Wednesday, June 26, 2013

One Work Injury, Two States, Two Insurers ... who pays?

Jurisdiction and Benefit Responsibility.
Employees may be assigned by their Employers to travel and work in another state.
Employees may reside in one state and commute cross state lines, to pursue their occupation.
At times, a question arises as to which state jurisdiction work comp law applies.
The Pennsylvania Workers' Compensation Act is clear, it applies to ALL injuries occurring within the Commonwealth. WCA Section 101; 77 P.S. 1.

The PA Act may extend to injuries occurring outside the Commonwealth, if one of 4 specific conditions are met. WCA 305.2; 77 P.S. 411.2.

...But what happens when one insurer pays work comp benefits to an injured worker ... and later determines another insurer is responsible... what are the remedies available?

Liberty Mutual Insurance Company and Charles Pike Construction Company, Inc. (Petitioners)
v. The Commonwealth of Pennsylvania, Department of Labor & Industry and Pennsylvania State Workers' Insurance Fund and Julia K. Hearthway, Secretary of Labor & Industry, (Respondents)
 No. 660 M.D. 2012, an unreported memorandum opinion of a panel of the Commonwealth Court of Pennsylvania authored by President Judge Pellegrini on June 18, 2013, addressed this type of situation.

Factual & Procedural Background

Procedurally this case was heard regarding the preliminary objections of Respondents (Commonwealth, etc.).
Petitioners (Liberty Mutual) filed a Petition for Review with the Commonwealth Court, (1) in the Nature of a Complaint in Equity and (2) Suit for Declaratory and (3) Injunctive Relief.

What does all of this legalese mean? 

Employee worked for Employer at a construction site in New Jersey.
Employee was seriously injured.
Liberty Mutual insured Employer for NJ work comp.
State Workers' Insurance Fund (SWIF) insured Employer for PA work comp.
Employer reported the injury to Liberty.
Liberty commenced payments of $300k+ medical and indemnity benefits.

Employee files a PA claim petition!
Liberty asks SWIF to assume jurisdiction and responsibility for payments to Employee for an injury arising from Employer's PA business operations.

SWIF and Employer enter into a stipulation (Liberty was not a party).
WCJ approves the stipulation whereby SWIF admits liability for the work injury and SWIF is "credited" with Liberty's payment of medical and indemnity benefits.

Liberty files a Petition to Review with the Bureau, seeking reimbursement from SWIF for the benefits paid by Liberty. (for which SWIF received a credit against their liability).

The WCJ denied reimbursement, ruling that she did not have jurisdiction to order SWIF to reimburse Liberty for payments made under NJ WC laws.

Liberty did not appeal the WCJ decision.
Liberty sent 3 separate demand letters to SWIF for reimbursement.
Liberty received no response.
Liberty filed this Petition for Review to the Commonwealth Court, invoking the original jurisdiction of this court.

Commonwealth Court Decision

i.   Liberty's Petition for Review in the Nature of a (1) Complaint in Equity was not dismissed.

ii.  The (2) Suit for Declaratory Judgement and (3) Injunctive Relief [ and request for counsel fees] were dismissed.

iii.  Respondents remaining Preliminary Objections were overruled.

iv.  Respondents were directed to file an answer to the remaining unjust enrichment claim.

Commonwealth Court Reasoning

Rejected Respondents argument [in their Preliminary Objections] that the Board of Claims has jurisdiction of this matter under Section 1724 of the Commonwealth Procurement Code.

Rejected Respondents argument that the Commonwealth Court lacked jurisdiction as Liberty did not exhaust their administrative remedies. The Commonwealth Court has jurisdiction, as the WCJ correctly ruled she did not have jurisdiction, such that their was no adequate administrative remedy available to Liberty. Liberty could properly raise this unjust enrichment claim.

Rejected Respondent's argument that Section 305.2 of the PA WCA would not support Liberty's claim for reimbursement. [ Section 305.2 deals with coordinating benefits paid under another states work comp laws].

Rejected Liberty's argument that the Section 319 subrogation provision of the PA Workers' Compensation Act allows reimbursement. This would only apply to payments made under a non-workers' compensation program. It does not apply to work comp benefits paid under mistake of fact.

Accepted Petitioner's unjust enrichment claim setting forth the legal and factual basis to establish that Liberty paid obligations that were those of SWIF.

Practice Pointers:

It is difficult to determine how the injury was investigated and how benefits were initially paid, as this appellate opinion, addressing a procedural issue, does not contain many of the facts of the underlying claim and its investigation.

Assume Employee was a NJ resident at the time of the work injury.

Employee would be entitled to NJ workers' compensation benefits under the "extra-territorial" provisions of that state's law.

BUT, as the injury occurred in PA, the workers' compensation statute of PA would also apply.

We have witnessed the situation where an  Employee files a NJ workers' compensation claim and receives benefits... and when those benefits may be limited in duration or amount... they file a PA claim. The employer and insurer cannot avoid this scenario as both PA and NJ laws may apply.

When confronted with this dilemna, one must attempt to coordinate these "reimbursement" efforts and tackle the underlying claim.

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