IN THE COMMONWEALTH COURT OF PENNSYLVANIA

Karen Davis, :

: No. 216 C.D. 2015

Petitioner : Argued: November 16, 2015

:

v. :

:

Workers’ Compensation Appeal :

Board (PA Social Services Union :

and Netherlands Insurance Company), :

:

Respondents :

BEFORE: HONORABLE BERNARD L. McGINLEY, Judge

HONORABLE RENÉE COHN JUBELIRER, Judge

HONORABLE ROCHELLE S. FRIEDMAN, Senior Judge

OPINION 

BY SENIOR JUDGE FRIEDMAN FILED: December 30, 2015

Karen Davis (Claimant) petitions for review of the January 28, 2015, 

order of the Workers’ Compensation Appeal Board (WCAB) affirming the decision 

of a workers’ compensation judge (WCJ) to grant the petition to review compensation 

benefits offset (offset petition) filed by PA Social Services Union (Employer) and its 

insurance carrier, Netherlands Insurance Company (Netherlands). We affirm.

Before the WCJ, the parties stipulated to the following facts. On 

November 9, 2010, Claimant was involved in a motor vehicle accident while in the 

course of her employment with Employer. Claimant was a passenger in a vehicle 

owned and operated by a co-employee, Vandallia E. Jarvie. The operator of the 
2

vehicle that hit Jarvie’s vehicle is unknown. Claimant sustained injuries to her 

cervical and lumbar spine. Pursuant to the Workers’ Compensation Act (Act),1

Netherlands paid Claimant $56,213.00 in wage-loss benefits and $33,572.22 in 

medical benefits.

Subsequently, Claimant filed an uninsured motorist claim with Allstate 

Insurance Company (Allstate), Jarvie’s motor vehicle insurance carrier. In the thirdparty uninsured motorist claim, Employer and Netherlands asserted a lien in the 

amount of $89,785.22, the total amount paid to Claimant for medical and wage-loss 

benefits. Claimant settled her uninsured motorist claim with Allstate for $25,000.00. 

Claimant incurred $8,333.33 in attorney’s fees and $196.59 in costs. 

On April 22, 2013, Employer and Netherlands filed the offset petition 

alleging that they were entitled to assert a subrogation lien on the settlement proceeds 

from Claimant’s uninsured motorist settlement. Based on the stipulated facts, the 

WCJ concluded that Netherlands was entitled to subrogate against Claimant’s 

settlement proceeds from Allstate. The WCJ noted that Jarvie purchased the motor 

vehicle insurance that provided the uninsured motorist benefits in dispute. Because 

the insurance had been purchased by someone other than Claimant, Netherlands was 

entitled to subrogation in accordance with section 319 of the Act, 77 P.S. §671. On

appeal, the WCAB affirmed. Claimant filed a petition for review with this court.2

 

1 Act of June 2, 1915, P.L. 736, as amended, 77 P.S. §§1-1041.4, 2501-2708.

2

This court’s review is limited to determining whether constitutional rights were violated, 

whether an error of law was committed, or whether the findings of fact are supported by substantial 

evidence. Section 704 of the Administrative Law, 2 Pa. C.S. §704.
3

In her petition for review, Claimant states that the sole issue is whether 

Netherlands is entitled to subrogation against Claimant’s recovery of uninsured 

motorist benefits from a non-negligent co-employee’s personal automobile policy for 

which Employer did not pay.

Claimant correctly states that the right of subrogation derives from 

statutory law. Section 319 of 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 employe, his personal 

representative, his estate or his dependents, against such 

third party to the extent of the compensation payable under 

this article by the employer . . . .

77 P.S. §671 (emphases added).

Claimant notes that the courts have addressed uninsured motorist 

benefits and subrogation in numerous cases, beginning with Gardner v. Erie 

Insurance Company, 691 A.2d 459 (Pa. Super. 1997), aff’d, 722 A.2d 1041 (Pa. 

1999). In Gardner, the Superior Court held that an injured employee, who received 

workers’ compensation benefits for an injury incurred while operating a coemployee’s vehicle during the course of employment, could seek uninsured benefits 

from the co-employee’s personal automobile policy. Id. at 466. The court, however, 

did not address the employer’s right to subrogation of those funds.

In Standish v. American Manufacturers Mutual Insurance Company, 698 

A.2d 599, 601-02 (Pa. Super. 1997), the Superior Court held that an employer’s 

workers’ compensation insurance carrier could not subrogate against the uninsured 
4

motorist benefits received by the claimant from the claimant’s personal automobile 

policy. The court noted that its decision did not “violate the legislature’s prohibition 

against double recovery of both workers’ compensation benefits and damages in tort” 

because the claimant “did not receive damages in tort. Rather, he received an award 

of benefits which were in the nature of an accident policy for the benefit of the 

insured.” Id. at 602.

In American Red Cross v. Workers’ Compensation Appeal Board 

(Romano), 745 A.2d 78, 81 (Pa. Cmwlth. 2000), aff’d, 766 A.2d 328 (Pa. 2001), this 

court, following Standish, concluded that the employer could not subrogate against 

proceeds received by the claimant from an uninsured/underinsured motor vehicle

policy paid for by the claimant. We stated that section 319 of the Act “limit[s]

subrogation rights, i.e., only against sums received from suits against third party 

tortfeasors.” Id. 

Thereafter, in City of Meadville v. Workers’ Compensation Appeal 

Board (Kightlinger), 810 A.2d 703, 704 (Pa. Cmwlth. 2002), a police officer 

sustained a work-related injury in a motor vehicle accident with an

uninsured/underinsured motorist. The employer paid heart and lung benefits and 

PMA, the employer’s workers’ compensation carrier, paid workers’ compensation 

benefits. Id. The employer maintained a motor vehicle insurance policy with Penn 

National, which paid the police officer a $100,000 settlement. Id.

PMA sought to subrogate against the motor vehicle insurance benefits. 

Id. This court noted that the motor vehicle insurance was paid for by the employer 
5

and the employer was paying damages resulting from the fault of a third party. Id. at 

707. If the third party had been insured, and claimant had reached a settlement with 

the third party, there is no question that PMA could assert its subrogation lien against 

those funds. Id. This court observed that the employer’s motor vehicle insurer was 

essentially paying damages resulting from the fault of a third party. Id. We 

concluded that it would be illogical to allow a claimant who is injured by an 

uninsured third party and recovers uninsured benefits under the employer’s motor 

vehicle policy to be in a better position than the claimant who recovers directly from 

the third-party tortfeasor. Id. The court distinguished American Red Cross, because 

proceeds obtained by a claimant through his own insurance policy, paid for by him, 

are not subject to subrogation. City of Meadville, 810 A.2d at 707.

In Hannigan v. Workers’ Compensation Appeal Board (O’Brien Ultra 

Service Station), 860 A.2d 632, 633 (Pa. Cmwlth. 2004) (en banc), the claimant was 

injured in a car accident with an uninsured motorist while driving a customer’s car. 

The claimant received workers’ compensation benefits, and also received a settlement 

from the customer’s motor vehicle insurance policy. Id. The employer sought 

subrogation against the claimant’s third-party recovery of uninsured motorist 

benefits. Id. Following City of Meadville, this court concluded that the employer 

was entitled to subrogate against the uninsured motorist benefits the claimant 

received under the customer’s motor vehicle insurance policy. Hannigan, 860 A.2d 

at 640.

The Hannigan court distinguished American Red Cross, stating that the 

claimant in American Red Cross received benefits through his own policy, the 
6

premiums for which were exclusively paid by the claimant. Hannigan, 860 A.2d at 

640 n.11.

In other words, where a claimant has purchased his own 

insurance which pays for his injuries because of the 

premiums he has paid, he is entitled to the double recovery 

ordinarily barred by [s]ection 319 [of the Act]. The same 

cannot be said, however, of a claimant who recovers under 

a policy of insurance purchased by some third-party, such 

as a co-worker or, as here, a customer. 

Id. (emphasis added).

Arguing that subrogation is improper in this case, Claimant relies on the

dissenting opinions by Judge McGinley and this author in Hannigan. In his 

dissenting opinion, Judge McGinley noted that the claimant received uninsured 

motorist benefits by virtue of his status as a third-party beneficiary under the 

customer’s motor vehicle policy. Id. at 641 (McGinley, J., dissenting). “Uninsured 

motorist benefits are intended to benefit not only the insured, but also his resident 

relatives, passengers, lawful occupants and authorized drivers who are injured during 

the operation of the policy owner’s vehicle.” Id. Thus, “there is no difference 

between a policy holder and his beneficiaries.” Id.

Furthermore, this author noted that section 319 of the Act “clearly limits 

an employer’s right of subrogation to those instances where the claimant recovers 

from a third-party tortfeasor.” Id. at 642-43 (Friedman, J., dissenting). Thus, 

“[b]ecause [the] [c]laimant received uninsured benefits pursuant to an accident 

insurance policy held by an insured who was not responsible for [the] [c]laimant’s 

injuries, [the] [e]mployer simply is not entitled to subrogation under section 319 [of 

the Act].” Id. at 643.
7

 Here, Claimant observes that workers’ compensation pays an insured 

employee medical and wage benefits. In a personal injury case, the injured party 

must also prove negligence, and, the injured party may receive payment for pain and 

suffering in addition to medical expenses.

3

 Claimant maintains that the employer 

should have the right to subrogation only where it has paid for the 

uninsured/underinsured motorist coverage.

However, this court has already concluded that an employer has the right 

to subrogation not only where the employer paid for the policy, but also where a third 

party, such as a customer or a co-worker, paid for the policy. Hannigan, 860 A.2d at 

640 n.11. Because Claimant’s co-employee paid for the uninsured motorist insurance 

policy, Employer was entitled to subrogate against Claimant’s settlement proceeds. 

Accordingly, we affirm.

___________________________________

ROCHELLE S. FRIEDMAN, Senior Judge

 

3

The facts in this case do not indicate that any portion of the insurance proceeds received by 

Claimant were designated for pain and suffering. Therefore, we do not answer the question of 

whether an employer has the right of subrogation to insurance proceeds that are designated as 

compensation for pain and suffering.
IN THE COMMONWEALTH COURT OF PENNSYLVANIA

Karen Davis, :

: No. 216 C.D. 2015

Petitioner : 

:

v. :

:

Workers’ Compensation Appeal :

Board (PA Social Services Union :

and Netherlands Insurance Company), :

:

Respondents :

O R D E R

AND NOW, this 30th day of December, 2015, we hereby affirm the 

January 28, 2015, order of the Workers’ Compensation Appeal Board.

___________________________________

ROCHELLE S. FRIEDMAN, Senior Judge