Workers’ Compensation Loses Out and Case Settlement Value Goes Down: State Agencies No Longer Have to Account for or Repay Workers’ Compensation Liens.

The Pennsylvania Supreme Court has just issued a landmark ruling that will have far reaching effects on Pennsylvania litigation.  In Frazier v. Workers’ Compensation Appeal Board, the Supreme Court ruled that, by virtue of sovereign immunity, a workers’ compensation lien cannot be recovered against a state agency, such as SEPTA, after trial or settlement.  As a practical matter, this decision means that if a plaintiff wins a judgment or settles with a governmental agency, he is not obligated to pay back (from those proceeds) any owed workers’ compensation liens because the lien cannot be charged to or recovered from a governmental agency.  The net effect of this is that: (a) some workers’ compensation liens will be unrecoverable (if the sole defendants are governmental agencies); (b) trial and settlement values will go down (because the lien does not to be repaid and cannot be boarded); and (c) plaintiffs might refocus their attacks in multiple defendant cases on any entity that is not a governmental agency.

Special thanks to Remy Cahn for her contributions to this post.  For more information, please contact Bob Cosgrove at rcosgrove@wcmlaw.com.