Court Opinion

ID: 3132489
Source: CourtListenerOpinion
Date Created: 2015-10-19 16:09:44.335809+00
Date Added: 2024-06-11T11:53:53.789182
License: Public Domain

J-S01012-15

NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37

LIBERTY MUTUAL INSURANCE AS                :     IN THE SUPERIOR COURT OF
SUBROGEE ON BEHALF OF NATHAN               :           PENNSYLVANIA
MIHALCIK, AS PLAINTIFF,                    :
                                           :
                    Appellant              :
                                           :
             v.                            :
                                           :
SAC, INC.,                                 :
                                           :
                    Appellee               :          No. 483 WDA 2014

              Appeal from the Order entered on February 19, 2014
               in the Court of Common Pleas of Bedford County,
                          Civil Division, No. 712-2009

BEFORE: GANTMAN, P.J., JENKINS and MUSMANNO, JJ.

MEMORANDUM BY MUSMANNO, J.:                      FILED OCTOBER 19, 2015

      Liberty Mutual Insurance (“Liberty Mutual”), as subrogee on behalf of

Nathan Mihalcik (“Mihalcik”), appeals from the Order granting SAC, Inc.’s

(“SAC”) Renewed Motion for Reconsideration of Motion for Summary

Judgment, and dismissing Liberty Mutual’s Complaint with prejudice.       We

affirm.

      Liberty Mutual paid approximately $60,000 in worker’s compensation

benefits to Mihalcik, who, during the course of his employment for Schneider

National, was injured in 2007 at a convenience store owned by SAC Inc.

(“SAC”).     Neither Mihalcik nor Schneider National filed a cause of action

against SAC.      On July 3, 2009, Liberty Mutual, asserting its capacity “as

subrogee on behalf of [] Mihalcik,” filed a Complaint against SAC, asserting
J-S01012-15

that the cause of Mihalcik’s injuries was a dangerous condition that SAC

negligently permitted to exist on its property.1 Liberty Mutual did not name

Mihalcik as a party to this action, and Mihalcik has not joined in this action.

SAC filed preliminary objections, including objections to Liberty Mutual’s

standing to bring suit against SAC, which were denied by the trial court.

Thereafter, SAC filed a Motion for Summary Judgment based on Liberty

Mutual’s lack of standing, which was denied by the trial court. SAC filed a

Motion for Reconsideration, which the trial court denied. SAC thereafter filed

a Renewed Motion for Reconsideration.        On November 19, 2013, the trial

court granted SAC’s Renewed Motion for Reconsideration, and dismissed

Liberty Mutual’s Complaint, with prejudice, on the basis that Liberty Mutual

lacked standing to bring an action against SAC. Liberty Mutual filed a timely

Notice of Appeal, and a court-ordered Concise Statement of Errors

Complained of on Appeal.

      On appeal, Liberty Mutual raises the following issue for our review:

“[Whether] section 319 of the Pennsylvania Workers’ Compensation Act

[hereinafter “PWCA”], 77 P.S. § 671[,] allow[s] the employer/insurer to step

into the shoes of the insured employee to subrogate against the tortfeasor?”

Brief for Appellant at 6 (capitalization omitted).

             Under our standard of review of an order granting or
      denying a motion for summary judgment, we view the record in
      the light most favorable to the non-moving party, and all doubts

1
  Although the Complaint is date-stamped August 3, 2009, the court docket
indicates that it was filed on July 3, 2009.

                                   -2-
J-S01012-15

      as to the existence of a genuine issue of material fact must be
      resolved against the moving party.       Summary judgment is
      properly entered only where there is no genuine issue as to any
      material fact and it is clear that the moving party is entitled to
      judgment as a matter of law. Our scope of review is plenary,
      and our review of a question of law, as presented here, is de
      novo.

Barnett v. SKF, USA, Inc., 38 A.3d 770, 776 n.6 (Pa. 2012) (internal

citations omitted).

      Liberty Mutual contends that the question of whether a workers’

compensation insurer can be subrogated to the rights of the employee is

controlled by section 319 of the PWCA, 77 P.S. § 671 (hereinafter “section

                                 -3-
J-S01012-15

319”).2    Brief for Appellant at 12.   Liberty Mutual points out section 319’s

provision that an employer “shall” have subrogation rights against the third

party tortfeasor, and discusses, at great length, an employer’s subrogation

rights against a third party under section 319. Id. at 13-20, 22-24, 27-28.

Nevertheless, Liberty Mutual claims, in conclusory fashion, that section 319

2
    Section 319 provides as follows:

        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 his dependents, against such third
        party to the extent of the compensation payable under this
        article by the employer; reasonable attorney’s fees and other
        proper disbursements incurred in obtaining a recovery or in
        effecting a compromise settlement shall be prorated between the
        employer and employee, his personal representative, his estate
        or his dependents. The employer shall pay that proportion of
        the attorney’s fees and other proper disbursements that the
        amount of compensation paid or payable at the time of recovery
        or settlement bears to the total recovery or settlement. Any
        recovery against such third person in excess of the
        compensation theretofore paid by the employer shall be paid
        forthwith to the employee, his personal representative, his
        estate or his dependents, and shall be treated as an advance
        payment by the employer on account of any future installments
        of compensation.

        Where an employee has received payments for the disability or
        medical expense resulting from an injury in the course of his
        employment paid by the employer or an insurance company on
        the basis that the injury and disability were not compensable
        under this act in the event of an agreement or award for that
        injury the employer or insurance company who made the
        payments shall be subrogated out of the agreement or award to
        the amount so paid, if the right to subrogation is agreed to by
        the parties or is established at the time of hearing before the
        referee or the board.

77 P.S. § 671.

                                   -4-
J-S01012-15

was written to protect an insurer’s right to subrogate workers’ compensation

benefit payments, and “mandates a workers’ compensation carrier’s right to

subrogate in the shoes of the insured employee.”       Id. at 14-15, 18, 32.

Liberty Mutual contends that the trial court erred by construing the word

“subrogated,” as used in section 319, to mean that that the workers’

compensation insurer may be “reimbursed if and only if the [injured

employee] sues [the third party tortfeasor] directly.” Id. at 14.

      Liberty Mutual contends that the trial court’s interpretation of section

319 conflicts with the precedent established by the Pennsylvania Supreme

Court in Frazier v. Workers’ Compensation Appeal Board (Bayada

Nurses, Inc.), 52 A.3d 241, 248 (Pa. 2012), which, Liberty Mutual asserts,

recognizes an employer’s right to subrogation. Brief for Appellant at 19, 22-

23. Liberty Mutual also claims that, in denying standing to Liberty Mutual,

the trial court misapplied the dicta in Reliance Ins. Co. v. Richmond

Machine Co., 455 A.2d 686 (Pa. Super. 1983), because it “did not file an

action in its own right, but as subrogee of [] Mihalcik, the injured worker.”

Brief for Appellant at 20, 23.   Liberty Mutual also contends that the trial

court erred by relying on Liberty Mut. Ins. Co. v. Domtar Paper Co., 77
A.3d 1282 (Pa. Super. 2013). Brief for Appellant at 22.

      Liberty Mutual asserts that the trial court’s determination permits SAC

to escape liability for its negligence, and has caused Liberty Mutual to pay

Mihalcik’s hospital bills and other workers’ compensation benefits, in

                                 -5-
J-S01012-15

contravention of the purpose of subrogation.      Id. at 25.      Liberty Mutual

contends that, even if the injured employee elects not to file a lawsuit

against the third party tortfeasor, the insurer should not be denied its right

to recover against the tortfeasor the amounts that the insurer paid to the

employee in compensation benefits. Id. at 25-26.

      Liberty Mutual contends that the trial court’s concern regarding

splitting a cause of action is contrary to the absolute right of subrogation

provided by section 319, contrary to the legislative intent regarding workers’

compensation subrogation, and will result in higher premiums for employers

and a loss of jobs.     Id. at 28, 30.    Liberty Mutual claims that, unless

reversed, the trial court’s Order will create a significant negative impact on

the Pennsylvania economy by causing an increase in workers’ compensation

premiums and a potential loss of jobs. Id. Finally, Liberty Mutual contends

that the trial court’s ruling prejudices workers’ compensation insurers

because other insurers, who underwrite home, auto and other risks, are

entitled to subrogate their entire book of business. Id. at 31.

      The trial court addressed Liberty Mutual’s claim, set forth the relevant

law, and concluded that Liberty Mutual’s claim lacks merit. See Trial Court

Opinion, 2/19/14, 2-4; see also Liberty Mut. Ins. Co. v. Domtar Paper

Co., 113 A.3d 1230, 1240 (Pa. 2015) (holding that Liberty Mutual could not

assert an independent cause of action against the tortfeasor, either in its

own   name    or   as   subrogee    of   the   insured/employee,     when   the

                                   -6-
J-S01012-15

insured/employee had not commenced an action against the tortfeasor, and

had not been named in or joined in the action brought by Liberty Mutual).

We agree with the sound reasoning of the trial court, and affirm on the basis

of the rationale set forth in its Opinion. See Trial Court Opinion, 2/19/14, 2-

4.

      Order affirmed.

Judgment Entered.

Joseph D. Seletyn, Esq.
Prothonotary

Date: 10/19/2015

                                  -7-
                                                                                                                                y)I {)iz--1~
                                                                                                                            Circulated 09/09/2015 03:00 PM

                                  IN THE COURT OF COI\11v10N PLEAS
                               OF BEDFORD COUNTY, PENNSYLVANIA

LIDERTY iVTUTUAL INSURANCE,                                        AS                                        NO: 712 FOR 2009
SUl3ROGEE              ON BEHALF OF NATHAN
TvfJHALCIK,                                                                                                   CIVIL DIVISION
            PLAfNTlH
                          V.
SAC, fNC.,
            DEFENDANT

                                                             iVIE!'v10RANDUM                OPINION

                                                               I. Survll\.'1ARY OF           CASE

            The m atters before the Court                           <1r,2    Defendant's Renewer! A-fo!imr/or f:rcrn~idcrntiou

c(\fi_,1io_
 /
            1;    tor S:11.1,'11:1,1,1
                 .•                      •
                                                   Ju1i~:M·nt and SC:\'::>ral other \-lotions i11 U111ine filed prior lo tri al
                                                   -     L                                                             •

The instant matter is                        .:i       claim brought by Plaintiff Liberty lvlutual Insurance. who paid

out S59,St0..:1~1 in .vorkers compensation benefits on behalf of Nalh,m lvlihalcik's

\-iih,1icik [oir.ed ,,s a l~i1tty lo this suit.                             l"lc.intifl's   Co1up!ni11t 21l!cgcs that S.,\C, Inc., was

subrozot.on.
      \,,.)              liable for the compensation                           benefits naid
                                                                                        t    bv~· Plaintiff
                                                                                                                        Circulated 09/09/2015 03:00 PM

            For the reasons          set forth below, we grc1nt Defendant's 1'cnewc,-t ;\ !ofio;1 for      1

F:.cco,1.~iduMim;         o/Afol:io;ifor          Swm1111ry furf.~incnl and dismiss          Pluintiff's   Complain! with

prejudice.

                                                          JL    DrsCUSS!ON

                l)lainLitf argues that the Pennsylvania Supreme Court's                          opinion in Frn zicr v.

IV.C.A.B.          (Bayada     Nurses, Iuc.). stands for the proposition that Plaintiff may proceed in

their claim without \Jih.::ilcik, the originnl injured party I employee. Trrnier, S'.2 A.3ci 241

lP,1. 2012).         Plaintiff primarily points to the portion of the Traz icr opinion                           that st.1tes, " .

lht: employer I compensation                        insurer 111m; step ln!o i/1c shoes of t/w cuiimnn! to recover

clircct!y ,1gainsl a third party tortleasor ... " Id. at 2,13 (emphasis                            added).       Wh.ile we

believe that Fn1:ier is certainly                     instructive, we Iind that this statement is, al most, dicta.'

it w2s intended to be               :1   \cg;:\I   standard+ is indefinite and unclear.               Even if we \\'E're to

t1cce1-1t Plaintilfs interpretation of this indefinite dicta in Fra xiev, it vrnu\d be in direct

 contradiction           lo lhc clear holdings in              <1   line of several cases.

                l.n Scaiis« v. F.:\:f. \'c11zic       fr Co .. the Pennsylvania Supreme               Court held that:

                "The ;1,d·,t ,_:if action remains in the inJ:urcd crnolovee: suit. is !o be lntJ:;,)/,t'> in
                         ~..                                                       •   .,.                          t

                :1is nnu:c; dw ernplovcr rn,1y "PfX'i\r as an .cddiLiun2i pcirty plaintif] . or, .-1:=:
                =.1se:pL1i1,l'iff .. [or] ... may intervene for the purpose of protection.

    I lie· true holding in     Frn z i ar vvas not whether the insurer r::ny proceed in <1 cli'!in:
 ·... ·ilhout     J,e injured emulovce. but whether subro,0.·c1lion i'.-:·,s barred bv sovereivn
                                         I    •                                                            ,,,          C)

 irnrnur.i tv
                                                                                                                                                      Circulated 09/09/2015 03:00 PM

Scalise,       152 A. 90, 92 (Pi1. 1930) (emphasis added; citations                                                     omitted).       Shortly 2fler

Scalise.       the Pennsylvania                Superior Court reiterated that "[tlhe employer's right of

subrogation          must be worked out through an action brought in the name of the injured

employee, either by joining                        the employer as a party plaintiff ... or as a use plaintiff."

Afofrz, to Use of Roynl                    Indcmniti] Co. ·u. Slievuioott Oros. T11c., 176 ;\. 842, S,D (Pa.Super.

!935).     Sec also Reliance                 Insurance             Co. v. Ricl1111011d                   Mnclii11c         Co., ~55 A.2d 686

(P_=1.Super. 1983) ::1nd 1V/1il-ley [11d11slries                              l nc. cJ. Scgcf, 0\62 A.2ci 800, 802 (Pa.Super.                               1983)

(slc1ting that "[l']he action c1gc1inst the third party tortfcasor must be brought by the

injured employee.").                   And, just recently, in a case that is nearly identical in bets to the

prtsen t case. the Superior Court c1gain held that " . . section 319 ( of the Pennsvlv ania

 \\'c,rker's     Compensation                 Act] does not provide employers with the ability to bri,1g suit

            L, the 1:'.r<2Sent case, Plaintiff has proceeded                                          under        c1   caption      "on bch,df of ~-foth,1n

 H1halcik,'' the injured employee. \Ve believe that such action is iPsignificant                                                                      to the issue

 at h<1nd and. as the trial court held in nonil.-n.r, '' ... me\·cly identifies                                                        its status ns a

 ,. t ....-."'''' .... J -· -,.. es
 .:ll),fl_::,~·-···'l11Ulll      -,,                        r;-',.., -....1llJ )1-
                                       n:,-,,.. ,l11,.t,l.[d.,.t
                                                       ,1,,                         . .,
                                                                                ,U)eC:              , ,, .. tv : 1.; 1··rur.
                                                                                              J cl1),.i")
                                                                                                               1).cLI
                                                                                                                          rt: ...      · , ·1· !f· ,\,1 I/.t r·,.S.LO.
                                                                                                                                    rclU(;I                    , ~- -(I,

 Oom/,1r Poper Co., 2012 \VL 9500572 (T\1.Cc,rn.Pl. '.2.012\. Herc. the the i11J1YCd employee

                                                                                       '.)
                                                                                       .. )
                                                                                                   Circulated 09/09/2015 03:00 PM

requirements to establish        Plaintiffs standing        to assert a claim. In short, we find that the

indefinite   Jictli from Frn zicr is insufficient        to overcome a long precedent of clear

holdings     from Scalise     through    Donitar.

                                          111.   OH.DER OF         Courn

         Ai\•D l\10\'V, this 14th dct)' of February, 2014, the Order of Court is as follows:

l.   DefencL:mt's Renewed        MMio11.f.'J1' Rcconsideratir.11     oflvloiionfor Sunnnnry J11ds1!icni is

     gr<\nt\~d. Plaintiff's Comploint            is dismissed      with prejudice.

2. Inasmuch       JS    we have dismissed        Plaintiff's Co1nplni11( with prejudice, the remaining

     motions    2u-2.   dismissed as moot

                                                                   BY THE COURT

                                                                                  I
                                                                       .... _,/
                                                                                            LiVENGOOD,       J.
 Counsel:
 1:c,r the flr,intiff: Kevin Connors. [squire
 For tl-,,:' D