The Pennsylvania Medical Cost Containment Provisions (Act 44) restored the employer's right of subrogation for workers' compensation benefits from a motor vehicle accident, but was silent with regard to benefits paid under the Heart & Lung Act. In the case of Stermel v. WCAB (City of Philadelphia), decided November 13, 2014, the Commonwealth Court had to determine if Act 44 also applied to Heart & Lung Act benefits.
The Workers' Compensation Judge initially determined that the employer was entitled to subrogation for Heart & Lung Act benefits paid for injuries to a police officer when his cruiser was rear-ended on the side of the road. Thereafter, the Pennsylvania Supreme Court decided Oliver v. City of Pittsburgh and held that subrogation for Heart & Lung benefits did not apply. Despite the Oliver case, the WCAB affirmed the WCJ's decision reasoning that 2/3rds of the employee's Heart & Lung benefits were actually workers' compensation benefits, so the employer was entitled to subrogate to that extent at least.
The Commonwealth Court has concluded that the employer was not entitled to subrogation for Heart & Lung benefits paid for injuries arising from a motor vehicle accident. It reasoned that the benefits are distinct and paid under separate legislative acts.
The City of Philadelphia is self-insured, the City paid full wages as required by the Heart & Lung Act, and, as such, no workers' compensation benefits were paid. If the City had insured its workers' compensation exposure, then the employee would have been under an obligation to return the benefits to the City as dictated by the Heart & Lung Act.
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