Court Opinion

ID: 6105454
Source: CourtListenerOpinion
Date Created: 2022-01-21 14:10:57.342589+00
Date Added: 2024-06-11T08:53:48.958717
License: Public Domain

IN THE COMMONWEALTH COURT OF PENNSYLVANIA

Jamey Kamp,                                 :
                      Petitioner            :
                                            :
       v.                                   : No. 1275 C.D. 2020
                                            : ARGUED: December 15, 2021
Green Acres Contracting Co.                 :
(Workers’ Compensation Appeal               :
Board),                                     :
                 Respondent                 :

BEFORE:       HONORABLE RENÉE COHN JUBELIRER, Judge1
              HONORABLE MARY HANNAH LEAVITT, Judge (P)2
              HONORABLE PATRICIA A. McCULLOUGH, Judge
              HONORABLE ANNE E. COVEY, Judge
              HONORABLE MICHAEL H. WOJCIK, Judge
              HONORABLE CHRISTINE FIZZANO CANNON, Judge
              HONORABLE ELLEN CEISLER, Judge

OPINION BY JUDGE CEISLER                                           FILED: January 21, 2022

       Jamey Kamp (Claimant) petitions this Court for review of the November 23,
2020 order of the Workers’ Compensation Appeal Board (Board), affirming the
decision of a workers’ compensation judge (WCJ). The WCJ denied Claimant’s
review petition seeking to limit the subrogation interest of Green Acres Contracting
Co. (Employer) under Section 319 of the Workers’ Compensation Act (Act).3 The

       1
          This case was assigned to the opinion writer before January 7, 2022, when Judge Cohn
Jubelirer became President Judge.

       2
         This matter was assigned to the panel before January 3, 2022, when President Judge
Emerita Leavitt became a senior judge on the Court.

       3
          Act of June 2, 1915, P.L. 736, as amended, 77 P.S. § 671. Section 319 of the Act
relevantly provides that, where a claimant’s work injury is caused by a third party, his employer
“shall be subrogated” against that third party to the extent of the workers’ compensation payable
under the Act. (Emphasis added.)
issues before the Court are whether Section 319 of the Act violates article I, section
1 and article III, section 18 of the Pennsylvania Constitution.4 After review, we
affirm the Board.

                                       I. Background
       The underlying facts of this matter are set forth in a joint stipulation executed
by the parties on March 9, 2019. Certified Record (C.R.), Item No. 23, Joint
Stipulation. Claimant suffered a work injury on April 21, 2016, when he was struck
by a motor vehicle while performing road work. Id. at 1. Employer issued a notice
of temporary compensation payable (NTCP), which automatically converted to a
notice of compensation payable (NCP) by operation of law. C.R., Item No. 5, WCJ
Decision, Finding of Fact (F.F.) No. 1. On June 18, 2018, a WCJ approved a
compromise and release (C&R) agreement between the parties, under which
Claimant received a lump sum payment of $80,000 in exchange for waiving any
future right to specific loss benefits for disfigurement under Section 306(c)(22) of
the Act.5 C.R., Item No. 19 at 6. Employer remained liable for Claimant’s ongoing
wage loss and for medical expenses directly attributable to the April 21, 2016 work
injury. Id. Employer specifically reserved its right to subrogation under Section 319

       4
         Article I, section 1 of the Pennsylvania Constitution provides that “[a]ll men are born
equally free and independent, and have certain inherent and indefeasible rights, among which are
those of enjoying and defending life and liberty, of acquiring, possessing and protecting property
and reputation, and of pursuing their own happiness.” Pa. Const. art. I, § 1.

        Article III, section 18 of the Pennsylvania Constitution prohibits the General Assembly
(GA) from enacting laws that “limit the amount to be recovered for injuries resulting in death, or
for injuries to persons or property[.]” Pa. Const. art. III, § 18.

       5
          Section 306(c)(22) of the Act, 77 P.S. § 513(22), establishes the amount of specific loss
benefits that may be awarded “[f]or serious and permanent disfigurement of the head, neck or face,
of such a character as to produce an unsightly appearance[.]”

                                                2
of the Act for payment of “any and all [workers’ compensation] benefits” paid to
Claimant. Id.
      The third-party tortfeasor responsible for the car accident that caused
Claimant’s April 21, 2016 work injury held two insurance policies with a combined
liability limit of $150,000. C.R., Item No. 22 at 2. After rejecting settlement offers
from the two insurers in the amount of their respective policy limits, Claimant filed
a declaratory action in the Court of Common Pleas of Fayette County (trial court)
against Employer, the third-party tortfeasor, and the two insurers, seeking a
determination of damages caused by the April 21, 2016 work accident.               Id.
Following an evidentiary hearing, the trial court issued an order on January 3, 2019,
in which it determined that Claimant’s damages totaled $1,894,877.98, of which
$1,500,000 was designated for Claimant’s pain and suffering. C.R., Item No. 22,
Ex. D. The trial court allocated the remainder as follows: $99,618.85 for lost wages,
of which Employer paid $65,662.91; $16,997.42 for lost pension contributions; and
$100,000 for permanent disfigurement. Id.
      Thereafter, Claimant received payment in the amount of each insurer’s
liability limit, for a total recovery of $150,000. Joint Stipulation at 3. On February
4, 2019, Claimant filed a review petition, seeking a determination as to Employer’s
subrogation interest in Claimant’s third-party recovery, the proceeds of which were
placed in an escrow account. C.R., Item No. 2, Item No. 12, Hearing Transcript,
3/8/19, at 6.   Employer’s proposed third-party settlement agreement (TPSA)
allocated Claimant’s entire third-party recovery to its accrued workers’
compensation lien, resulting in a net subrogation lien in the amount of $99,735.12,
after deduction of litigation costs. C.R., Item No. 17.

                                          3
      Claimant’s TPSA recommended a distribution of proceeds based on
Employer’s proportional share of the damages calculated by the trial court in
Claimant’s declaratory action. C.R., Item No. 15. Employer’s accrued workers’
compensation lien in the amount of $327,861.85 represented 17.3% of the
$1,894,877.98 in damages set forth in the trial court’s January 3, 2019 order. Id.
Therefore, Claimant asserted that Employer’s subrogation interest was limited to
17.3% of Claimant’s actual third-party recovery, minus Employer’s share of the
litigation expenses, resulting in a net workers’ compensation lien of $17,150.54. Id.
Additionally, Claimant challenged Section 319 of the Act as unconstitutionally
granting Employer a subrogation interest in Claimant’s entire third-party recovery,
including damages that were unrelated to Employer’s payment of compensation
under the Act. C.R., Item No. 20.
      In his July 22, 2019 decision, the WCJ concluded that no legal authority
existed to support the calculation method proposed in Claimant’s TPSA. WCJ
Decision, Conclusion of Law (C.O.L.) No. 2. The WCJ found that Employer had an
accrued workers’ compensation lien in the amount of $327,861.85, and Claimant’s
litigation expenses totaled $50,863.92. F.F. No. 9, C.R., Item Nos. 14, 17. After
deducting Claimant’s litigation expenses from his $150,000 third-party recovery, the
WCJ found that Employer had a net subrogation lien in the amount of $99,136.08.
F.F. No. 9. The WCJ declined to address the constitutional issues Claimant raised,
as they were beyond the scope of his authority. C.O.L. No. 5.
      Claimant appealed to the Board, reiterating his argument that Section 319 of
the Act was unconstitutional, and Employer’s net subrogation lien should be limited

                                         4
to 17.3% of Claimant’s actual third-party recovery.6 C.R., Item No. 6. The Board
noted that its appellate review does not encompass constitutional issues and that it
lacked the authority to determine the constitutional validity of its enabling
legislation.7 Nevertheless, the Board disagreed with Claimant that Section 319 was
constitutionally infirm. The Board noted that the rationale behind an employer’s
right to subrogation was to prevent a claimant’s double recovery for the same injury,
to ensure that an employer is not required to pay for the negligence of a third party,
and to prevent a third party from escaping liability for its wrongful conduct. Board
Decision at 10-11 (quoting Dale Mfg. Co. v. Workmen’s Comp. Appeal Bd. (Bressi),
421 A.2d 653, 654 (Pa. 1980)). The Board opined that the subrogation provisions
of Section 319 were rationally related to these goals. Accordingly, the Board
affirmed the WCJ. This appeal followed.

       6
         Employer appealed the WCJ’s calculation of Claimant’s litigation expenses, which
included $599.04 in costs that Employer argued were solely related to Claimant’s declaratory
action and thus were not expenses incurred in obtaining his third-party recovery. C.R., Item Nos.
8, 17. The Board disagreed and affirmed the WCJ. Id., Item No. 10, Board Decision at 18.
Employer did not appeal that decision.

       7
          See Manor v. Dep’t of Pub. Welfare, 796 A.2d 1020, 1024 (Pa. Cmwlth. 2002) (while an
agency is competent to pass upon the validity of its own rules and regulations, it is not competent
to pass upon the constitutionality of its own enabling legislation). Agencies may, however, address
constitutional challenges to a statute’s application. Keystone ReLeaf LLC v. Dep’t of Health, 186
A.3d 505 (Pa. Cmwlth. 2018) (internal citations omitted).

                                                5
                                          II. Issues
       On appeal,8 Claimant argues that Section 319 of the Act violates article I,
section 1 and article III, section 18 of the Pennsylvania Constitution.
                                       III. Discussion
       Section 319 of the Act relevantly provides that, where an employee’s
compensable injury is caused by a third party, “the employer shall be subrogated
to the right of the employe[e.]” 77 P.S. § 671 (emphasis added). This language is
clear and unambiguous, is written in mandatory terms, and admits no exceptions,
equitable or otherwise. Kidd-Parker v. Workers’ Comp. Appeal Bd. (Phila. Sch.
Dist.), 907 A.2d 33, 37 (Pa. Cmwlth. 2006) (internal citations omitted).                      An
employer’s right to subrogation under Section 319 is statutorily absolute and can be
abrogated only by choice. Winfree v. Phila. Elec. Co., 554 A.2d 485, 487 (Pa. 1989).
The purpose behind Section 319 is to prevent a claimant’s double recovery for the
same injury, to ensure that an employer is not required to pay for the negligence of
a third party, and to prevent a third party from escaping liability for his wrongful
conduct. Gillette v. Wurst, 937 A.2d 430, 436 (Pa. 2007).
       “[A] statute is presumed to be constitutional and will not be declared
unconstitutional unless it clearly, palpably[,] and plainly violates the [Pennsylvania]
Constitution.” Dep’t of Transp. v. McCafferty, 758 A.2d 1155, 1160 (Pa. 2000). A
party challenging the constitutionality of a statute has a heavy burden of persuasion.
Id. Doubts regarding whether a challenger has met this high burden are resolved in
favor of finding the statute constitutional. Germantown Cab Co. v. Phila. Parking

       8
         This Court’s scope of 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. Thompson v. Workers’ Comp. Appeal Bd. (USF&G Co.), 781 A.2d 1146
(Pa. 2001). Questions of law are subject to plenary review. Id.

                                                6
Auth., 206 A.3d 1030, 1041 (Pa. 2019). “A statute is facially unconstitutional only
where there are no circumstances under which the statute would be valid.” Id. at
1041. A facial attack tests the constitutionality of a statute based on its text alone
without consideration of the facts of a particular case. Haveman v. Bureau of Pro.
& Occupational Affs., State Bd of Cosmetology, 238 A.3d 567, 572 (Pa. Cmwlth.
2020).
      Claimant acknowledges that Section 319 does not implicate a fundamental
right and therefore our analysis of Section 319’s constitutionality is governed by the
rational basis test. Under this analysis, we first determine whether the challenged
statute seeks to promote a legitimate state interest. Kramer v. Workers’ Comp.
Appeal Bd. (Rite Aid Corp.), 883 A.2d 518, 534 (Pa. 2005) (internal citations
omitted). If so, we must then determine whether the legislation is reasonably related
to accomplishing that state interest. Id.
      As to the first part of the rational basis test, the overall purpose of the Act is
to provide an injured employee benefits, without regard to the employer’s fault.
Hartford Ins. Grp. v. Kamara, 199 A.3d 841, 848 (Pa. 2018). In exchange, the
employer is granted the “exclusivity of the remedy of workers’ compensation
benefits,” and the right to subrogate against the injured employee’s recovery from
any third-party tortfeasor responsible for his compensable injuries. Id.
      Claimant does not challenge the legitimacy of Section 319’s purpose, which
in part seeks to relieve an employer from the financial burden caused by the actions
of a third-party tortfeasor, and he agrees that Section 319 achieves this purpose.
Claimant further agrees that Section 319 prevents a claimant from recovering
damages from both his employer and a negligent tortfeasor. He suggests, however,
that Section 319 works “too well in application[,]” as it grants the employer an

                                            7
“unfettered” right to recover against a claimant’s third-party settlement, regardless
of the relationship between the damages awarded and the benefits paid by an
employer under the Act. Claimant’s Br. at 17. Because Section 319 has effectively
abrogated his right to recover damages incurred as a result of the April 21, 2016
work injury, Claimant argues that Section 319 violates his constitutionally protected
right to “recover and retain” property, in contravention of Article I, Section 1 of the
Pennsylvania Constitution, without due process of law.
       To summarize, Claimant does not argue that Section 319 fails to promote a
legitimate state interest, nor does he challenge whether Section 319 is reasonably
related to accomplishing that state interest. Claimant has not alleged that no
circumstances exist under which Section 319 would be valid.9 Instead, he argues
that Section 319 works “too well” in achieving its purpose. Claimant’s Br. at 17.
       We must reject Claimant’s argument that Section 319 is constitutionally
infirm simply because it works too effectively at shifting the financial burden of an
employee’s work injury from the innocent employer to the negligent tortfeasor. Our
courts have repeatedly held as absolute an employer’s right to subrogation under
Section 319, and Claimant has not presented a compelling argument for overturning
this jurisprudence. The WCJ’s decision granting Employer a subrogation interest in
the entire amount of Claimant’s third-party recovery does nothing more than give
effect to the express language in Section 319.10 Additionally, while the trial court’s
January 3, 2019 order clearly apportioned its $1,894,877.98 award to Claimant’s

       9
          Indeed, Claimant misstates the proper standard for a facial constitutional challenge,
asserting that he need only demonstrate that a “substantial number” of Section 319’s applications
are unconstitutional. Claimant’s Br. at 14.

       10
         This is particularly true, given that Employer’s accrued workers’ compensation lien in
the amount of $327,861.85 far exceeds Claimant’s $150,000 third-party recovery.

                                               8
damages for pain and suffering, medical expenses, lost wages and pension
contributions, and permanent disfigurement, there is no evidence demonstrating that
the parties similarly apportioned Claimant’s actual recovery. As a result, there
would appear to be no basis for limiting Employer’s subrogation interest to a fraction
of the amount recovered, had the WCJ chosen to do so.
      Claimant’s second constitutional attack is based on article III, section 18 of
the Pennsylvania Constitution, which relevantly permits the GA to enact laws
governing the payment of workers’ compensation benefits by employers, fixing the
amount of compensation to be paid, and providing remedies for the collection
thereof. Article III, section 18 further provides that “in no other cases shall the [GA]
limit the amount to be recovered for injuries resulting in death, or for injuries to
persons or property[.]” Pa. Const. art. III, § 18. Claimant contends that Section 319
of the Act violates article III, section 18, as the subrogation rights granted to
employers effectively limit the damages a claimant may recover against a third-party
tortfeasor.
      We disagree. As Employer points out, the amount of Claimant’s actual third-
party recovery reflected the limits of the third-party tortfeasor’s insurance policies.
Section 319 of the Act neither implicitly nor explicitly limits the amount a claimant
may recover from a third-party tortfeasor. It merely grants an employer the right to
subrogate a claimant’s recovery to the extent the employer has paid benefits under
the Act. As already discussed herein, one purpose of Section 319 is to ensure that
an employer is not required to pay for the negligence of a third party; the subrogation
rights entrenched in Section 319 are reasonably related to accomplishing that
purpose.

                                           9
       In challenging the constitutional validity of Section 319, Claimant urges this
Court to distinguish the instant matter from Thompson v. Workers’ Compensation
Appeal Board (USF&G Company), 781 A.2d 1146, 1152-54 (Pa. 2001) (Thompson
II), in which our Supreme Court held that an employer’s right to subrogation under
Section 319 was “absolute” and not subject to “ad hoc equitable exceptions.” We
decline to do so.
       The claimant in Thompson II, John L. Thompson (Thompson), sustained a
work-related injury in August 1988 when the tip-boom of an Omni 60 aerial platform
collapsed, after which Thompson’s employer, Craig Welding & Equipment Rental
(Craig), and its insurance carrier, USF&G (Insurer), paid Thompson total disability
benefits under the Act. A subsequent inspection of the Omni 60 aerial platform
revealed problems with the bolts designed to connect the tip-boom. Following the
inspection, Craig took possession of the suspect bolts, which were subsequently lost.
Thompson and his wife filed a product liability action in October 1988 against the
manufacturers, suppliers, and owners of the platform.
       The defendants in the product liability action sought to preclude Thompson
from presenting evidence relating to his receipt of workers’ compensation benefits
as a sanction for Craig’s failure to produce the bolts at trial. The trial court granted
the defendants’ motion, after which Thompson and his wife settled the matter for
$300,000.    The parties, which did not include Craig or Insurer, specifically
apportioned $200,000 of the settlement to Thompson’s pain and suffering and
$100,000 to his wife’s claim for loss of consortium. This distribution scheme had
the effect of defeating any subrogation rights Craig had under Section 319 of the
Act.

                                          10
      Craig filed a petition to suspend Thompson’s workers’ compensation benefits
and to enforce its right to subrogation under Section 319. A WCJ granted Craig’s
request, which the Board affirmed. This Court reversed in Thompson v. Workers’
Compensation Appeal Board (USF&G Company), 730 A.2d 536 (Pa. Cmwlth. 1999)
(Thompson I), rev’d Thompson II, after concluding that Craig was barred from
enforcing its subrogation lien on equitable grounds, based on its spoliation of
evidence.
      The Supreme Court reversed in Thompson II, as Craig’s right to subrogation
under Section 319 was “absolute” and unaffected by equitable considerations. The
Supreme Court remanded the matter to this Court with direction to consider whether
Craig’s subrogation right was nonetheless barred given that Thompson’s settlement
funds were designated for pain and suffering and loss of consortium. To that end,
this Court held in Thompson v. Workers’ Compensation Appeal Board (USF&G
Company), 801 A.2d 635 (Pa. Cmwlth. 2002) (Thompson III), that Thompson’s
damages for pain and suffering were subject to subrogation under Section 319. In
so doing, we relied on Bumbarger v. Bumbarger, 155 A.2d 216 (Pa. Super. 1959),
in which the Superior Court held that an employer’s subrogation claim could not be
defeated by “arbitrarily apportioning” a claimant’s third-party recovery as damages
for pain and suffering.
      We recognized the difference between a workers’ compensation claim, which
represented a statutory form of absolute liability, and a tort claim, for which a judge
or jury “face[d] a range of options as to both liability and damages,” both “legal
mechanisms [were] designed to compensate the claimant” for his work injury.
Thompson III, 801 A.2d at 638. Craig sought subrogation from funds awarded for
the same compensable injury for which it was liable under the Act. Accordingly,

                                          11
we held that Craig could not be deprived of its statutory subrogation rights simply
through characterization of Thompson’s recovery as pain and suffering, and
Thompson’s recovery for those amounts were subject to Craig’s subrogation lien
under Section 319. We did not address the issue of spousal loss of consortium, as
the parties had resolved that matter.
      Claimant attempts to factually distinguish the instant matter from Thompson
II and Thompson III, noting that Employer fully participated in the third-party action
and, unlike the Thompson parties, it has not been alleged that Claimant colluded with
the third-party tortfeasor to defeat Employer’s subrogation rights.
      Such minor distinctions are not sufficient to render inapplicable the holdings
in Thompson II and Thompson III. Employer’s participation in the third-party action
is largely irrelevant, as the parties executed a C&R prior to the initiation of any third-
party litigation, and Employer expressly retained its subrogation rights under Section
319. Claimant’s argument also ignores a key point made by this Court in Thompson
III, which recognized that the employer’s subrogation right derived from the same
compensable injury giving rise to the third-party action. Claimant’s third-party
action indisputably arose from the same compensable injury for which Employer is
liable to pay benefits under the Act. Per Thompson III, an employer’s subrogation
rights under Section 319 are “not affected by the way in which the claimant and
third-party tortfeasor, or the fact-finder in their action, characterize the nature of the
third-party recovery.” Thompson III, 801 A.2d at 638.
                                    IV. Conclusion
      Based on the foregoing, we conclude that Section 319 of the Act does not
violate article I, section 1 or article III, section 18 of the Pennsylvania Constitution.
The Supreme Court’s holding in Thompson II and this Court’s subsequent decision

                                           12
in Thompson III govern our disposition of this matter. As Employer’s right to
subrogation under Section 319 is absolute, we affirm the Board.

                                            ELLEN CEISLER, Judge

                                       13
          IN THE COMMONWEALTH COURT OF PENNSYLVANIA

Jamey Kamp,                       :
                Petitioner        :
                                  :
     v.                           : No. 1275 C.D. 2020
                                  :
Green Acres Contracting Co.       :
(Workers’ Compensation Appeal     :
Board),                           :
                 Respondent       :

                                ORDER

     AND NOW, this 21st day of January, 2022, the November 23, 2020 order of
the Workers’ Compensation Appeal Board is hereby AFFIRMED.

                                        ELLEN CEISLER, Judge