Court Opinion

ID: 4195578
Source: CourtListenerOpinion
Date Created: 2017-08-14 16:13:09.972416+00
Date Added: 2024-06-11T14:39:31.237965
License: Public Domain

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 RENÉE 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 the
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), and
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 Claimant’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 while Claimant was on duty and driving
Employer’s police vehicle. Employer issued a Notice of Temporary Compensation
Payable (NTCP), thereby accepting Claimant’s injury as compensable. The NTCP
converted to a Notice of Compensation Payable (NCP) by operation 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 benefits totaling $9,110.47 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 benefits 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 motorist benefits (UIM policy).
Claimant settled these claims for $50,000.00. However, to 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 decision. Claimant appealed to this Court.2

       1
        Act of 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).
                                                2
              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 for 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 that, 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 irrelevant 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 provided: “Finding 9(f) is a conclusion of
law which we disagree with (see below).” Reproduced Record (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 appeal to the Board, Claimant expounded: “[Employer] alleges that [it] paid medical
bills from a [WC] account when [it] should have paid from their Heart and Lung [Act] account. . . .”
R.R. at 24a. Based on the record, we hold that Claimant properly preserved this issue before the
Board.
                                                 3
              the payment of full salary and all medical expenses, see
              Section 1 of the Heart and Lung Act, self-insured employers
              paying Heart and Lung Act benefits issue an NCP only to
              acknowledge the work injury. See Stermel [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 medical 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
              recovery. Consequently, we are constrained 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 wording of
the NCP to make its determination. In both cases, the employers 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 basis that the
employers were going beyond the MVFRL 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 use 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 plaintiff from including as an element of
damages WC or other benefits paid, which included Heart and Lung Act benefits. Section 1722 of
the MVFRL did not allow Claimant to recover loss of wages covered by the Heart and Lung Act.
                                              4
separating the Heart and Lung benefits from the WC benefits as the basis to establish
subrogation rights. However, the Heart and Lung Act expressly provides for wages
and medical benefits, and, therefore, both are statutorily “require[d;]” thus,
Employer’s separate 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 argument, 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 Board’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, Judge

                                           5
             IN THE COMMONWEALTH COURT OF PENNSYLVANIA

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

                                      ORDER

             AND NOW, this 8th day of August, 2017, the 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