OPINION BY President Judge PELLEGRINI.
Mary Ann Protz (Claimant) petitions for review of the order of the Workers' Compensation Appeal Board (Board) affirming the decision of the Workers' Compensation Judge (WCJ) which awarded Derry Area School District (Employer) and PSBA/Old Republic Insurance Company (Insurer) subrogation of a third party medical malpractice award Claimant received with respect to medical treatment she underwent following her accepted workplace injury. For the reasons that follow, we affirm the Board's order.
The following facts are not in dispute. Claimant sustained a work-related injury to her right knee in the form of right knee pain with underlying vascular impairment from a total knee arthroplasty with chronic regional pain syndrome type I (reflex sympathetic dystrophy) while working for Employer on April 23, 2007. Employer accepted the work injury and was paying Claimant partial-disability benefits as of January 2012 pursuant to an impairment rating evaluation.
Subsequently, Claimant's work injury necessitated a total knee replacement resulting in an inadvertent transected popliteal artery. As a result, Claimant filed medical malpractice actions against the hospital where the operation was performed and the operating doctor and his practice in the Court of Common Pleas of Westmoreland County, alleging that Defendants negligently performed the procedure and failed to obtain Claimant's informed consent.
In the course of the medical malpractice lawsuits, Claimant submitted a medical report from her expert, Raymond M. Vance, M.D. (Dr. Vance), stating that as a result of Claimant's work injury, she underwent a total knee replacement performed by Dr.
Specifically, Dr. Vance's report stated:
(Id.) This action eventually settled.
In December 2012, Employer and Insurer filed a petition to review compensation benefits (petition) indicating that Claimant received a third party recovery in the medical malpractice action and seeking to subrogate that recovery under Section 319 of the Workers' Compensation Act (Act).
At the hearing, Employer submitted Claimant's medical malpractice complaints, a praecipe dated November 2012 to settle and discontinue the consolidated medical malpractice actions, and the settlement and distribution sheet prepared by Claimant's counsel in the malpractice action, showing that all monies awarded were with regard to future medical expenses and lost wages, with none of the funds being set aside for the payment of past medical bills or past lost wages. The WCJ also admitted, over Claimant's counsel's hearsay objection, Dr. Vance's report.
Following the hearing, the WCJ issued a decision awarding Employer and Insurer subrogation benefits from the time of the settlement forward because Employer and Insurer "established that [Claimant]'s third party settlement was for the malpractice injury ... sustained during surgery performed to treat the April 23, 2007, work injury and the complications that sprang from that injury," for which Employer and Insurer were paying Claimant's medical and indemnity benefits. (R.R. at 68a.)
Based upon Section 508 of the MCARE Act,
As such, the WCJ ordered that Employer and Insurer reimburse Claimant for the attorneys' fees and costs she incurred in obtaining the medical malpractice settlement. Determining that the cost of recovery for the third party settlement consumed 47% of the settlement, the WCJ also held that Employer and Insurer were entitled to a reduction of Claimant's "medical bills and disability benefits at the rate of 47% of the repriced amount for future medical bills and 47% of her weekly disability rate." (Id.)
Claimant appealed to the Board, contending that: (1) the WCJ erred in relying upon Dr. Vance's report which was offered only for purposes of adjudicating Claimant's utilization review petition and not for purposes of Employer's petition; and (2) Section 508 of the MCARE Act precluded a workers' compensation carrier from subrogating the proceeds of a claimant's third party medical malpractice action. First, the Board noted that although there was no evidence before it regarding Claimant's utilization review petition, "[Employer] indicate[d] that Claimant has filed a UR Petition concerning the propriety of physical therapy she had been receiving, which was initially consolidated with the Review Petition." (R.R. at 79a n. 2.) Because Claimant's utilization review petition "[p]urportedly ... involved the question of the reasonableness and necessity of physical therapy treatment," and because the expert report "specifically spoke to issues surrounding the event during surgery performed for the work injury that led to complications and disability," the Board reasoned that the report was germane to the subrogation issue and that Claimant never argued that the report should be admitted only for utilization review purposes.
Regarding subrogation, the Board explained that under Section 319 of the Act, the right of subrogation is automatic and absolute. 77 P.S. § 671. Because the plain language of Section 508 of the MCARE Act expressly eliminated subrogation rights with respect to past medical bills and past lost earnings but was silent on the issue of future payments of expenses and lost earnings, the Board concluded that it did not preclude the subrogation sought in this case and affirmed the WCJ's order. 40 P.S. § 1303.508. Claimant filed the instant appeal raising the same arguments as below.
With respect to Claimant's argument that the WCJ erred in relying upon Dr. Vance's expert report because it was
Claimant does not disagree that Section 508 of the MCARE Act is silent regarding subrogation of future medical expenses and wage loss awards in medical malpractice actions, but contends that such silence must be construed as prohibiting subrogation in accordance with the plain language of Section 508(c) of the MCARE Act. 40 P.S. § 1303.508(c). Conversely, Employer and Insurer argue that the statute's plain meaning mandates allowance of subrogation in this respect.
The right of subrogation has been described as "an absolute [right]" that "applies whenever a debt or obligation is paid by one party though another is primarily liable" and which "has assumed even greater stature" in the workers' compensation context. Brubacher Excavating, Inc. v. Workers' Compensation Appeal Board (Bridges), 575 Pa. 168, 835 A.2d 1273, 1275 (2003). In examining an employer's right to subrogation under Section 319 of the Act, 77 P.S. § 671, our Supreme Court has emphasized the threefold rationale supporting subrogation rights: "[T]o prevent double recovery for the same injury by the claimant, to ensure that the employer is not compelled to make compensation payments made necessary by the negligence of a third party, and to prevent a third party from escaping liability for his negligence." Poole v. Workers' Compensation Appeal Board (Warehouse Club, Inc.), 570 Pa. 495, 810 A.2d 1182, 1184 (2002) (internal citation omitted). It is against this backdrop that we analyze the MCARE Act.
Certainly, Section 508(c) of the MCARE Act precludes subrogation of plaintiffs' medical malpractice proceeds to the extent that those proceeds are "covered in subsection (a)." 40 P.S. § 1303.508(c). Subsection (a), in turn, bars recovery of "past medical expenses or past lost earnings incurred to the time of trial," including those paid by an employer or workers' compensation insurance carrier. 40 P.S. § 1303.508(a). Subsection (a), however, does not address future medical expenses or future wage loss. Therefore, because future expenses and wage loss are not "covered in subsection (a)," subsection (c)'s prohibition against subrogation with regard to those awards does not apply. 40 P.S. § 1303.508(c).
This plain-meaning interpretation is consistent with the purpose of subrogation insofar as it prevents Claimant from enjoying a double recovery for the same injury, namely, workers' compensation benefits and medical malpractice proceeds which both compensate her for her complex regional pain syndrome, a complication she would not have experienced but for the
Our interpretation of Section 508 of the MCARE Act also aligns with the presumption that "the legislature did not intend to change existing law by omission or implication" but only "by an express provision." Fletcher v. Pennsylvania Property and Casualty Insurance Guaranty Association, 914 A.2d 477, 483 (Pa.Cmwlth.2007), aff'd, 603 Pa. 452, 985 A.2d 678 (2009). Indeed, prior to the enactment of the MCARE Act, employers and workers' compensation carriers were entitled to subrogation with respect to both past and future benefits. See Helms Express v. Workmen's Compensation Appeal Board (Lemonds), 106 Pa.Cmwlth. 287, 525 A.2d 1269, 1272 (1987), appeal dismissed, 519 Pa. 319, 548 A.2d 252 (1988). Although Section 508(c) of the MCARE Act disallows subrogation with respect to benefits paid up until the time of trial, it does nothing to alter the pre-existing law with regard to future benefits. This is of particular importance since the General Assembly has demonstrated in other contexts its ability to impose an absolute bar against workers' compensation carriers' right of subrogation. See 75 Pa.C.S. § 1720 ("In actions arising out of the maintenance or use of a motor vehicle, there shall be no right of subrogation or reimbursement from a claimant's tort recovery with respect to workers' compensation benefits....").
Accordingly, we affirm the Board's order awarding Employer and Insurer subrogation of Claimant's third party medical malpractice recovery with respect to the award for her future medical expenses and wage loss.
AND NOW, this 6th day of January, 2016, the order of the Workers' Compensation Appeal Board in the above-captioned case is affirmed.
77 P.S. § 671.
(R.R. at 26a-27a.)
40 P.S. § 1303.508(a)-(d).