IN THE COMMONWEALTH COURT OF PENNSYLVANIA

Michael DeHoratius

, : Petitioner :

:

v. :

: Workers’ Compensation Appeal : Board (Upper Darby Township)

, : No. 1901 C .D. 2016 Respondent : Submitted: May 5 , 2017

BEFORE: HONORABLE REN ÉE COHN JUBELIRER, Judge

HONORABLE ANNE E. COVEY, Judge HONORABLE JAMES GARDNER COLINS, Senior Judge

OPINION NOT REPORTED

MEMORANDUM OPINION BY JUDGE COVEY FILED: August 8, 2017

Michael DeHoratius (Claimant) petitions this Court for review of t he
Workers’ Compensation (WC) Appeal Board’s (Board) November 8, 2016 order
affirming the Workers’ Compensation Judge’s ( WCJ) decision granting Upper Darby
Township’s (Employer) Petition for Modification of WC Benefits (Modification
Petition) and Petition for Suspension of WC Benefits (Suspension Petition), a nd
directing Claimant to pay $5, 137.83 from his third

- party recovery in order to satisfy
Employer’s subrogation lien. The sole issue before the Court is whether Employer is
entitled to subrogation of C laimant’s third

- party recovery. After review, we reverse
in part

. Claimant is employed as a patrol officer in Employer’s police
department. On November 30, 2013 , Claimant was injured as a result of a work

related motor vehicle accident that occurred whi le Claimant was on duty and driving
Employer’s police vehicle. Employer issued a Notice of Temporary Compensation2

Payable (NTCP)

, thereby accept ing Claimant’s injury as compensable. The NTCP
converted to a Notice of Compensation Payable (NCP) by operatio n of law. Claimant

returned to work on January 10, 2014 with no loss in earnings. Employer is self

insured for Heart and Lung and WC benefits and has a separate account for each. For
his period of disability, Claimant was paid benefi ts total ing $9,110.4 7 under what is
commonly referred to as the Heart and Lung Act

. 1 Employer also paid WC
indemnity benefits pursuant to the NCP

. Claimant signed the WC indemnity checks
and returned them to Employer as required by law. In addition, Employer paid

medical b enefits for Claimant’ s work injury under the NCP

.

As a result of the November 30, 2013 work injury, Claimant filed a claim against a third

- party motor vehicle policy. Claimant also made a claim against
Employer’ s insurance policy for underinsured motor ist benefits (UIM policy).

Claimant settled these claims for $50,000.00. However, t o obtain the settlement

, Claimant incurred $16,601.42 in attorney fees and $195.85 in associated costs.
Therefore, Claimant’ s net third

- party recovery was $33,202.73.

On January 13, 2015, Employer filed its Modification and Suspension

Petitions , wherein it alleged that Claimant had returned to work and Employer was
seeking subrogation reimbursement from Claimant’s third

- party recovery. The WCJ
held hearings on February 2 and June 8, 2015. On September 22, 2015, the WCJ
granted Employer’s Petitions and ordered Claimant to pay Employer $5,137.83 to
satisfy Employer’ s subrogation lien. Claimant appealed to the Board. On November
8, 2016, the Board affirmed the WCJ’s decis ion. Claimant appealed to this Court. 2

1 Act o f June 28, 1935, P.L. 477, as amended, 53 P.S. §§ 637

- 38.

2 “On review[,] this Court must determine whether constitutional rights were violated, errors of law were committed, or necessary findings of fact were supported by substantial competent evidence. ” Stepp v. Workers’ Comp. Appeal Bd. (FairPoint Commc’ns, Inc.) , 99 A.3d 598, 601 n.6 (Pa. Cmwlth. 2014).3 Initially, Section 1 (a) of the Heart and Lung Act provides that a police
officer injured in the performance of his duties and temporarily incapacitated from
performing his duties by that injury, “ shall be paid ” his full rate of salary until the
incapacity has ceased, as well as “ [ a ] ll medical and hospital bills [] incurred in
connection with any such injury [

. ] ” 53 P.S. § 637 (a) (emphasis added) . Further,

“ any [ WC benefits ] received or collected by any such employe f or such period []

shall be turned over to the. . . township . . . . ” Id. (emphasis added).

Employer does not dispute that it is not entitled to subrogation for the
lost wages Claimant received under the Heart and Lung Act. However, Employer

contends tha t, since it paid Claimant indemnity and medical benefits from its WC

account
, it is entitled to subrogation from Claimant’s third

- party recovery for those

benefits. Claimant argues that because he was entitled to Heart and Lung Act
benefits, it is irrelev ant that Employer chose to pay Claimant’s benefits from its WC

account. 3 We agree.

This Court addressed a similar argument in Pennsylvania State Police v.
Workers’ Compensation Appeal Board (Bushta), 149 A.3d 118 (Pa. Cmwlth. 2016),
appeal granted

, (Pa

. No. 483 WAL 2016, filed April 18, 2017), 2017 WL 1397531

, wherein, the employer maintained that it was entitled to subrogation because a
portion of the claimant’s benefits were paid out of WC. The Bushta Court held:

Although the NCP in the instant case stated that ‘ [p]aid [s]alary continuation [was under the] Heart and Lung [Act,] ’ NCP at 2, because the Heart and Lung Act requires

3 Employer rejoins that Claimant waived this issue by not raising it before the Board. However, in his appeal to the Board, Claimant expressly pro vided: “Finding 9(f) is a conclusion of law which we disagree with (see below).” Reproduced R ecord (R.R. ) at 24a. Finding 9(f) states: “Employer is entitled to a subrogation recovery against Claimant’s third[

- ]party settlements.” R.R. at 20a. In his a ppeal to the Board , Claimant expounded: “[Employer] alleges that [it] paid medical bills from a [WC] account when [it] should have paid from their H eart and Lung [Act] account. . . .” R.R. at 24a. Based on the record , we hold that Claimant properly prese rved this issue before the Board.4 the payment of full salary and all medical expenses, see Section 1 of the Heart and Lung Act, self

- insured employers paying H eart and Lung Act benefits issue an NCP only to acknowledge the work injury. See Sterme l [ v. Workers ’ Comp

. Appeal Bd

. (City of Phila

. ), 103 A.3d 876 (Pa. Cmwlth. 2014)]

. Section 25( b) of Act 44 [ 4 ] expressly states:

‘ The provisions of [Sections 1720 and 1722 of the Motor Vehicle Financial Responsibility Law ( MVFRL )

, 5 ] 75 Pa.C.S. §§ 1720[,] 1722 are repealed insofar as they relate to [WC] payments or other benefits under the [WC] Act. ’ [ 6 ] Section 25(b) of Act 44 makes no distinction between wage loss or m edical benefits

. Here, because [ the c] laimant was a public safety employee, his benefits fall under the Heart and Lung Act. Thus, pursuant to Section 1720 of the MVFRL, [ the e ] mployer is not entitled to subrogation from [ the c ] laimant ’ s third

- party

recov ery

. Consequently, we are co nstrained to hold that [the c]laimant’ s recovery

. . . is not subject to subrogation.

Bushta, 149 A.3d at 122

- 23 (emphasis added). Employer responds that because the
NCP issued to Claimant did not reference the Heart and Lung Act and because
Employer kept the salary payments (under Heart and Lung Act benefits) separate
from medical benefits (under WC Act benefits )

, this case is distinguishable from both

Stermel and Bushta. However, the Court in neither decision relied on the w ording of

the NCP to make its determination. In both cases

, the e mployers were self

- insured

and argued that because they treated the medical payments as WC, they were entitled

to subrogation.

The Court in both decisions rejected this argument on the basi s that the

e mployers were going beyond the MV F RL by treating Heart and Lung Act benefits
as WC benefits when the Heart and Lung Act specifically encompasses wages and

medical benefits . It appears Employer is seeking to us e its accounting method of

4 Act of July 2, 1993, P.L. 190, No. 44.

5 75 Pa.C.S. §§ 1701

- 1799.7

. 6 Section 1720 of the MVFRL prohibited a plainti ff from including as an element of damages WC or other benefits paid, which included Hea r t and Lung Act benefits. Section 1722 of the MVFRL did not allow Claimant to recover loss of wages c overed by the Heart and Lung Act

.5

separat ing the Heart and Lung benefits from the WC benefits as the basis to establish
subrogation rights. However, t he Heart and Lung Act expressly provides for wages
and medical benefits, and

, therefore

, both are statutori l y “require[d ; ]” thus

, Employer ’s separ ate WC account does not entitle it to subrogation under the WC Act

. Bushta, 149 A.3d at 122; see also 53 P.S. § 637(a). This fact is especially true here,

where Employer required Claimant to endorse his WC checks to Employer. Contrary
to Employer’s argu ment, Employer appears to be the party seeking double recovery
by requesting subrogation of these same payments

. Accordingly, we hold that

Claimant’s third

- party recovery is not subject to subrogation.

For all of the above reasons, the portion of the Boar d’s order directing
Claimant to pay Employer $5,137.83 to satisfy Employer’s subrogation lien is
reversed. The portion of the Board’s order granting Employer’s Petitions is affirmed.

___________________________ ANNE E. COVEY, JudgeIN THE COM MONWEALTH COURT OF PENNSYLVANIA

Michael DeHoratius, : Petitioner :

:

v. :

: Workers’ Compensation Appeal : Board (Upper Darby Township), : No. 1901 C.D. 2016 Respondent :

O R D E R

AND NOW, this 8 th day of August, 201 7

, th e portion of the Workers’
Compensation (WC) Appeal Board’s (Board) November 8, 2016 order affirming the
Workers’ Compensation Judge’s decision granting Upper Darby Township’s
(Employer) Petition for Modification of WC Benefits and Petition for Suspension of

WC Benefits is affirmed. The portion of the Board’s order directing Claimant to pay
$5,137.83 from his third

- party recovery in order to satisfy Employer’s subrogation

lien is reversed.

___________________________ ANNE E. COVEY, Judge