In Liberty Mutual Insurance Company v. Domtar Paper Co. et al., the Pennsylvania Supreme Court recently affirmed the Superior Court’s ruling (which we had previously reported on) that Section 319 of the Pennsylvania Workers’ Compensation Act (“WCA”), 77 P.S. § 671, does not confer on employers or their workers’ compensation insurers a right to pursue a subrogation claim directly against a third-party tortfeasor when the compensated employee who was injured has not taken against the tortfeasor.
As we previously reported, this case arose when George Lawrence, an employee of Schneider National, Inc. fell at Domtar Paper’s parking lot while acting in the scope of his employment. In an effort to recover the amount of workers’ compensation benefits 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.
In affirming the Superior Court’s decision, the Pennsylvania Supreme Court noted that Liberty Mutual failed to explain why the Court should abandon Superior Court precedent that holds a right of action against the tortfeasor is indivisible and remains in the employee who suffered the entire loss. See Moltz v. Sherwood Bros., Inc., et al., 176 A, 842 (Pa. Super. 1935), Reliance Insurance Co. v. Richmond Machine Co., 455 A.2d 686 (Pa. Super. 1983), and Whirley Indus., Inc. v. Segel, 462 A. 3d 800 (Pa. Super. 1983). The court reasoned that “preventing the employer/ insurer from asserting an independent cause of action against the tortfeasor eliminates the possibility that the third-party tortfeasor could be exposed to multiple suits filed by both the employer and the injured employee, and will preserve the preferred rights of the injured employee who retains a beneficial interest in the cause of action against the tortfeasor. “ Ultimately, the Court concluded that preliminary objections were properly granted and affirmed because Lawrence did not (1) commence an action against Domtar Paper; (2) was not named in the action filed by Liberty Mutual; and (3) did not join the action filed by Liberty Mutual.
To our mind, as we told the press, this appears to be more a case of imprecise pleading and less a case of a substantive change in the law.
Special thanks to Sheri Flannery for her contributions to this post. For more information, e-mail Bob Cosgrove.