A workers’ compensation carrier may not pursue a subrogation claim directly against a third-party tortfeasor when the compensated employee has taken no action against the tortfeasor, the Supreme Court held in Liberty Mutual Ins. Co. v. Domtar Paper Co., __ A.3d __ (No. 19 WAP 2014, filed April 27, 2015). George Lawrence suffered a work-related injury when he slipped and fell in a parking lot leased by Domtar Paper Co. His employer’s workers’ compensation carrier, Liberty Mutual, paid Lawrence $33,929 in benefits. Liberty Mutual filed suit against Domtar and other entities who owned and maintained the parking lot (collectively, Appellees). Liberty Mutual designated itself as “Subrogee of George Lawrence” in the caption; however, Lawrence did not join in the suit or assign his cause of action to Liberty Mutual. Liberty Mutual contended that it could recover by virtue of Section 319 of the Workers’ Compensation Act, 77 P.S. §671, which provides that an employer shall be subrogated to the right of an employee against a third-party tortfeasor to the extent of compensation paid under the Act. The trial court dismissed the suit, holding that only the injured employee has a right of action against a third-party tortfeasor, not the employer/insurer.
On appeal, the Superior Court affirmed. Liberty Mutual Ins. Co. v. Domtar Paper Co., 77 A.3d 1282 (Pa. Super. 2013). The Court explained that Pennsylvania courts strongly disfavor splitting causes of action between subrogors and subrogees and have held that such is not permissible in the context of a workers’ compensation claim. The Court agreed with the trial court that an employer’s right of subrogation under Section 319 must be asserted through an action brought in the name of the injured employee either as a party plaintiff or use plaintiff.
The Supreme Court allowed Liberty Mutual’s appeal and affirmed in a split decision authored by Justice Baer. The majority thoroughly analyzed the decisional law under Section 319, observing that the courts have consistently held that the right to sue a third-party tortfeasor lies in the injured employee and suggested, in dicta, that an employer/insurer can seek to enforce its subrogation right by filing an action against the tortfeasor in the name of the injured employee. Here, Liberty Mutual sued Appellees in its own right; noting its status as Lawrence’s subrogee was insufficient.
Justice Baer’s majority opinion garnered two dissents. Chief Justice Saylor opined that Liberty Mutual filed a proper complaint because denominating itself as Lawrence’s subrogee effectively made Lawrence the use plaintiff. Justice Todd agreed with Chief Justice Saylor but wrote separately to emphasize that the actual plaintiff (here, the injured employee) should be served with a copy of the subrogee’s complaint so that he or she can retain counsel and actively participate. Justice Todd would also direct the Civil Procedural Rules Committee to address suitable service requirements for an action commenced by a subrogee.