workers’ compensation carrier and a claimant’s attorney to settle a subrogation claim is not enforceable. Settlements must be reduced to writing and executed to be enforceable.

Allocation of Third PartyRecovery

Gillette v. Wurst, 869 A.2d 488 (Pa. Super. Ct. 2005). A widow's disclaimer of her interest in a wrongful death action recovery related back to date of her husband's death, and thus, the widow did not have any interest in the wrongful death settlement with the third party against which the workers' compensation insurer could assert its lien for benefits it previously paid. The widow’s disclaimer effectively prevented satisfaction of the subrogation lien by the insurance carrier.

Loss of Consortium Claims

Darr Constr. Co. v. WCAB (Walker), 715 A.2d 1075 (Pa. 1998). Proceeds specifically designated for a loss of consortium claim arising out of a third party settlement are not subject to a workers’ compensation carrier’s subrogation lien.

Anderson v. Borough v. Greenville, 273 A.2d 512 (Pa. 1971). There is no subrogation for any monies awarded to dependent children.

Third Party Settlement Agreement

New Jersey Workers’ Compensation Act

The Act provides:“In the event that the employee or his dependents shall recover and be paid from the said third person or his insurance carrier, any sum in release or in judgment on account of his or its liability to the injured employee or his dependents, the liability of the employer under this statute thereupon shall be only such as is hereinunder in this section provided…”

N.J.S.A. 34:15-40

IMPORTANT DECISIONS

REGARDING NEW JERSEY

WORKERS’ COMPENSATION

Legal Malpractice Claims

Frazier v. N.J. Manufacturers Insurance Co., 667 A.2d 670 (N.J. 1995). A workers’ compensation lien attaches to the proceeds of a legal malpractice action where the malpractice action is derivative of the third-party claim. The workers’ compensation insurance carrier need not institute a suit against the third-party tortfeasor to secure the lien. Moreover, the employee must reimburse the workers’ compensation carrier for any amount received regardless of whether or not the employee is fully compensated for the injuries.

Medical Malpractice

Brum v. International Terminal Operating Co., Inc., 312 A.2d 507 (N.J. Super. A.D. 1973). An employer is entitled to reimbursement from the proceeds of a medical malpractice action limited to the amount of disability and expenses paid by the employer for the injury caused by the medical malpractice.

Employee’s UninsuredMotorist Coverage

Midland Insurance Co. v. Colatrella, 510 A.2d 30 (N.J. 1986). A workers’ compensation carrier’s lien attaches to proceeds from an employee’s own uninsured motorist policy. The carrier has a lien even when the employee is not fully compensated. See Frazier, (holding that recoveries that are not directly from the tortfeasor are subject to a lien even when the employee is not fully compensated.)

Employer’s UnderinsuredMotorist Coverage

Montedoro v. City of Asbury Park, 416 A.2d 433 (N.J. Super. 1980). A workers’ compensation carrier’s lien attaches to the proceeds of an uninsured motorist’s policy purchased by the employer. The carrier has a lien even when the employee is not fully compensated. See Frazier, (holding that recoveries that are not directly from the tortfeasor are subject to a lien even when the employee is not fully compensated.)

Loss of Consortium

Weir v. Market Transition Facility of N.J., 723 A.2d 1231 (N.J. Super. 1999). A workers’ compensation carrier may not assert a lien against the injured worker’s spouse’s per quod (loss of consortium) recovery obtained in a third-party action.

Credit/Advance

If the injured worker recovers a sum greater than that of the future liability of the workers’ compensation carrier, the carrier is released from such future liability. It is entitled to reimbursement for the past benefits paid less attorney’s fees and expenses of suit. N.J.S.A. 34:15-40(b).

If the sum recovered by the injured worker is less than the future liability of the workers’ compensation carrier for benefits to be paid in the future, the carrier is still liable to the worker for the difference, together with attorney’s fees and expenses of suit. The carrier is then entitled to reimbursement for any excess over that difference. N.J.S.A. 34:15-40(c).