eNotes: Workers’ Compensation – April 2024 – Pennsylvania

SIGNIFICANT CASE SUMMARIES

Pennsylvania Case Summaries

Tiano v. City of Phila.
No. 287 EAL 2023, 2024 Pa. LEXIS 408

Petition for Allowance of Appeal from the Order of the Commonwealth Court granted on March 20, 2024

Supreme Court to review whether self-insured government entities are prohibited from subrogating Heart and Lung benefits from a third-party settlement

On March 20, 2024, the Pennsylvania Supreme Court granted a Petition for Allowance of Appeal in Tiano v. City of Philadelphia (WCAB), No. 438 C.D. 2022 (Pa. Cmmw. Ct. Aug. 17, 2023). The Claimant, a police officer, sustained a work-related injury after falling into a utility hole. The Employer paid Heart and Lung Benefits (HL) in lieu of workers’ compensation benefits (WC). The Claimant subsequently received a settlement from the third-party tortfeasor responsible for the injury. The Employer filed Review and Modification Petitions seeking subrogation against the Claimant’s third-party recovery. The WCJ limited the Employer’s subrogation right to WC benefits paid after the settlement. On appeal, the Workers’ Compensation Appeal Board (Board) reversed in part, holding that the Employer had a subrogation right to paid HL benefits from the date of the work injury, which was from a non-motor vehicle accident. The Commonwealth Court affirmed, holding that in non-motor vehicle accident cases, the Employer has a subrogation right irrespective of whether benefits were paid as HL or WC, and regardless of whether the Employer is self-insured.

Claimant appealed the Commonwealth Court’s Decision to the Pennsylvania Supreme Court, which granted review on the following issue:

Whether the Commonwealth Court’s decision conflicts with this Court’s decisions, such as City of Erie v. WCAB (Annunziata), 838 A.2d 598, 602-03 (Pa. 2003), Oliver v. City of Pittsburgh, 11 A.3d 960 (Pa. 2011), Stermel v. Workers’ Compensation Appeal Board (City of Philadelphia), 103 A.3d 876 (Pa. Cmwlth. 2014), and Pennsylvania State Police v. Workers’ Comp. Appeal Bd. (Bushta), 184 A.3d 958, 969 (Pa. 2018), because a self-insured, government entity, is prohibited from subrogating Heart and Lung Benefits Act Benefits from a third-party settlement received by [Petitioner], an employee, who was injured in the line of duty as a Philadelphia Police officer in a non-motor vehicle case[.]

The Pennsylvania Supreme Court previously expanded the anti-subrogation provisions to cases involving the Dram Shop Act. Thus, there is a disturbing trend toward the erosion of subrogation rights in the context of HL benefits, which could possibly continue with the disposition of this appeal. Employers who pay both HL and WC benefits should monitor the outcome of this case, as it will have significant implications for the administration of claims covered by both WC and HL. This case will determine whether self-insured government entities can subrogate against third party cases which do not involve motor vehicle accidents.

Questions about this matter can be directed at John Morgan at (267) 861-7580 or jmorgan@tthlaw.com.

Williams v. City of Phila. (WCAB)
No. 277 C.D. 2023
Commonwealth Court of Pennsylvania

Decided: March 21, 2024

Contingency fee agreements on future medical bills held per se reasonable.

Background:

The Claimant and her attorney entered into a contingency fee agreement both for 20% of medical benefits and 20% of indemnity benefits. The WCJ approved the fee agreement as to past medical benefits, but not future medical benefits, as these were unknown costs. On appeal, the Board affirmed that Claimant could not agree to a counsel fee for 20% of future, unknown medical expenses. Claimant appealed to the Commonwealth Court.

Holding:

The Court, through an examination of relevant statutes, notably Section 306(f.1)(7) of the Workers’ Compensation Act, delineated the boundaries of medical providers’ billing practices. It clarified that providers cannot directly “balance bill” claimants for any costs related to care provided under the Act, including differences between the billed amount and the payment made. The Court noted that a provider may seek fee review if it is not satisfied with the amount received in satisfaction of the bills. Thus, the Court held that a 20% counsel fee agreement applicable to all workers’ compensation benefits received by a claimant is per se reasonable, and a provider that provides medical services to treat a work-related injury may not recoup directly from a claimant any portion of any payment deducted to pay a counsel fee.

Takeaway:

The Williams decision signifies a pivotal moment in workers’ compensation law, delineating the contours of fee agreements and provider billing practices. Its ramifications are far-reaching, necessitating strategic adaptations by all self-insured employers, carriers, third party administrators and policymakers alike to navigate the evolving landscape of the medical aspects of workers’ compensation claims effectively, as this impacts fee agreements, penalties, billing practices, and fee review. Notably, while Williams explicitly protects claimants from providers seeking payment of the 20% deducted to pay attorney’s fees, it is silent with respect to whether employers are so protected.

Questions regarding this case can be directed to Christopher L. Scott at (717) 237-7111 or cscott@tthlaw.com.