Fried, Kane, Walters, Zuschlag and Grochmal PO Box 955
Gibsonia, PA 15044-0955

Burden on Claimant to Demonstrate Amount of a Third Party Settlement

Reed (Palladino, Executor) v. WCAB (Allied Signal, Inc.), No. 879 C.D. 2014, filed April 21, 2015

Factual Background
The Executrix/daughter filed as the claimant following the death of her father Review, Modification, and Reinstatement Petitions. Prior to his death, the employee had filed a Claim Petition alleging a work-related occupational disease of asbestosis. The WCJ granted the Claim Petition, in large part due to employer’s failure to file a timely answer. Benefits were then suspended when the employee failed to follow through on work available to him within his restrictions. The Commonwealth Court actually issued an unpublished decision on this case earlier, affirming the WCJ’s decision to suspend partial benefits until claimant disclosed the amount received in a third-party tort action.

After the conclusion of that first round of litigation, claimant filed the Review, Modification, and Reinstatement Petitions. In denying the petitions, the WCJ noted that claimant had consistently denied obtaining any recovery from the third party action. She had also testified that her parents had lived together until her father was admitted to a nursing home, which was in direct conflict with her mother’s will which indicated they had been separated for over 30 years. As such, the WCJ doubted the credibility of all of claimant’s testimony. Also in evidence was a Joint Tort Release executed by the father and wife releasing the third party from liability in exchange for $1.00 and “other valuable considerations to them in hand paid.”

A representative from the insurance carrier for the third party also testified regarding a group settlement involving the employee. This representative testified that it was common practice to phrase the release as was done in this case, but that frequently more than $1.00 was involved, with each individual plaintiff getting different amounts. Division of those funds was left to the discretion of the plaintiff’s attorney with the consent of all clients. The WCJ therefore found that the employee had received something as part of a group settlement, and the burden was on the claimant to establish the amount of the third party recovery. She had failed to carry the burden by accounting for the monies received from the third party settlement. The Board affirmed the WCJ’s determination.

Commonwealth Court Decision
On appeal, claimant argued that the WCJ’s findings were not supported by substantial evidence, the WCJ capriciously disregarded competent evidence, failed to issue a reasoned decision, and erred in placing the burden of proof on claimant to demonstrate the lack of recovery from the third party claim for purposes of subrogation.

The Court held that the employer had satisfied its burden under Section 319, triggering the automatic subrogation provision. This had been held by the prior WCJ and affirmed by the Court on the first round. The only question remaining was the amount of the recovery, as the language of Section 319 of the act indicates that subrogation is mandatory and automatic. The employer must merely demonstrate that it is compelled to pay workers’ compensation benefits due to the negligence of a third party, and that the funds employer is seeking to recover were paid to the claimant for the same compensable injury for which they are liable. Employer had satisfied that burden, and the statute does not make subrogation contingent upon an employer demonstrating the amount of recovery. The Court felt that imposing such a burden would require an absurd reading of Section 319 and place an unreasonable burden on the employer. The Court held that the burden for demonstrating the amount of a settlement was properly placed on claimant.

The Court also concluded that the WCJ had properly identified, reviewed, and discussed the rationale behind his findings of fact and conclusions of law related to each witness. The evidence upon which the WCJ relied in rendering his decision was similarly competent and he had not capriciously disregarded evidence. The Court found that Claimant’s arguments in this regard were merely a statement that she felt the WCJ should have seen the evidence as she did and found in her favor. The Court affirmed the WCJ’s determination that employer’s obligation to pay the workers’ compensation award was suspended awaiting documentation of the amount of the third party settlement.