Insurer entitled to subrogation under §319 of PA Workers’ Compensation Act for injuries sustained by claimant while driving out of state during the course and scope of employment.

The claimant was injured in a motor vehicle accident that took place in Delaware while in the course and scope of her employment, and she received workers’ compensation benefits pursuant to the Pennsylvania Workers’ Compensation Act. The claimant then reached a settlement of a third party action that had been filed in Delaware. The insurer filed a petition to review to recover their subrogation lien under §319 of the Act.

The claimant took the position that the laws of Delaware, not Pennsylvania, applied with respect to the employer’s subrogation rights. Delaware law follows a more equitable approach, whereas under §319 of the Pennsylvania Act, an employer’s right to subrogation is absolute.

After the Workers’ Compensation Judge granted the employer’s review petition and the Workers’ Compensation Appeal Board affirmed, the claimant appealed to the Commonwealth Court.

On appeal, the claimant argued that Delaware law applied since Delaware had more significant contacts to the matter than Pennsylvania. The court rejected this argument and affirmed the decisions below. The court concluded that Pennsylvania had more significant contacts with the underlying controversy than Delaware. Although the litigation from which the lien arose occurred and was governed by the laws of Delaware, the claimant was a resident of Pennsylvania and the employer did business in Pennsylvania while holding a Pennsylvania workers’ compensation insurance policy. More importantly, the claimant availed herself of the Pennsylvania Act, the employer paid benefits under the Act, and all of the litigation concerning the claimant’s receipt of workers’ compensation benefits had been in Pennsylvania pursuant to the Act. For that matter, the claimant had entered into a C&R agreement under the Act in which she affirmed the employer’s subrogation lien.

Case Law Alerts, 3rd Quarter, July 2014