PA Workers’ Compensation Subrogation – Equatability

PA Workers’ Compensation Court Allows Pennsylvania Workers’ Compensation Subrogation Credit to be applied to Specific Loss Benefits Paid out to Surviving Child after Claimant’s Death (Kinzler v. WCAB (Ass’n for Vascular Access & Twin City Fire Ins. Co.), No. 165 C.D 2020, 2021 Pa. Commw. LEXIS 39 (Pa. Cmwlth. Jan 6, 2021))

You might not run into the issue of whether or not you can assert your Pennsylvania workers’ compensation subrogation credit against dependent children of a now-deceased claimant any time in the near future, but the court’s analysis here is helpful when addressing any Pennsylvania workers’ compensation subrogation lien involving the death of an injured worker. Read on.

Facts – $4,375 Million for Fall off a Barstool

In this rather unique case, the claimant fell off a Cheesecake Factory restaurant barstool at a work-related function. The employer accepted the claim for a sprain of the low back and tailbone. The claimant then filed a lawsuit against the Cheesecake Factory for her injuries and settled that third-party action for $4.375 million. The employer procured a Pennsylvania workers’ compensation lien lump sum payment and substantial future credit from that third-party settlement.

The claimant’s bad luck continued when she fell out of bed a few months later, leading to an infection, sepsis, and a worsening of her diabetes that progressed to a diabetic coma and brain damage. A further fall resulted in a broken leg, ulcers, necrosis, infection and eventually an amputation of the claimant’s lower right leg.

Her bad luck did not end there; She filed a workers’ compensation petition in part for the specific loss of her lower leg, and she died the very next day from causes unrelated to her work injury. The court found the lower leg amputation related to the work injury, and awarded 350 weeks for the claimant’s specific loss of the lower leg, noting that the benefits were to be paid to the claimant’s surviving daughter in her role as the beneficiary of the injured worker’s estate.

Issue – Equatability

The issue addressed here by the PA Commonwealth Court on appeal was whether the employer could apply its ample PA workers’ compensation subrogation credit to the workers’ compensation specific loss benefits that were to be paid out to the now-deceased claimant’s surviving child.

The court looked at prior a prior similar case, Anderson[1], where a claimant’s widow received PA workers’ compensation death/dependency benefits and then she and the surviving children procured a wrongful death award in a third party action against the driver who caused the work-related accident.

Equatability – The court in Anderson held that the workers’ compensation subrogation lien applied to the widow’s portion of the wrongful death award because there was equatability between the workers’ compensation death/dependency benefits and the widow’s portion of the third party wrongful death fund; the widow was eligible in her own right to the workers’ compensation death/dependency payments, and the widow was eligible in her own right to her portion of the third-party action wrongful death payments.

The children, on the other hand, were not subject to the employer’s subrogation rights, as there was no equatability. The children were eligible in their own right to their portion of the third party wrongful death award, but they were not eligible in their own right to any of the workers’ compensation death/dependency benefits, as those workers’ compensation benefits were payable at the time only to the widow.

At first glance, the newly-reported case, Kinzler, looks a lot like the Anderson case; There appears to be no equatability: The third-party Cheescake Factory recovery was paid to the injured worker and the PA workers’ compensation specific loss benefits were paid to the injured worker’s child.

The court here found equatability. Rather than focusing on which party receives the payment, the court looked instead at which party was eligible in her own right to those payments. Here, the injured worker was the only person eligible in her own right to the Cheesecake Factory third-party recovery and to the PA workers’ compensation specific loss benefits. The child of the now-deceased injured worker would not have been able to file a petition to claim workers’ compensation specific loss benefits in her own right, but rather only as a right due to her mother, the injured worker. The payments of those specific loss benefits were issued to the daughter only in her capacity as an heir to the estate of the now-deceased injured worker. Accordingly, since there was equatability between the Cheesecake Factory recovery and the workers’ compensation benefits, the employer here was entitled to apply its subrogation lien credit against the specific loss payments due.

In sum, when looking to apply PA workers’ compensation subrogation where an injured worker has died, generally look to who is entitled in their own right to the workers’ compensation benefits and who is entitled in their own right to any third-party recovery, so you can determine whether there is equatability between the two recoveries. Please consult with your subrogation counsel on any subrogation claim that involves the death of the injured worker, as there are a number of facts that can complicate this general rule-of-thumb.

[1] Anderson v. Greenville, 273 A.2d 512 (Pa. 1971)