Court Opinion

ID: 9759102
Source: CourtListenerOpinion
Date Created: 2023-08-29 00:04:54.62645+00
Date Added: 2024-06-11T07:28:59.245841
License: Public Domain

LEADBETTER, Judge,
Dissenting.
In this case, the court must decide whether the proceeds of a legal malpractice action may be subrogated by an employer paying workers’ compensation benefits when the damages in the malpractice action are based upon the same injury that gave rise to the workers’ compensation benefits. Because I believe that they may, I respectfully dissent.
Pennsylvania’s courts have never before addressed the question of whether legal malpractice claims may be subrogated by a workers’ compensation carrier, and a survey of other jurisdictions which have addressed this issue reveals that courts are divided. New Jersey, for example, interpreting a workers’ compensation statute similar to Pennsylvania’s, concluded that the statute was “not to be so rigidly confined and was to apply to recoveries that were the functional equivalent of a recovery from the actual third-party tortfeasor.” Frazier v. N.J. Mfrs. Ins. Co., 142 N.J. 590, 598, 667 A.2d 670, 674 (1995). Further, noting that a contrary determination would lead to a double recovery for the claimant, the court observed:
The Legislature did not intend such disparate treatment between a worker who recovers directly from the third-party tortfeasor and a worker who recovers from his attorney because of the third-party tortfeasor’s same tortious conduct. No apparent justification exists for allowing an injured employee who receives a legal malpractice recovery to be in a better position than an injured employee who recovers directly from the tortfea-sor. Malpractice claims that are derivative of third-party claims are therefore subject to the workers’ compensation hen.
Id. at 601-02, 667 A.2d at 676.
Michigan, on the other hand, does not allow subrogation of legal malpractice *391claims. In its interpretation of a substantially similar statute, Michigan found, “In this case, defendants (plaintiffs lawyers) did not cause the injury that lead to the compensation payments. Put differently, the circumstances that allegedly caused plaintiffs injury did not ‘create’ a legal liability in the defendant lawyers.” Ramsey v. Kohl, 231 Mich.App. 556, 562, 591 N.W.2d 221, 224-25 (1998). And, recognizing that the state has a general policy against double recoveries, the court observed, “it is not for this Court to enforce the general policy suggested by a statute at the expense of the specific language of the statute.” Id. at 562-63, 591 N.W.2d at 225.
I feel that New Jersey’s is the better view, and that the majority reads our sub-rogation statute too narrowly. The injury in a legal malpractice case is not new or independent. Rather, in Pennsylvania, a legal malpractice recovery is a derivative recovery, determined by the amount that would have been recovered from the third-party tortfeasor had the claim been brought forward properly:
In order to establish a claim of legal malpractice, a plaintiff/aggrieved client must demonstrate three basic elements:
1) employment of the attorney or other basis for a duty;
2) the failure of the attorney to exercise ordinary skill and knowledge; and
3) that such negligence was the proximate cause of damage to the plaintiff.
Kituskie v. Corbman, 552 Pa. 275, 281, 714 A.2d 1027, 1029 (1998) (citing Rizzo v. Haines, 520 Pa. 484, 499, 555 A.2d 58, 65 (1989)). In order to demonstrate “damage” in the third element, a plaintiff must prove a viable cause of action against the third-party he wished to sue in the underlying case, and the measure of damages is the amount lost through failure to prosecute adequately the underlying action. Id. at 281, 714 A.2d at 1030. In fact, the legal malpractice action is so intimately tied to the merits of the underlying action that an attorney may mount a successful defense by demonstrating that damages in the underlying action would be uncollectable. Id. at 285, 714 A.2d at 1032. Further, as the United States District Court for the Eastern District of Pennsylvania has stated, in attempting to predict our Supreme Court’s resolution of this issue:
By permitting subrogation, the employee will recover those losses he or she would have recovered if the third party action had been brought in a timely manner and the employer will effectively be reimbursed to the extent it had paid workers’ compensation benefits, at no loss to the worker.
Graham v. Liberty Mutual Group, No. Civ. A. 97-4507, 1998 WL 961376, at *8 (E.D.Pa. Dec.14, 1998). Thus, I would hold that damages stemming from a legal malpractice claim are the “functional equivalent” of a third-party tort recovery, and therefore subrogable by workers’ compensation carriers.
PELLEGRINI, Judge, joins in this dissenting opinion.