PSP v. WCAB (Bushta) ( 2016 )


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  •               IN THE COMMONWEALTH COURT OF PENNSYLVANIA
    Pennsylvania State Police,             :
    Petitioner    :
    :
    v.                :
    :
    Workers’ Compensation Appeal           :
    Board (Bushta),                        :   No. 2426 C.D. 2015
    Respondent       :   Submitted: July 29, 2016
    BEFORE:     HONORABLE RENÉE COHN JUBELIRER, Judge
    HONORABLE ANNE E. COVEY, Judge
    HONORABLE JOSEPH M. COSGROVE, Judge
    OPINION BY
    JUDGE COVEY                                FILED: October 26, 2016
    Pennsylvania State Police (Employer) petitions this Court for review of
    the Workers’ Compensation (WC) Appeal Board’s (Board) November 3, 2015 order
    reversing the Workers’ Compensation Judge’s (WCJ) decision approving the
    Stipulation of the Parties entered into between Joseph Bushta (Claimant) and
    Employer (Stipulation). Employer presents two issues for this Court’s review: (1)
    whether the Board erred by finding that the parties were not bound by their
    Stipulation because Claimant was not aware of case law which existed before the
    Stipulation’s execution; and (2) whether the Board erred by reversing the WCJ’s
    decision because it was contrary to the holding in Stermel v. Workers’ Compensation
    Appeal Board (City of Philadelphia), 
    103 A.3d 876
    (Pa. Cmwlth. 2014). After
    review, we affirm.
    On February 25, 2011, Claimant suffered a work-related injury in the
    course of his employment when his state vehicle was hit by a tractor-trailer. On
    March 18, 2011, Employer issued a Notice of Compensation Payable (NCP)
    accepting compensable injuries described as cervical, thoracic and lumbar strains.
    The NCP provided for $858.08 weekly indemnity benefits, but indicated that
    Claimant was receiving salary continuation under what is commonly referred to as
    the Heart and Lung Act.1
    On January 21, 2014, Claimant entered into a Settlement and Indemnity
    Agreement and Release of All Claims (Settlement Agreement), wherein, Claimant
    and his spouse acknowledged receipt of $1,070,000.00 as a full compromise
    settlement of any and all claims they may have against Winston J. Whitney, U.S.
    Trailer Relocators, LLC, USTR Freight, LLC, Rental Trailers of Laredo, Property &
    Casualty Ins. Co. of Hartford, James C. Hilton, Greatwide Dedicated Transport, III,
    LLC, GE Business Financial Services, Inc., as well as any other person, corporation,
    insurer, association or partnership responsible for Claimant’s February 25, 2011
    injuries. Pursuant to the Settlement Agreement, $200,000.00 of the $1,070,000.00
    third-party recovery was apportioned for Claimant’s spouse’s loss of consortium
    claim. The total amount attributed solely to Claimant was $870,000.00.
    The Settlement Agreement reflected that Claimant “will reimburse any
    lien holder, known or unknown, for any liens as a result of the above incident.”
    Reproduced Record (R.R.) at 43a. In signing the Settlement Agreement, Claimant
    acknowledged his understanding that he was “solely responsible for the payment of
    any . . . workers’ compensation liens . . . incurred as a result of the accident.” 
    Id. Before executing
    the Settlement Agreement, Claimant had entered into a Contingent
    Fee Agreement with Powell Law in which it was agreed that Claimant’s attorneys
    1
    Act of June 28, 1935, P.L. 477, as amended, 53 P.S. §§ 637-638. Section 1 of the Heart
    and Lung Act provides that a police officer, corrections officer, firefighter, or member of other
    enumerated professions, injured in the performance of his duties and temporarily incapacitated from
    performing his duties by that injury, shall be paid his full rate of salary until the incapacity has
    ceased, as well as “[a]ll medical and hospital bills, incurred in connection with any such injury.” 53
    P.S. § 637. Further, “any [WC benefits], received or collected by any such employe for such
    period, shall be turned over to the Commonwealth of Pennsylvania. . . .” 
    Id. 2 would
    receive 33 1/3% of the recovery as their fee. The attorney’s fee attributable
    solely to Claimant’s recovery totaled $290,000.00. Further, Claimant and his spouse
    incurred $18,723.68 in litigation costs. On February 4, 2014, Employer filed a
    Petition for Review with the WC Office of Adjudication asserting a right of
    subrogation against the proceeds of Claimant’s third-party recovery.
    On November 19, 2014, Claimant and his counsel signed the Stipulation
    and Employer’s counsel signed it on November 20, 2014.                       According to the
    Stipulation, Employer “[paid] Heart and Lung Act wage loss benefits beginning with
    a pay dated [sic] occurring on [March 3, 2011].” R.R. at 110a. It further provided
    that Claimant initially accepted his full salary in the amount of $1,417.20 per week
    (or $2,834.40 bi-weekly) as Heart and Lung Act benefits. However, these payments
    increased as Claimant obtained raises, until he started collecting his normal pay as of
    June 22, 2012. In total, Claimant was paid $94,166.64 in Heart and Lung Act wage
    loss benefits.     The Stipulation also reflected that $56,873.13 in WC indemnity
    benefits were remitted to Claimant under the Workers’ Compensation Act (WC Act)2
    from February 26, 2011 until June 3, 2012.
    Further, the Stipulation provided that “a medical payment history
    revealed treatment billed as of [February 25, 2011] through and including payment
    remitted for dates of service occurring on [February 18, 2013].                  The aggregate
    amount of medical benefits paid by Employer totaled $110,869.53.” R.R. at 111a.
    Employer and Claimant also executed a Third Party Settlement Agreement
    calculation sheet which reflected that Employer was entitled to reimbursement of a
    net lien, calculated based upon the indemnity and medical benefits payable under the
    WC Act in the amount of $56,873.13 and $110,869.53, respectively. The accrued
    lien expense reimbursement rate was 19.2801%. The parties stipulated that the
    2
    Act of June 2, 1915, P.L. 736, as amended, 77 P.S. §§ 1-1041.4, 2501-2708.
    3
    accrued lien was $167,742.66, and did not include $37,293.51 which Employer
    characterized as Heart and Lung Act wage loss benefits.
    On December 4, 2014, the WCJ issued his decision approving the
    Stipulation. On December 22, 2014, Claimant appealed to the Board, arguing that
    since all Employer provided benefits were paid pursuant to the Heart and Lung Act,
    Employer is not entitled to subrogation and, therefore, the Stipulation was contrary to
    Stermel. On November 3, 2015, the Board agreed, and reversed the WCJ’s decision.
    Employer appealed to this Court.3
    Employer first argues that the Board erred by finding that the parties
    were not bound by their Stipulation because notwithstanding Claimant’s lack of
    knowledge, Stermel was decided before the Stipulation’s execution.                      Although
    Claimant’s execution of the Stipulation on November 19, 2014 occurred after Stermel
    was decided (on November 13, 2014), Stermel was decided before the WCJ issued
    his decision approving the Stipulation, and before the matter was appealed to the
    Board.
    In Cipcic v. Workers’ Compensation Appeal Board (Consolidation Coal
    Co.), 
    693 A.2d 1009
    (Pa. Cmwlth. 1997), this Court was presented with the issue of
    whether the Board erred by retroactively applying Republic Steel v. Workmen’s
    Compensation Appeal Board (Petrisek), 
    640 A.2d 1266
    (Pa. 1994) (decided on April
    22, 1994 which was after the WCJ’s decision but before the Board’s decision) to the
    claimant’s case. The Cipcic Court held:
    ‘It is well-settled that changes in decisional law which
    occur during litigation will be applied to cases pending
    on appeal.’ M & D Auto Body v. Workmen’s [Comp.]
    Appeal [Bd.] (John Pallott), . . . 
    599 A.2d 1016
    , 1020 ([Pa.
    3
    “On review[,] this Court must determine whether constitutional rights were violated, errors
    of law were committed, or necessary findings of fact were supported by substantial competent
    evidence.” Stepp v. Workers’ Comp. Appeal Bd. (FairPoint Commc’ns, Inc.), 
    99 A.3d 598
    , 601 n.6
    (Pa. Cmwlth. 2014).
    4
    Cmwlth.] 1991). . . . Further, where ‘decisional law relies
    on a statutory interpretation which was not wholly without
    precedent, such decisions are treated as relating back to the
    original statute because they are nothing more than
    interpretations of existing legislation.’ 
    Id., n.5. Republic
                Steel addressed the issue of whether benefits are available
    to a claimant under the provisions of the [WC] Act where a
    work-related disability has no effect upon earning power.
    This issue bore directly upon [the c]laimant’s burden of
    proving his eligibility for benefits. Therefore, the Board did
    not err by applying the Supreme Court’s interpretation of
    the [WC] Act in Republic Steel to the facts of this case,
    notwithstanding that Republic Steel was decided after the
    close of the record before the WCJ. . . . As noted by this
    Court, Republic Steel modified case law previously decided
    by this Court.
    
    Cipcic, 693 A.2d at 1011
    (emphasis added).
    Stermel addressed the issue of whether Heart and Lung Act benefits are
    subject to subrogation, which bears directly upon the basis for the Stipulation before
    this Court. Notwithstanding that the Stipulation was executed after Stermel was
    decided, Stermel was decided before the WCJ’s decision and the appeal to the Board.
    Accordingly, the Board did not err by applying Stermel to the case sub judice.
    Employer next contends that the Board erred by reversing the WCJ’s
    decision because it was not contrary to Stermel’s holding. We disagree. The Stermel
    Court held that a city employer was not entitled to recover a portion of the Heart and
    Lung Act benefits it paid a police officer from the officer’s third-party tort claim
    settlement. This holding was resultant of the Court’s interpretation of the interplay
    between the Motor Vehicle Financial Responsibility Law (MVFRL)4 and Act 44.5
    The Court explained:
    [T]he [MVFRL], . . . prohibits a plaintiff from including as
    an element of damages payments received in the form of
    4
    75 Pa.C.S. §§ 1701-1799.7.
    5
    Act of July 2, 1993, P.L. 190, No. 44.
    5
    [WC] or other ‘benefits paid or payable by a program . . .
    or other arrangement.’ [Section 1720 of the MVFRL,] 75
    Pa.C.S. § 1720. This language ‘benefits paid or payable by
    a program’ has been construed to include the program by
    which Heart and Lung [Act] benefits are paid. Fulmer [v.
    Pa. State Police], 647 A.2d [616,] 618-19 [(Pa. Cmwlth.
    1994)]. Section 25(b) of Act 44 changed the Section 1720
    [of the MVFRL] paradigm [] for [WC] benefits, [but] not
    Heart and Lung [Act] benefits. This means [a c]laimant
    continue[s] to be ‘precluded’ from recovering the amount of
    benefits paid under the Heart and Lung Act from the
    responsible tortfeasors. [Section 1722 of the MVFRL,] 75
    Pa.C.S. § 1722. There can be no subrogation out of an
    award that does not include these benefits. Likewise,
    because the tort recovery cannot, as a matter of law,
    include a loss of wages covered by Heart and Lung [Act]
    benefits, [a c]laimant d[oes] not receive a double recovery
    of lost wages or medical bills.
    
    Stermel, 103 A.3d at 885
    (emphasis added). Further, Employer’s argument that a
    portion of Claimant’s Heart and Lung Act benefits were subject to subrogation
    because they were in fact WC benefits was expressly rejected by the Stermel Court
    in its discussion of the legislature’s intent:
    As our Supreme Court has explained, the legislature’s
    rationale is irrelevant:
    Significantly, the [MVFRL’s] remedial scheme has
    become increasingly complicated, in light of the
    need to address premium costs while maintaining
    financial viability in the insurance industry. The
    Legislature has made numerous specific refinements
    impacting the competing, and legitimate, rights and
    interests of insurers, employers, and injured persons.
    In this landscape, where there are mixed policy
    considerations involved, we decline to extend clear
    and specific refinements beyond their plain terms.
    Oliver [v. City of Pittsburgh], 11 A.3d [960,] 966 [(Pa.
    2011)] (emphasis added). By treating a portion of the
    Heart and Lung benefits as [WC] payments, [Employer]
    extended the legislature’s ‘specific refinements beyond
    their plain terms.’
    6
    Only the legislature may undertake further refinements and
    eliminate the distinction between the self-insured public
    employer and the public employer who purchases an
    employer’s liability policy of insurance. We must,
    therefore, [affirm] the Board.
    
    Stermel, 103 A.3d at 885
    -86 (bold emphasis added).
    Here, as in Stermel:
    Section 1722 of the [MVFRL] did not allow Claimant to
    recover loss of wages from the tortfeasor defendants
    because they were covered by the Heart and Lung Act. The
    record does not disclose the elements of the $[1,070,000.00]
    Claimant received from the tortfeasor.[6] As a matter of
    law, however, it was net of his Heart and Lung [Act]
    benefits.
    
    Stermel, 103 A.3d at 885
    . Accordingly, the Board’s reversal of the WCJ’s decision
    was not contrary to this Court’s holding in Stermel.
    Importantly, the Stermel Court appears to limit its holding to lost wages
    received under the Heart and Lung Act; however, a review of the record in Stermel
    reveals that both wage loss and medical benefits were at issue in that action.
    Further, the Heart and Lung Act clearly provides for medical expenses as well as
    wage loss. See Section 1 of the Heart and Lung Act (emphasis added) (pertaining to
    “[a]ll medical and hospital bills, incurred in connection with any such injury); see
    also 
    Oliver, 11 A.3d at 966
    (emphasis added) (“The design [of the Heart and Lung
    Act] is to ensure that, if . . . temporarily disabled in the performance of their duties,
    these critical-services personnel do not suffer salary losses or incur the expense of
    medical care and treatment.”).
    Although the NCP in the instant case stated that “[p]aid [s]alary
    continuation [was under the] Heart and Lung [Act,]” NCP at 2, because the Heart and
    Lung Act requires the payment of full salary and all medical expenses, see Section 1
    6
    With the exception of the $200,000.00 attributed to loss of consortium.
    7
    of the Heart and Lung Act, self-insured employers paying Heart and Lung Act
    benefits issue an NCP only to acknowledge the work injury. See Stermel. Section
    25(b) of Act 44 expressly states: “The provisions of [Sections 1720 and 1722 of the
    MVFRL,] 75 Pa.C.S. §§ 1720[,] 1722 are repealed insofar as they relate to [WC]
    payments or other benefits under the [WC] Act.” Section 25(b) of Act 44 makes no
    distinction between wage loss or medical benefits. Here, because Claimant was a
    public safety employee, his benefits fall under the Heart and Lung Act.       Thus,
    pursuant to Section 1720 of the MVFRL, Employer is not entitled to subrogation
    from Claimant’s third-party recovery. Consequently, we are constrained to hold that
    Claimant’s recovery under his Settlement Agreement is not subject to subrogation.
    For all of the above reasons, the Board’s order is affirmed.
    ___________________________
    ANNE E. COVEY, Judge
    8
    IN THE COMMONWEALTH COURT OF PENNSYLVANIA
    Pennsylvania State Police,              :
    Petitioner     :
    :
    v.                   :
    :
    Workers’ Compensation Appeal            :
    Board (Bushta),                         :   No. 2426 C.D. 2015
    Respondent        :
    ORDER
    AND NOW, this 26th day of October, 2016, the Workers’ Compensation
    Appeal Board’s November 3, 2015 order is affirmed.
    ___________________________
    ANNE E. COVEY, Judge