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Pennsylvania Superior Court Holds That Insurer Cannot Enforce Subrogation Rights in Independent Suit Against Third Party in Workers Compensation Claim

In Liberty Mutual Insurance Co., v. Domtar Paper Co., No. 1052 WDA 2012, 2013 PA Super 262 (September 27, 2013), the Pennsylvania Superior Court examined the issue of whether Section 319 of the Pennsylvania Workers' Compensation Act, codified at 77 P.S. §671, provides an independent cause of action for insurers to directly sue third parties.

The facts of the case were undisputed. An employee of Schneider National, Inc., Mr. Lawrence, sustained a knee injury in the parking lot of Domtar Paper Company during the scope of his employment. Schneider carried a workers' compensation policy with Liberty Mutual and following a claim by the employee, Liberty Mutual paid approximately $34,000 in benefits. Liberty Mutual then sued the owners of the Domtar property as subrogee of Mr. Lawrence alleging negligence in maintenance of the property.

In an examination of Pennsylvania case law, the court held that section 319 does not provide the ability to directly sue third party tortfeasors. Analyzing Scalise v. F. M. Venzie & Co., 152 A. 90 (Pa. 1930), Reliance Insurance Co. v. Richmond Machine Co., 455 A.2d 686 (Pa. Super. 1983), and Moltz v. Sherwood Bros. Inc., 176 A. 842 (Pa. Super. 1935), the court found that the employer's right of subrogation must be brought in an action in the name of the injured employee. Citing specifically Reliance Insurance Co., the Court noted the requirement to bring the action on behalf of the employee so that liability of the third party could be determined. Moreover, the court stated that Pennsylvania courts generally are averse to splitting causes of action between subrogors and subrogees as this practice could lead to multiple liabilities against defendants. The judgment of the trial court was therefore affirmed.

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