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March 2012 Workers Compensation Lien Update

The Pennsylvania Superior Court finds that an employee driving home from work is acting in the course and scope of employment and therefore, the employee subjects the employer to Pennsylvania’s jurisdiction and vicarious liability for the employees’ actions.

In Schiavone v. R.J. Aveta, 2012 Pa. Super. 68, 1352 EDA 2011 (Pa. Super. 2012) the Pennsylvania Superior Court considered whether an employee who was driving directly home from work in a company owned vehicle was acting within the course and scope of his employment for purposes of deciding whether there is jurisdiction over the defendant’s employer for its vicarious liability an auto crash case.

In Schiavone, the Defendant employee was driving a company car on his way home from work when he was involved in a motor vehicle collision with the Plaintiff.  The Plaintiff sued both the driver, for his direct negligence, and his employer, under a theory of vicarious liability, e.g. the master is liable for the acts of their servant.  At the time of the crash, the defendant driver was driving from his job in New Jersey to his home in Pennsylvania and the crash occurred in Pennsylvania.

To make a determination on the issue of jurisdiction, the court analyzed Pennsylvania’s jurisdictional statute, or Long Arm statute (42 Pa.C.S.A. § 5322), and juxtaposed this statute against the Worker’s Compensation Act.  The court recognized that the case falls under an exception to the “coming and going” rule found in the Worker’s Compensation realm which clearly states that a worker is not in the scope of employment in worker’s compensation matters when coming or going to work because that does not further the employer’s business pursuits.

Under Pennsylvania law, for an employee to satisfy the “employment contract” exception to the coming and going rule, he must establish that: (1) he was commuting to or from work; (2) the employer controlled the means of transportation; and (3) the company provided for the costs and expenses related to the employee’s commute.

The Court held that in third party litigation, and not worker’s compensation, an employee commuting home from work in a company-owned vehicle of which all travel expenses are paid for by the employer is acting within the scope of his employment such that the employer is responsible for any negligent conduct resulting from the employee’s driving.  The court determined that jurisdiction was authorized under the long arm statute because the defendants caused injury to a resident of Pennsylvania while within the state and that it was not a violation of the defendants’ due process rights, i.e. it was fair, to then make them appear and defend a lawsuit in Pennsylvania because the defendant had sufficient contacts with Pennsylvania that they could reasonably anticipate being called into court there.  This holding led the court to find that jurisdiction did exist over the Defendants and the case could proceed in Pennsylvania against both the driver and his employer.  To read the full decision please click here.

The New York State Court of Appeals holds that future medical benefits are so speculative that they cannot be considered in the reduction of workers compensation liens.

In the Matter of Bissell v. Town of Amherst, NY Slip Op 2250 [Ct App 2012], the Court of Appeals has held that future medical benefits cannot be considered in calculating the workers compensation carrier’s lien against a third party recovery.  For those not familiar with this area of the law, where an injured party receives workers compensation benefits the carrier paying such benefits has a statutory lien against any recovery from a third party.  For example, a construction worker injured in a fall might receive lost wages and have his medical bills paid by his employer’s workers compensation carrier.  In the event that he then sues a third party (property owner or general contractor), his workers compensation carrier is entitled to recover those costs that it paid out.  In addition, the workers’ compensation carrier may be entitled to stop future payments in their entirety, or in part, if there are additional funds available to the injured party.

In Bissell the case went to verdict resulting in a jury determination that Mr. Bissell was entitled to over $4,000,000.00 for future medical expenses.  By time of trial, the workers compensation carrier had paid out over $300,000.00 in benefits for medical and lost wages.  It asserted a lien of over $200,000.00 for these benefits, after reduction for its proportionate share of attorneys’ fees and costs.  Mr. Bissell argued, however, that not only should the lien be extinguished in its entirety, but that the carrier should contribute fresh money of over one million dollars representing its share of the cost of recovering the future medical bills.  The argument being that the carrier will now not have to pay for those future medical expenses and as such reaped an enormous benefit.  As with the past lien, the carrier is responsible for the cost of obtaining that benefit.  In addition, Mr. Bissell argued that the future medical expenses can be determined with accuracy as the jury made an actual award.

Unfortunately, the Court of Appeals held that even though the jury made such a determination, it cannot be used against the carrier in computing the actual benefit.  Instead, the Court held that the true benefit can only be determined when future medical bills are actually accrued.  Thus, no reduction of the lien for the medical expenses awarded by the jury and no responsibility for payment of its share of the litigation expenses incurred in obtaining the benefit.

The holding appears to be a windfall for the worker’s compensation carrier.  In our experience and in speaking with various carriers, it appears rare that an injured party actually forwards future medical bills to the carrier.  Instead, they find other sources of payment or are able to stop treatment.  This results in no future liability for the carriers in practical terms.  While the Court’s holding may result in an unintended benefit to the carriers, there is now some certainty on this issue.  To see the entire decision, please click here.