Absent a showing by the claimant that the employer deliberately subverted a third party-suit brought by the employee, the employer's right to subrogation under §319 of the Act is virtually absolute.

The claimant sustained injuries in the course and scope of his employment as a police officer when he lost control of a motorcycle he was on while training and it fell on top of him. The claimant's injuries were acknowledged by the employer as work-related, and the claimant received benefits. The claimant then filed a third-party tort action against the employer, alleging that improper maintenance of the motorcycle caused him to lose control, which resulted in his injuries. Ultimately, the claimant obtained an arbitration award in the amount of $490,000. The employer filed a petition seeking to recover its workers' compensation lien, which totaled $219,755.63. The claimant challenged the petition, alleging the employer acted in bad faith by allowing for the spoliation of evidence which affected the claimant's third party recovery. The claimant cited the case of Thompson v. WCAB (USF&G), 566 Pa. 420, 781 A.2d 1146 (2001) in support of his position.

According to the evidence presented by the claimant, very shortly after the incident occurred, the employer was notified by claimant's counsel that he intended to perform an inspection of the motorcycle. The employer was asked to refrain from altering the motorcycle, particularly the clutch mechanism. Counsel for the employer responded by saying that inspection would not be permitted because the claimant did not comply with a directive requiring him to notify the police department of the law suit. The employer's counsel further said that, once the claimant complied with this, access to the motorcycle would be given. Claimant's counsel then satisfied the employer's notice requirements. Counsel for the employer contacted officials from the police department to advise them that the motorcycle should be made available for inspection and to ensure that it had not been or would not be altered. Later, counsel for the employer learned that in September of 2006, a repair order for the motorcycle was issued, which indicated that the motorcycle's clutch lever had been replaced.

After considering the evidence, the Workers' Compensation Judge granted the employer's petition. The judge found that the claimant did not establish that the employer undertook in deliberate bad faith to subvert the third party suit brought by the claimant so as to extinguish the employer's right to subrogation. The Workers' Compensation Appeal Board (Board) affirmed on appeal, and the Commonwealth Court did, as well. According to the Court, it was reasonable for the judge to conclude that there was not deliberate bad faith on the part of the employer, but rather, a series of miscommunications.

Case Law Alerts - 2nd Quarter 2013