eNotes: Liability – August 2022 – Pennsylvania

SIGNIFICANT CASE SUMMARIES

PA CASE SUMMARIES

Arlet v. Workers’ Comp. Appeal Bd. (Commw. of Pa., Dep’t of Labor & Indus., Bureau of Workers’ Comp.)
Pennsylvania Supreme Court
No. 12 WAP 2021

Decided: February 23, 2022

Pennsylvania Supreme Court adopted the “no-coverage” exception in anti-subrogation rule that prohibits insurers from subrogating against their own insured.

Background

Claimant, a shipwright employed by Flagship Niagara League, slipped and fell on an icy sidewalk at work and sustained injuries. Flagship’s insurer, Acadia Insurance Company, paid benefits to Claimant under its Commercial Hull Policy (“the Policy”). The Policy provided indemnity coverage under the Jones Act, which provides a “seaman” the ability to sue his employer for negligence and to recover for injuries sustained in the course of his employment. After Claimant received benefits from the Policy, he filed a claim for workers’ compensation benefits, arguing that he was not a covered individual under the Jones Act (seaman or crew member). The Workers’ Compensation Judge (“WCJ”) ruled that Claimant was a “seaman” covered exclusively under the Jones Act and therefore ineligible for workers’ compensation benefits. Claimant appealed to the Workers Compensation Appeal Board (“WCAB”).

The WCAB reviewed the terms of the Policy and held that although Claimant as a “land-based employee” did not quality as a “seaman” under the Jones Act, he was a “member of the crew” under the Policy. Thus, the WCAB held that the Acadia correctly paid benefits to Claimant under the Policy and affirmed the WCJ in concluding that an insurer is precluded from seeking subrogation against its own insured. On appeal, the Commonwealth Court of Pennsylvania held that the terms “seaman” and “crewmember” were interchangeable and that the Claimant was neither. Thus, Claimant was entitled to workers’ compensation, but he should not have received the benefits under the Policy. Notwithstanding its determination that Claimant’s exclusive remedy lay with the Worker’ Compensation Act, the Commonwealth Court affirmed the WCAB’s holding that the anti-subrogation prevented an insurer from subrogating against its insured.

Holding

The Pennsylvania Supreme Court noted that subrogation is an equitable principle and it is well-settled that an insurer cannot subrogate against its own insured. This rule serves two purposes: (1) it prevents the insurer from passing the loss back to its insured, an act that would avoid the coverage that the insured had purchased; and (2) it guards against conflicts of interest that might affect the insurer’s incentive to provide a vigorous defense for its insured.

In this case, the PA Supreme Court adopted from other jurisdictions the “no coverage exception” to the anti-subrogation rule that prohibits an insurer from subrogating against its own insured. The Court reasoned, because the injury or damage Acadia paid to cover turns out not to be covered by the Policy, equity allowed for Acadia to seek subrogation against its insured Flagship.

Questions about this case can be directed to Tiffany Yeung at (267) 861-7587 or tyeung@tthlaw.com.

Manuel v. Leighton
Pennsylvania Superior Court
No. 589 MDA 2021, 2022 Pa. Super. Unpub. LEXIS 1571

Decided: July 11, 2022

Superior Court affirms jury’s rejection of dram shop claims against two bars.

Background

Plaintiff brought this wrongful death case as administrator of his mother’s estate, after Defendant driver struck her car while driving drunk. Plaintiff also brought Dram Shop claims against two bars. Defendant driver drank at least eight beers at the first bar over three-and-one-half hours, and two beers within roughly fifty minutes at the second bar. He was cut-off at this second bar after a bartender witnessed him fumbling with, and attempting to light, a cigarette backwards. Defendant driver left the second bar shortly after this encounter. He then caused the fatal accident within five minutes of leaving.

The Trial Court granted a directed verdict, finding Defendant driver negligent by stipulation of the parties. The jury awarded the estate $500,000 in damages against the driver. Plaintiff also moved for a directed verdict against one of the bars based on its representative’s answers to hypothetical questions, but the Trial Court denied this Motion. After deliberation, the jury found neither bar was negligent. The Trial Court denied Plaintiff’s Motions for post-trial relief, and Plaintiff timely appealed. Plaintiff estate raised five issues for the Superior Court, challenging the following rulings: the denied Motion for directed verdict; a denied Motion for judgment notwithstanding the verdict; a denied Motion for post-trial relief concerning opinions of a defense expert; a denied Motion for post-trial relief concerning mistrial for evidence of Plaintiff’s seatbelt use; and a denied Motion for post-trial relief for lack of a specific jury instruction.

Holding

The Superior Court affirmed the Trial Court’s decisions and the case’s outcome. The Superior Court found that there was reasonable evidence presented in witness testimony and by experts which offered genuine issues of material fact as to whether Defendant driver was showing visible signs of intoxication. The Superior Court held Plaintiff did not fully develop his legal argument for judgment as a matter of law. The Court similarly held Plaintiff did not provide enough of an argument to show that the Trial Court abused its discretion with regard to the evidentiary concerns. The Court held that Plaintiff’s other issues on appeal had been waived for various reasons, and judgment was affirmed.

Questions about this case can be directed to Logan Nagle at (717) 255-7234 or lnagle@tthlaw.com.

Kohlman v. Grane Healthcare Co.
Pennsylvania Superior Court
No. 103 WDA 2021, 2022 Pa. Super. 118

Decided: July 5, 2022

Pennsylvania Superior Court affirms the denial of nursing home’s Preliminary Objections to compel arbitration, finding the arbitration agreement unconscionable as a matter of law.

Background

Defendant Highland Park filed Preliminary Objections to Plaintiff’s Complaint, asserting the Arbitration Agreement contained in the facility’s Admissions Agreement. In 2020, the Superior Court affirmed the denial of arbitration with regard to the wrongful death claim, but remanded the case for discovery as to whether the Arbitration Agreement was unconscionable.

The parties took discovery on a number of issues, including Decedent’s physical and mental state at the time she executed the Arbitration Agreement, whether Decedent was accompanied by anyone, whether Decedent was aware she could receive treatment from another facility, whether Decedent was economically constrained, and the general complexity of the Arbitration Agreement. Discovery included the deposition of the facility’s Admissions Director. After completion of the specified discovery, Defendants reasserted the Arbitration Agreement by filing Preliminary Objections. The Trial Court again overruled the Preliminary Objections and Defendants filed a timely interlocutory appeal to the Superior Court.

Holding

On appeal, the Superior Court held that the Arbitration Agreement was unconscionable. Discovery revealed that Decedent was receiving Oxycodone and Xanax on the day that she was admitted to the facility. The Admissions Director testified that no one else was with Decedent when she signed the Arbitration Agreement and other documents in the admissions packet. Discovery further reflected that it was necessary for the Admissions Director to read the Agreement. The Admissions Director further testified that she does not tell residents that they can refuse to sign the Arbitration Agreement. The Admissions Director could not recall a resident ever refusing to sign the Arbitration Agreement or seeking to revoke the Arbitration Agreement. The Admissions Director testified that she did not tell Decedent that she could consult an attorney or that the resident had the right to revoke the agreement to arbitrate after signing it. Decedent’s physical inability to read the Arbitration Agreement or other documents was important to the Court based on the above testimony. The Superior Court further held that the severability clause did not save the Agreement. The Arbitration Agreement provided that the parties were to equally split the cost of arbitration. The Superior Court concluded by stating, “Instead, one party clearly sought to take advantage of the other. Under these circumstances, we decline to provide an alternate fee provision and allow the agreement to stand.”

Questions about this case can be directed to Hugh P. O’Neill at 717-255-7629 or honeill@tthlaw.com.