Commonwealth Court holds that the Section 319 subrogation provision of the Act is absolute and does not violate constitutionally protected rights in contravention of the Pennsylvania Constitution.

In this case, the claimant sustained a work injury in April of 2016 when struck by a motor vehicle while performing road work. The employer paid the claimant benefits under a Notice of Compensation Payable. Later, the parties entered into a C&R Agreement that was approved by a Workers’ Compensation Judge. In the C&R, the employer reserved its right to subrogation under § 319 of the Act.

In a third-party matter, the claimant filed a declaratory action against the employer, a third-party tortfeasor and two insurers, seeking a determination of damages caused by the work-related motor vehicle accident. It was determined that the damages totaled approximately $1.9 million, of which $1.5 million was designated for pain and suffering. The claimant then received payment for the two insurers’ policy limits, for a total receipt of $150,000.

The employer then prepared a Third Party Settlement Agreement, showing a net subrogation lien of $99,735.12. The employer’s accrued lien was $327,861.85. the claimant also prepared a Third Party Settlement Agreement and asserted that the employer’s subrogation was limited to 17.3% of the actual third party recovery, not the accrued lien. Thus, according to the claimant, the employer’s net lien was $17,150.54.

The claimant filed a petition to review, and the Workers’ Compensation Judge found that the employer’s net subrogation lien was $99,136.08. The Appeal Board affirmed, and neither the judge nor the Board addressed the constitutional issues raised by the claimant.

On appeal to the Commonwealth Court, the claimant argued that § 319 violated his constitutional rights to recover and retain property without due process of law, in violation of the Pennsylvania Constitution. The court, however, rejected the claimant’s argument, describing it as one that says § 319 works “too well” in achieving its purpose. According to the court, the employer’s right to subrogation under § 319 of the Act is absolute and the claimant failed to present a compelling argument for overturning it. The court additionally said that there was no basis to limit the employer’s subrogation interest to a fraction of the amount recovered. The court further rejected the claimant’s argument that the subrogation rights granted to employers effectively limits the damages claimants may recover against third party tortfeasors. 
 
 

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