The Pennsylvania Supreme Court recently heard arguments as to whether an insurance company can pursue litigation against a third-party tortfeasor if the injured insured does not file suit herself.

At issue before the court in Liberty Mutual Insurance Co. v. Domtar Paper Co. was whether Section 319 of the Pennsylvania Workers’ Compensation Act, 77 P.S. § 671, allows the employer/ insurer to step into the shoes of the insured employee to pursue subrogation against a tortfeasor.   The case arose when George Lawrence, an employee of Schneider National, Inc. fell on his knee at Domtar Paper’s parking lot while acting in the scope of his employment. Liberty Mutual, who issued a workers’ compensation policy to Schneider National, paid approximately $34,000 to Lawrence for his workers’ compensation benefits claim. In an effort to recover the amount it paid out to Lawrence, Liberty Mutual designated itself a subrogee of Lawrence and brought a negligence action against Domtar Paper, who allegedly owned and maintained the parking lot.

Domtar Paper filed Preliminary objections on the basis that Liberty Mutual’s cause of action was barred because Pennsylvania does not recognize an independent cause of action by workers’ compensation insurers when the injured party has not brought suit in his own right and is not a party in the case.  The trial court sustained the objections and the Pennsylvania Superior Court affirmed.  Specifically, the Superior Court explained that Section 319 of the Workers’ Compensation Act does not give an employer or insurer a cause of action in its own right.

Appearing before the Pennsylvania Supreme Court, counsel for Liberty Mutual argued that the Workers’ Compensation Act permits an employer to be subrogated to the rights of an employee and denying that right would create an economic loss for the carrier. Needless to say, judgment in favor of Liberty Mutual would be important for insurers who pursue subrogation.  Thanks to Sheri Flannery for her contribution to this post.  For more information, please write to Mike Bono.