Superior Court Sets Forth Decision on Allocation of Third Party Settlement

Date: April 10, 2007

In Urmann v. Rockwood Casualty Insurance Company, 905 A.2d 513 (Pa. Super. July 31, 2006), the Pennsylvania Superior Court held that the trial court did not commit an abuse of discretion when it approved a settlement in which the workers\’ compensation carrier was not fully compensated for it’s lien and most of the settlement was apportioned to loss of consortium.

John Urmann was injured in a work-related, single-car accident. As a result of the accident, he received workers\’ compensation benefits and also pursued a third party claim. The initial offer of settlement in the third party case was $25,000 but after mediation, the case was settled for $300,000, with $250,000 being apportioned to Mrs. Urmann\’s loss of consortium claim, and $50,000 to Urmann\’s bodily injury claim. The civil trial court approved the settlement. The workers\’ compensation carrier appealed the approval because its recovery from the $50,000 portion of the settlement would have left its lien substantially less that what it was owed.

Rockwood Casualty Insurance Company argued that the Urmanns unilaterally apportioned the settlement funds with the majority of the money going towards the consortium claim and, thus, violated Section 671 of the Workers\’ Compensation Act.
The Superior Court held that Rockwood did not present any evidence of an improper apportionment and that the trial court was not in violation of the decision of Pendleton v. WCAB (Congoleum Corp.), 625 A.2d 187 (Pa. Commw. 1993) because there was an agreement with the third party and an adjudication by the trial court after reviewing the agreement and after a hearing.
After reviewing the evidence presented before the trial court, the Superior Court concluded that the trial court did not err or abuse its discretion when it determined that the Urmann\’s had presented sufficient “non-economic” evidence in support of their petition to approve the settlement agreement. The Court noted that the unusual facts of the case supported apportionment since claimant was oblivious to or unaware of his limitations from brain injuries and his spouse was the true victim of his personality changes, and no public policy imperative existed to require maximization of carrier’s subrogation interests.

Thomas P. Cummings, Esq.

Joe Price
Attorney Joe Price is a seasoned Trial Lawyer serving Northeast, Central and Southeast Pennsylvania for the past forty (40) years. He has handled serious personal injury cases in courts throughout the Federal system including New Jersey and New York. Attorney Price is A.V. Rated by Martindale Hubble. He is Board Certified in Civil Practice by the National Board of Trial Advocacy since 1996.