Medical and indemnity benefits paid to a claimant under the Heart & Lung Act are not subrogable from the claimant’s third party recovery.

The workers’ compensation judge denied the employer’s first review petition, noting that the employer was not a self-insured entity but, rather, a member of a self insurance group fund. Nevertheless, the judge found that this did not permit the employer or the Delaware Valley Workers Compensation Trust to subrogate against the claimant’s tort recovery. The Appeal Board reversed the workers’ compensation judge’s decision that benefits were not subrogable. The Board found that the Trust, acting in the same manner as an insurance carrier, paid workers’ compensation benefits completely separate from the employer’s payment of Heart and Lung benefits.

The Commonwealth Court reversed the Board. In doing so, it found that the Trust, while perhaps indistinguishable from an insurance company, nevertheless remitted workers’ compensation indemnity payments to the claimant that were then signed over to the employer. The claimant did not actually collect any workers’ compensation benefits, only Heart and Lung benefits. The court also found that it was irrelevant that the Trust paid workers’ compensation benefits to the employer, noting that the critical question in determining whether a right of subrogation exists is the nature of the benefits for which subrogation is sought, not who is paying the benefits or whether benefits are being paid from a separate account. 

_{Case Law Alerts, 4th Quarter, October 2019}

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