Court Opinion

ID: 9765288
Source: CourtListenerOpinion
Date Created: 2023-08-29 03:58:13.11414+00
Date Added: 2024-06-11T07:30:07.904698
License: Public Domain

Justice BAER
dissenting.
Decedent John Gillette was employed as a teacher at Parker Middle School. While acting in the course and scope of employment as a chaperone at an eighth grade graduation dance, Decedent was shot and killed by a student, A.W. A.W. also shot and injured another student, J.T. Decedent was survived by his wife, Appellee Ms. Gillette, and their three children. Appellant Utica National Insurance Group is the workers’ compensation provider for the school district where Decedent worked and was killed. Following Decedent’s death, Utica paid fatal claim benefits to Ms. Gillette in the amount of $167,934. Ms. Gillette, in her own right and as executor of Decedent’s estate, commenced a wrongful death lawsuit against A.W. and his parents, which was consolidated with the personal injury lawsuit brought by J.T.1 Ms. Gillette *558and J.T. agreed to settle their claims against the Wursts for $300,000, the limit of the Wurst’s homeowner’s insurance policy. Under the proposed settlement, Ms. Gillette would receive $288,000 and J.T. would receive the remaining $12,000. Pennsylvania’s Wrongful Death Statute mandates that Pennsylvania’s intestacy scheme be used to determine distribution of the $288,000 award received by Ms. Gillette. See 42 Pa.C.S. § 8301(b). After payment of counsel fees and costs, if Ms. Gillette had accepted her intestate spousal share, she would have received $109,493.77, and each of Decedent’s three children would have received $26,497.93.2 Ms. Gillette, however, exercised her right under Pennsylvania law to disclaim the portion of the settlement funds allotted to her as the surviving spouse by the intestacy scheme, with the exception of $12,000 for Decedent’s funeral expenses, resulting in the balance of the spousal share to be distributed to Decedent’s and her children.
The day the parties petitioned the court to approve this settlement, Utica filed a petition to intervene, asserting subrogation rights against Ms. Gillette’s share of the settlement, seeking to recover a portion of the $167,934 in fatal claim benefits it paid to her following Decedent’s death. The trial court permitted Utica to intervene, and then approved the settlement, ruling that it lacked jurisdiction to resolve the subrogation issue presented by Utica and upholding Ms. Gillette’s right to disclaim her share of the settlement funds. The Superior Court affirmed, finding that nothing prevents a beneficiary from disclaiming an intestate interest in proceeds from a wrongful death action so long as the disclaimer is carried out in accordance with applicable statutory law.3
*559The Majority reverses the trial and Superior Courts, reasoning that Utica is not subrogated to the amount Ms. Gillette actually received, but to the share that Ms. Gillette had a right to receive. I respectfully dissent because, as explained below, this analysis fails to consider the consequences of Ms. Gillette’s exercise of her right to disclaim under 20 Pa.C.S. § 6201 as clearly enunciated by the plain language of 42 P.S. § 6205(b) (these are sections of Pennsylvania’s Probate, Estates and Fiduciaries Code, hereinafter “PEF Code”). In accord with this statutory language, quoted below, when Ms. Gillette disclaimed her right to the settlement proceeds, she triggered a legal fiction requiring that she be treated as having predeceased Decedent. Thus, the proceeds from the wrongful death action went directly to Decedent’s children, and Ms. Gillette never had any right to them. Accordingly, the majority is incorrect when it hinges its results on Ms. Gillette’s alleged right to receive the wrongful death proceeds. As that right never existed, there was nothing for Utica to subrogate against.
The action brought by Ms. Gillette was a wrongful death action. The Wrongful Death Statute provides that any damages recovered pursuant to such an action “shall be distributed to the beneficiaries in the proportion they would take the personal estate of the decedent in the case of intestacy and without liability to creditors of the deceased person.... ” 42 Pa.C.S. § 8301(b). Pennsylvania’s intestacy scheme, which is found in the PEF Code, describes the intestate share for a surviving spouse, see 20 Pa.C.S. § 2102, and further provides a right to disclaim, as follows:
§ 6201. Right to disclaim
A person to whom an interest in property would have devolved by whatever means, including a beneficiary under a will, an appointee under the exercise of a power of appointment, a person entitled to take by intestacy, a joint tenant with right of survivorship, a donee of an inter vivos *560transfer, a donee under a third-party beneficiary contract (including beneficiaries of life insurance and annuity policies and pension, profit-sharing and other employee benefit plans), and a person entitled to a disclaimed interest, may disclaim it in whole or in part by a written disclaimer....
20 Pa.C.S. § 6201. The PEF Code also defines the effect of a disclaimer:
§ 6205. Effect of disclaimer
(a) In general. — A disclaimer relates back for all purposes to the date of the death of the decedent....
(b) Rights of other parties. — Unless a testator or donor has provided for another disposition, the disclaimer shall, for purposes of determining the rights of other parties, be equivalent to the disclaimant’s having died before the decedent in the case of a devolution by will or intestacy....
20 Pa.C.S. § 6205.
This case is about the tension between this statutory right to disclaim and the effect thereof under Sections 6201 and 6205, and the provision of the Workers’ Compensation Act that Utica relies upon in seeking to subrogate against Ms. Gillette’s share of the wrongful death proceeds:
§ 671. Subrogation of employer to rights of employee against third persons; subrogation of employer or insurer to amount paid prior to award
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. The question before us is the impact of a beneficiary’s disclaimer of her intestate share of proceeds from a wrongful death action on an insurance carrier’s right of subrogation.
The legislature has created a unique statutory scheme in the case of the distribution of wrongful death proceeds, premised upon intestacy distribution. See 42 Pa.C.S. § 8801(b). *561The law governing intestacy specifically includes the right to disclaim, 20 Pa.C.S. § 6201, and treats the disclaimant as having predeceased the decedent. 20 Pa.C.S. § 6205(b).4 There is no dispute that the facts of this case establish a valid disclaimer by Ms. Gillette. We need not look beyond the plain language of Section 6205 to determine the effect of this disclaimer and the proper result in this case. The clear meaning of Section 6205(a) is that the status of the parties and the effect of the disclaimer are fixed to the time of the decedent’s death, regardless of when the disclaimer is actually made. See In re Bute’s Estate, 355 Pa. 170, 49 A.2d 339, 341 (1946) (“When a devise is renounced the renunciation will relate back to the moment when the gift was made and prevent it from ever taking effect, leaving the devisee without an interest in the property and without liability in connection therewith.”); In re Estate of McCutcheon, 699 A.2d 746 (Pa.Super.1997) (holding that because a disclaimer relates back to the decedent’s death, the status of parties in the chain of succession are established as of the time of death, regardless of when the disclaimer is made). In addition to relating a disclaimer back to the date of the decedent’s death, Section 6205(b) establishes the time of death of the disclaimant as *562prior to the death of the decedent. Applying the plain language of Section 6205 to this case leads to the fiction that at the time of Decedent’s death, Ms. Gillette had predeceased him. Therefore, because she is treated as predeceased, she does not exist for purposes of determining distribution of the wrongful death award. Because she does not exist, she has no right nor interest in the wrongful death award distributed to Decedent’s children.5 As Ms. Gillette had no legal right or interest in the award, Utica can have no right to or interest to it either.
It is also noteworthy that Utica chose to contest the wrongful death award by filing a petition to intervene in the wrongful death action. Under Commonwealth Court precedent applying the Workers’ Compensation Act, when a claimant is entitled to workers’ compensation benefits, and also asserts a wrongful death action based upon the work-related injury, the two proceedings are entirely separate and have no relation or impact upon one another unless and until the claimant receives an award or settlement in the third party action. Creighan v. W.C.A.B. (Mellon Stuart Corp.), 154 Pa.Cmwlth.620, 624 A.2d 680, 681 (1993). When that occurs, then, and only then, does the subrogation provision, 77 P.S. § 671, come into play. Id. In the context of this case, Utica’s right of subrogation is not implicated until Ms. Gillette actually receives an award or settlement. Because Ms. Gillette does not, as a matter of law, have any right or interest in any part of the award that she disclaimed, Utica’s right of subrogation is simply not implicat*563ed, and has no impact on the distribution of the wrongful death proceeds.
Finally, I observe that the language of Section 6201 extends the expansive right to disclaim to most if not all conceivable beneficiaries. Whether the disclaimant has excessive unliquidated credit card bills, is a judgment debtor, or, like here, is subject to a right of subrogation, the legislature has decided, as a matter of sound public policy, that the satisfaction of the debt can be avoided through disclaimer. The majority implicitly limits this right to situations where the disclaimer will result in tax benefits for the disclaimant. However, that is not what the legislature has said. Simply because the right to disclaim is often used to avoid taxes does not mean that one cannot disclaim for any other reason, including defeating the claims of creditors. Indeed, that is what has happened here. Accordingly, I dissent.

. A wrongful death action is intended to secure compensation to certain relatives of decedent and any sum recovered in wrongful death action does not become an asset of decedent’s estate. Tulewicz v. Southeastern Pennsylvania Transp. Authority, 529 Pa. 588, 606 A.2d 427 (1992); In re Pozzuolo’s Estate, 433 Pa. 185, 249 A.2d 540 (1969). In this case, Ms. Gillette chose to bring the wrongful death action on her own behalf and on behalf of the estate. It is not clear why she chose this course of *558action, nor is it pertinent to my dissent. For simplicity, I will refer to the plaintiff/appellee as Ms. Gillette.

. If there are surviving issue of the decedent, all of whom are issue of the surviving spouse, the intestate share of a surviving spouse is the first $30,000, plus one-half of the balance of the intestate estate. See 20 Pa.C.S. § 2102(3).

. The trial court believed that the question of Utica's subrogation rights was solely within the jurisdiction of the workers’ compensation system, requiring Utica to raise the issue before a workers’ compensation judge. *559The Superior Court determined that it did not have to rule on the trial court's refusal to accept jurisdiction in light of its holding that Ms. Gillette prevailed on the merits.

. Mr. Chief Justice Cappy, in his concurring opinion, invokes the fiction that a disclaimant is treated as having predeceased the decedent for purposes of disclaimer, and hypothesizes that if Ms. Gillette had truly predeceased Decedent, then Decedent's three children would have received fatal claim benefits. Under the hypothetical, where Ms. Gillette predeceased Decedent, the children also would have brought the wrongful death action and received the wrongful death award. Because the recipients of the fatal claim benefit and the wrongful death award would be the same in this scenario, the concurrence reasons that Utica would then have a right of subrogation against the three children. Respectfully, the hypothetical is premised on the improper expansion of the legal fiction created by 20 Pa.C.S. § 6205(b) to fatal claim benefits paid under the Workers' Compensation Act. The fiction applies only in the context of the devolution of property after exercise of a disclaimer under the PEF Code. It does not apply to benefits paid under the Workers’ Compensation Act. Thus, the Legislature's creation of the fiction that the disclaimant predeceased the decedent for purposes of the PEF Code does not impact or alter the factual and legal reality that Ms. Gillette was the recipient of the fatal claim benefits under the Workers' Compensation Act. As these benefits went to Ms. Gillette and, by virtue of her disclaimer, the wrongful death proceeds went to the children, the concurrence is constructed upon a faulty premises.

. In order to establish a right of subrogation against a third-party recovery, an employer must demonstrate that the fund to which it seeks subrogation was for the same compensable injury for which the employer is liable under the Workers’ Compensation Act. Sharkey v. W.C.A.B. (Sharkey's American Hardware), 744 A.2d 345 (Pa.Cmwlth.Ct. 1999). Because of the existence of Ms. Gillette for purposes of the fatal claim benefits, Decedent's children had no right of their own to recover fatal claim benefits. See Anderson v. Borough of Greenville, 442 Pa. 11, 273 A.2d 512 (1971). The fatal claim benefits were therefore paid directly to Ms. Gillette. In contrast, by virtue of Ms. Gillette’s disclaimer, the wrongful death award will be paid to Decedent’s children. Consequently, the fund to which Utica seeks subrogation is not for the same injury for which it paid fatal claim benefits, and it cannot establish a right of subrogation against a third party recovery by Decedent's children. Sharkey.