Reduction Of Subrogation Liens By Apportionment

03.07.17

An employer's subrogation claim for workers' compensation benefits paid must be apportioned if there are several compensable injuries, but the tort-feasor is responsible for only some of those injuries. This was the holding of the Commonwealth Court in Serrano v. WCAB (Ametek, Inc.), No. 2684 C.D. 2015, filed 2/13/2017, which remanded the case for an apportionment. In that case, the injured worker sustained burns to several areas of his body in a flash fire. The employer provided workers' compensation benefits for wage loss and medical treatment for burns of the face, chest, head, ears, hands, arms and thighs.

The employer then asserted a net lien of $620,178.30 against a third party recovery of $2.7 million from Aramark, the manufacturer of coveralls that failed to protect certain body parts of the injured worker during the fire. The Workers' Compensation Judge (WCJ) found that injuries to the torso, arms and legs were caused by Aramark's negligence. The WCJ also found that injuries to the hands, neck, face, head, esophagus and lungs, were not caused by Aramark and the failure of the coveralls. Workers' compensation benefits for non-Aramark injuries included, $15,302.31 in medical expenses to treat the head, neck, face, etc. and $27,937.50 in specific loss benefits for scarring to the neck, face and head.

The WCJ held that the employer was not entitled to recover the medical expenses and specific loss benefits paid for injuries not caused by Aramark's negligence, thereby reducing the lien by $15,302.31 and by $27,937.50. The Workers' Compensation Appeal Board reversed and concluded that the employer was entitled to recover for all workers' compensation payments made.

On appeal, the Commonwealth Court rejected the employer's argument that the injured workers' multiple injuries constituted a single "compensable injury" for subrogation purposes. The Court reasoned that in asserting a subrogation claim it was the employer's burden to "demonstrate it was compelled to make payments due to the negligence of a third party and that the fund against which the employer sought seeks subrogation was for the same injury for which the employer was is liable under the Act." In this case, the fund created by the tort-feasor, Aramark, was only for some of the injuries sustained by the injured worker, but not for injuries to the head, face, neck, esophagus and lungs. Therefore, apportionment (reduction) of the lien was required.

Comment: This decision illustrates the concept that the employer's subrogation lien may be limited by the tort-feasor's responsibility for some, but not all, of the compensable injuries. After apportionment is made, we would not be surprised to see this case appealed eventually to the Pennsylvania Supreme Court in order to address this novel and important issue.

For more information, please contact Stephen T. Potako at spotako@wglaw.com or 267.765.4132, or Peter J. Weber at pweber@wglaw.com or 215.972.7901.

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Sara L. De Long
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