PA Supreme Court Upholds Employer’s Right of Subrogation over Proceeds of a Claimant’s Third Party Action
Right is Absolute Absent
Deliberate Bad Faith
An employer who has paid workers’ compensation benefits to a claimant has
a subrogation right over any funds that a workers’ compensation (“wc”) claimant
successfully collects from a civil action against a third party who caused his
work-related injuries. In Thompson
v. WCAB, 741 A.2d 1146 (Pa. 2001), the employer paid wc benefits to the
claimant, and the claimant then brought a third party civil action against
other parties. The employer was in sole
possession of crucial evidence for that third party action, and lost that
evidence. This loss arguably diminished
the value of the claimant’s third party action significantly.
The Commonwealth Court used rules of Equity to preclude the employer from
asserting its subrogation rights, since it was directly responsible for
diminishing the value of the claimant’s civil case. The PA Supreme Court reversed, stating that the employer’s right
to subrogation is absolute, under Section 319 of the PA Workers’ Compensation
Act; That Equity plays no part in an employer’s subrogation right, as that
issue is explicitly and unambiguously addressed by the Statute. However, the Court stated that the holding
might be different if the damage to the claimant’s third party action was
caused by deliberate bad faith of the employer.
A Nail in the Coffin for WC Labor Market Surveys – Caso and Walker
The Bureau’s Response – A
Rebirth?
One of the most important and effective claim management and litigation
tools created by the 1996 amendments to the Pennsylvania Workers’ Compensation
Act is the Labor Market Survey. This
new procedure of proving an earning capacity was a much simpler, more
cost-effective method than the previous Kachinski method, where the
employer had the very difficult and problem-laden task of sending claimants on
specific interviews with prospective employers and then proving sabotage or bad
faith in the claimant’s follow up on these interviews.
The
amendments that created the Labor Market Survey process in 1996 clearly state
that Claimants can be compelled to submit to interviews with vocational experts
“approved by the Department.” The
Department of Labor, Bureau of Workers’ Compensation appears to have read this
language as not compelling the Bureau to make any kind of list of approved
vocational experts or to specifically approve any vocational expert.
When faced
with an employer’s attempt to compel a claimant to attend an interview with a
vocational expert, some Judges had compelled the interviews under the reasoning
that, as Workers’ Compensation Judges under the Bureau of Workers’ Compensation,
they had the power to approve such vocational experts under the Act. Other Judges had read the Act strictly, and
refused to compel such vocational interviews.
Caso:
In Mario
Caso v. WCAB, 2001 WL 1692182 (Pa. Cmwlth), the Commonwealth Court specifically
addressed this issue for the first time.
The Court adopted a strict reading of the Act, and concluded that
because the Act clearly states that interviews can only be compelled with
“approved” experts, and no experts have been officially “approved” by the
Bureau, Judges cannot compel interviews with vocational experts.
Walker:
In Richard
Walker v. WCAB, 2002 WL 99267 (Pa. Cmwlth), the Commonwealth Court held
that a vocational counselor who meets the criteria set forth in the Regulations
is not “an expert approved by the Department.” Further, an Employer can only compel a vocational interview with
an approved expert.
The clear and
more dangerous implication of the Caso and Walker relates to the
validity of a Labor Market Survey in litigation. If a Judge cannot compel an interview because the vocational
expert is not “approved,” the implication is that a Judge cannot reduce or
suspend a claimant’s wc wage benefits based on a Labor Market Survey conducted
by a vocational expert who is not “approved.”
The Bureau’s
Response:
According to the office of the Director of The Bureau of Workers’
Compensation, the Bureau has responded to the Court’s opinions in Caso
and Walker. Although it is not
clear that the Bureau agrees with the holding of the Court, the Bureau
nevertheless appears to be addressing this situation from a practical point of
view. It has begun to give approval to
specific vocational experts upon submission of the necessary documentation to
prove the expert meets the standards for approval. According to Bureau
Director Dick Thompson, the Bureau has approved 311 vocational experts in
Pennsylvania as of Pennsylvania 29, 2002,
Accordingly, it is essential that employers make sure that they receive
confirmation of an individual vocational expert’s Bureau approval before
assigning that vocational expert to conduct interviews and perform a Labor
Market Survey. This response by the
Bureau should breathe new life into the very important claim management and
litigation tool of Labor Market Surveys.
Arbitration Agreement Does not Bar EEOC from Pursuing a Claim against Employer under the ADA
In EEOC v. Waffle House 122 S.Ct. 754 (U.S. 2002), The EEOC brought suit under the ADA on behalf of a former employee of the Waffle House to obtain specific relief for the employee. The employee’s employment contract provided that disputes between the employee and employer should first be resolved through arbitration before any other relief is sought. The Federal Arbitration Act (“FAA”) generally stays court proceedings where there is such an arbitration agreement.
The Supreme Court of the United
States held that the arbitration agreement did not bar the EEOC from seeking
relief on behalf of the employee, as the EEOC’s claim is independent of any claim
the employee could bring. Further, the
EEOC was not party to the arbitration agreement between the employer and
employee.
A Claimant Unable to Perform Job due to Carpal Tunnel
Syndrome is Not Necessarily “Disabled”
under the ADA
The US Supreme Court
Defines the Test
In order to trigger the employer’s duty to engage in the accommodation process under the Americans with Disabilities Act (“ADA”), a claimant must have a known mental or physical disability. A “disability” under the ADA is a physical or mental impairment that substantially limits one or more major life activities of a claimant. One “major life activity” is “performing manual tasks.”
In Toyota Motor Manufacturing v. Williams, 2002 WL 15402 (U.S. 2002) claimant sued her former employer alleging that employer failed to provide her with reasonable accommodations under the ADA. The Sixth Circuit granted partial summary Judgment on behalf of the claimant because her disability prevented her from performing a certain “class” of manual jobs at work.
The Supreme Court of the United States clarified the standard for assessing whether a claimant is substantially limited in the specific “major life activity” of “performing manual tasks.” The Court held that to satisfy this standard, a claimant’s impairment must prevent of severely restrict her from “doing activities that are of central importance to most people’s lives.”
The Court accordingly held that the Sixth Circuit used the wrong standard to determine whether the Respondent was disabled under the ADA. The sixth Circuit should have looked at whether the claimant’s impairment prevented or severely limited her ability to perform tasks which are of central importance in most people’s daily lives, not whether it limited her ability to perform certain jobs. The Court noted here that the claimant testified that even after her condition worsened, she was still able to brush her teeth, wash her face, bathe, tend to her flower garden, do laundry and pick up around the house.
Claimant Permitted
to File WC Dependency Claim 13 Years after Father’s Death
Minority Tolling Statute Applied in WC
In Irvin East v. WCAB, 2001 WL 1424557 (Pa. Cmwlth), the
Commonwealth Court held that the Minority Tolling Statute applies to wc claims. That statute provides that if an individual
entitled to bring a civil action is an “unemancipated
minor” at the time the cause of action accrues, the Statute of Limitations does
not begin to run until the individual reaches majority age.
Here, it was held that the workers’ compensation law’s
three year statute of limitations for bringing claims for compensation in cases
of death was tolled by the Minority Tolling Statute; Accordingly, the claimant
was permitted to file a dependency claim 13 years after his father’s death, as
the claimant was fifteen years old at the time the Claim was filed.
Termination cannot be the Basis for a Discrimination Claim under the FMLA if the Plaintiff is Unable to Perform her Job
In Alifano v. Merck & Co., Inc., 2001 WL 1580269 (E.DPa.),
Plaintiff took medical leave under the FMLA.
On her return to work, she informed her employer of medical restrictions
limiting her to an 8 hour day, and restricting her travel to her normal commute
to and from work. As this restriction
prevented plaintiff from performing an essential function of her job – travel throughout the northeastern
United States – the employer offered her an alternate position. Plaintiff refused the alternate position
because it did not accommodate her restrictions, and the employer accordingly
terminated her.
The Plaintiff filed a complaint, alleging in part that (1) the employer
failed to provide her with reasonable accommodations under the FMLA, and (2)
the employer discriminated against her by terminating her for exercising her
FMLA rights.
The District Court dismissed the 1st claim, stating that
unlike the ADA, the FMLA does not require an employer to reasonably accommodate
an employee’s serious health condition.
To prove a claim for discrimination for availing oneself of one’s FMLA
rights, a Plaintiff must show an “adverse employment action.” While the termination of a plaintiff can be
an adverse employment action, here, the plaintiff was terminated from a
position she was admittedly unable to perform.
Accordingly, the plaintiff could not show the necessary adverse
employment action to prove a discrimination claim, and her claim for
discrimination for exercising her FMLA rights was dismissed.
New Jersey Resident Employed in NY Forced to Litigate Title VII Claim in Missouri
Place of Alleged
Discriminatory Decision was at Headquarters of Employer in Missouri
In Rojas v. Trans Stats Airlines, 2001 WL 1523832 (D.N.J.),
plaintiff brought suit alleging wrongful termination and discharge in violation
of Title VII. In addressing whether the
lawsuit should be litigated in New Jersey, where it was filed by plaintiff, the
court looked at three factors: 1) where the alleged unlawful employment
practice was committed, 2) where the plaintiff’s employment records are, and 3)
would the plaintiff have worked in New Jersey had the alleged discriminatory
conduct not occurred.
The decision to terminate the plaintiff was made by the employer in a
Regional corporate division that included New Jersey, the relevant employment
records were kept at the airline’s headquarters in Missouri, and the plaintiff
would have continued working at JFK in NY if he had not been terminated. Accordingly, the case was transferred to the
State of the employer’s headquarters, Missouri.
At home Position Valid in Proving Job Availability in WC
A recent Commonwealth Court case, Bussa v. WCAB, found that a
modified job referred to a wc claimant was not valid or “available,” and the
Court accordingly did not reduce the claimant’s wc benefits based on the wages
he could have received in the at-home position. The concern with the Bussa case was that it might prevent
employers from reducing their wc exposure and liability on a given case through
an offer of a modified at-home position to a wc claimant.
A more recent case, Viola Medved v. WCAB, 2001 WL 1507261 (Pa.
Cmwlth) confirms that an employer can still reduce its wc wage liability
through a vocational expert’s offer to a claimant of an at-home position.
In Viola Medved, the Employer, through a vocational expert,
offered the claimant an at-home telecommunications position. Clamant refused the position, arguing that
she had no interest in telecommunications, that the installation of a second
phone line in her home violated her right to the quiet enjoyment of her home;
that her working from home was an intrusion of her husband’s privacy and that
she had a right to a “normal” workplace.
She contended that these factors rendered the position “unavailable.” The Judge and Appeal Board disagreed, and
her benefits were modified based on the wage of the offered position.
The Commonwealth Court stated that its recent decision in Bussa v.
WCAB established the rule for determining whether jobs referred under the Kachinski
method are “actually available.” Although
a list of factors is always considered – including physical limitations, age,
intellectual capacity, education and experience – a general “totality of the
circumstances” approach is applicable. Accordingly, an at-home light duty
position can be “available” or not depending on how intrusive it is in each
specific situation. Here, the Court
held that in viewing the totality of this Claimant’s circumstances, there were
no factors present to support the contention that this at-home job was not
available to her.
Questions? Please feel free to
call or email.
David R. Kunz, Esq.
(215) 875.1400 / dkunz@kunzlaw.com
Caroline H. Rieker, Esq.
(215)875.1410 / crieker@kunzlaw.com