Update- In an earlier post (set forth below) I discussed subrogation rights of an employer who has paid Heart and Lung Act benefits to an injured employee. On January 28, 2011, the Pennsylvania Supreme Court issued a decision In Oliver v. City of Pittsburgh holding that Heart and Lung and Act Benefits are not subrogable.
Under the Pennsylvania Workers Compensation Act, when an employer has paid benefits to an injured worker as a result of a work injury that was caused by the negligence of a third party, the employer is entitled to recoup whatever benefits it has paid from the injured employee\’s recovery from the negligent third party. This concept, known as subrogation, often comes in to play when an employee is injured in a motor vehicle accident while in the course and scope of employment.
Generally speaking, the employer\’s subrogation rights are absolute with regard to recouping payments made under the workers Compensation Act. An interesting issue has arisen in this Commonwealth with respect to subrogation rights of a municipality with respect to benefits paid under the Heart and Lung Act. The Heart and Lung act addresses payments made to a certain class of employees (i.e. police officers, firefighters, etc.) for injuries incurred while â€œin the performance of (their) dutiesâ€. The key distinction between workers compensation wage loss benefits and Heart and Lung benefits is that workers compensation benefits are generally 2/3 (or 66.66%) of an employee\’s pre-injury earnings while Heart and Lung benefits are 100% of the employee\’s pre-injury pay.
In 2009, the Pennsylvania Commonwealth Court addressed the issue of a municipality\’s subrogation rights relative to payment of Heart and Lung benefits. In Oliver v. City of Pittsburgh, the court held that an employer that pays benefits under the Heart and Lung Act is entitled to subrogate against the injured employee\’s third party recovery. This decision effectively reversed a prior Commonwealth Court ruling from 2002 that held an employer, while having a right to subrogation relative to benefits paid under the Workers Compensation Act, did not have the right to subrogate as to the Heart and Lung benefits paid.
Again, as indicated above, the Pennsylvania Supreme Court has reversed the Pennsylvania Commonwealth Court and has held that Heart and Lung and Act Benefits are not subrogable.