Arlet v. Workers' Comp. Appeal Bd.

• Decision Date: 23 February 2022
• Docket Number: 12 WAP 2021
• Citation: 270 A.3d 434
• Parties: Robert ARLET, Appellant v. WORKERS' COMPENSATION APPEAL BOARD (Commonwealth of Pennsylvania, Department of Labor and Industry, Bureau of Workers' Compensation), Appellees
• Court: Pennsylvania Supreme Court

270 A.3d 434

Robert ARLET, Appellant

v.WORKERS' COMPENSATION APPEAL BOARD (Commonwealth of Pennsylvania, Department of Labor and Industry, Bureau of Workers' Compensation), Appellees

No. 12 WAP 2021

Supreme Court of Pennsylvania.

Argued: October 26, 2021

Decided: February 23, 2022

Timothy Dale Iannini, Esq., Bruce Edward Rende, Esq., Robb Leonard Mulvihill, LLP, for Appellant Robert Arlet

George Joseph, Esq., Quinn, Buseck, Leemhuis, Toohey & Kroto, Inc., for Appellee Flagship Niagara League

Kimberly Dawn Mazin, Esq., Pennsylvania Department of Labor & Industry, 651 Boas Street, for Appellees Department of Labor and Industry, Bureau of Workers' Compensation, Uninsured Employers Guaranty Fund

Eric G. Preputnick, Esq., Commonwealth of Pennsylvania, for Appellee Workers' Compensation Appeal Board

Deborah Jean Schwartz, Esq., Pennsylvania Department of Labor & Industry, for Appellee Department of Labor and Industry, Bureau of Workers' Compensation

BAER, C.J., SAYLOR, TODD, DONOHUE, DOUGHERTY, WECHT, MUNDY, JJ.

OPINION

JUSTICE MUNDY

In this appeal by permission, we consider the right of an insurer to subrogation under the Workers’ Compensation Act (WCA).¹ More specifically, we consider, as a matter of first impression for this Court, the limitations of the general equitable prohibition of an insurer seeking subrogation from its insured.

FACTUAL AND PROCEDURAL BACKGROUND

On March 9, 2011, during the course and scope of his employment as a shipwright, Robert Arlet (Claimant) slipped and fell on an icy sidewalk on the premises of his employer, Flagship Niagara League (Employer), sustaining injuries.² Employer had obtained a Commercial Hull Policy from Acadia Insurance Company (Insurer).³ Through the policy, Insurer provided coverage for damages caused by the Brig Niagara and for Jones Act⁴ protection and indemnity coverage for the "seventeen (17) crewmembers" of the Brig Niagara. Cover Letter for Commercial Hull Policy: CHA028883411; Reproduced Record at 45a.⁵ Employer had also at some point obtained workers’ compensation insurance from the State Workers’ Insurance Fund (SWIF).⁶

Insurer paid benefits to Claimant under its Commercial Hull Policy's "maintenance and cure" provision, which "concerns the vessel owner's obligation to provide food, lodging, and medical services to a seaman injured while serving the ship." Lewis v. Lewis & Clark Marine, Inc. , 531 U.S. 438, 441, 121 S.Ct. 993, 148 L.Ed.2d 931 (2001). Specifically, Insurer paid Claimant maintenance of $50.00 per day for 92 days plus $42,133.36 in medical expenses. On February 8, 2013, Claimant filed a claim for workers’ compensation benefits effective March 9, 2011. Employer filed an answer asserting Claimant's remedy was exclusively governed by the Jones Act, and furthermore that Claimant had fully recovered from his injury by May 12, 2011. Employer also filed to join SWIF as an additional insurer in the event the WCA was deemed to supply the applicable exclusive remedy, and Employer was found to be liable thereunder. SWIF filed an answer denying coverage, alleging Employer's policy was lapsed at the time of Claimant's injury. Thereafter, Claimant filed an Uninsured Employers Guaranty Fund (UEGF) claim petition, asserting the fund's liability in the event he prevailed, and Employer was deemed uncovered by SWIF and failed to pay.⁷ UEGF filed an answer, denying the principal allegations in the petition.

The Workers’ Compensation Judge (WCJ) bifurcated the proceedings to first address whether Claimant was a "seaman" for the purposes of the Jones Act. If so, recovery through the WCA would be pre-empted, but Claimant could, pursuant to the Jones Act, sue Employer for negligence, which recovery had already been effected through the above noted payments by insurer. Following testimony and argument, the WCJ ruled that Claimant was a "seaman" covered exclusively under the Jones Act and therefore ineligible for workers’ compensation benefits. The WCJ reasoned that the term "member of the crew" as used in the Commercial Hull Policy, and the term "seaman" as used in the Jones Act, were synonymous. Claimant appealed, and the Workers’ Compensation Appeals Board (WCAB) reversed that determination. It reasoned that, as a land-based employee, Claimant did not meet the definition of seaman under the Jones Act and was, therefore, entitled to pursue his workers’ compensation claim.⁸

On remand, the WCJ awarded Claimant total disability benefits at a weekly rate of $411.75 from March 8, 2011 to August 19, 2011. The WCJ determined that, because Employer had not maintained a state workers’ compensation insurance policy at the time of Claimant's injury, it would be responsible for payment of the amount of the award that exceeded the benefits paid under the Commercial Hull Policy, being net uncompensated wage loss of $5,046.71. Additionally, the WCJ held that Insurer was not entitled to subrogation because it had correctly paid Claimant under its Commercial Hull Policy, and that, if Employer failed to pay, UEGF must pay the benefits, with leave to pursue reimbursement from Employer. See Olin Corp. (Plastics Div.) v. WCAB , 14 Pa.Cmwlth. 603, 324 A.2d 813 (1974) (recognizing subrogation is the right of a party who has made payment toward an obligation, which should have been paid by another, to be indemnified by the other.) Claimant and UEGF each appealed to the WCAB.

UEGF argued that Claimant was a "seaman" with his sole remedy available under the Jones Act. Having previously ruled on the question, the WCAB declined to revisit the issue. For his part, Claimant argued that the WCJ erred in ruling that Insurer correctly paid benefits under the Commercial Hull Policy and was ineligible for subrogation. The WCAB disagreed. It reviewed the terms of the Commercial Hull Policy and noted that the policy did not employ the same terminology present in the Jones Act. Specifically, by using the term "member of the crew" rather than "seaman" the policy at best created an ambiguity as to whether the terms were synonymous or not, and that any ambiguities must be resolved in favor of the insured. Thus, the WCAB held that, although Claimant was not a "seaman" under the Jones Act, he was a "member of the crew" under the Commercial Hull Policy, meaning that Insurer had correctly paid proceeds to Claimant under the policy. Therefore, the WCAB concluded Section 319 of the WCA, see infra note 10, precluded Insurer from seeking subrogation, and it affirmed the WCJ. Claimant sought review in the Commonwealth Court and Employer intervened.

Claimant argued that "the law of the case" doctrine should apply to preclude the WCAB's order from deviating from its previous determination that Claimant was not a "seaman." Because the terms "seaman" and "crewmember" are interchangeable, Claimant contended, the WCAB's decision is at odds with its earlier ruling. Employer responded that the WCAB did not reverse its earlier ruling, which had not specifically construed the "member of the crew" language of the Commercial Hull Policy. Accordingly, "the law of the case" doctrine would not apply. The court declined to invoke the law of the case doctrine absent any authority indicating the doctrine is applicable to proceedings completely within the workers’ compensation system.

Claimant next argued the WCAB's decision was not supported by substantial evidence because, inasmuch as his employment duties did not qualify him as a "seaman" under the Jones Act, he could not then be deemed a "crewmember." Employer countered that the terms are not the same, and the use of the term "crewmember" in the Commercial Hull Policy and not "seaman" must be deemed purposeful.

The Commonwealth Court reviewed pertinent case law construing the term "seaman" in the Jones Act as a mixed question of law and fact and concluded the terms "seaman" and "crewmember"- or "member of the crew" - are interchangeable. Arlet v. Workers’ Compensation Appeal Board , 237 A.3d 615, 622-623 (Pa. Cmwlth. 2020) (citing Chandris, Inc. v. Latsis , 515 U.S. 347, 115 S.Ct. 2172, 132 L.Ed.2d 314 (1995) ; Foulk v. Donjon Marine Co., Inc. , 144 F.3d 252 (3rd Cir. 1998) ); and Hill v. Workmen's Compensation Appeal Bd. (Spirit of Phila.) , 703 A.2d 74 (Pa. Cmwlth. 1997). Thus, the court held that because "the remedies under [the WCA and the Jones Act] are exclusive, the WCAB erred in concluding that Claimant was entitled to Jones Act maintenance and cure benefits and workers’ compensation benefits for the same injury." Id. at 623. The court did not disturb the WCAB's underlying determination that Claimant was not a seaman for the purposes of the Jones Act. Notwithstanding its determination that Claimant's exclusive remedy lay with the WCA, the court affirmed the WCAB on the alternative grounds that "it is well settled that an insurer cannot subrogate against its own insured." Id. (citing Keystone Paper Converters, Inc. v. Neemar, Inc. , 562 F. Supp. 1046, 1048 (E.D. Pa. 1983) ; Employers of Wausau v. Purex Corp. , 476 F. Supp. 140, 142 (E.D. Pa. 1979) ; and Remy v. Michael D's Carpet Outlets , 391 Pa.Super. 436, 571 A.2d 446, 447 (1990) ).

ISSUE ON APPEAL

Claimant sought allowance of appeal, and we granted allocator to consider the following question.

Did the Commonwealth Court of Pennsylvania err as a matter of law in its July 29, 2020 Opinion and Order when it affirmed the Workers’ Compensation Appeal Board's finding that Acadia [Insurance Company] did not have a right to subrogation for benefits paid to [Claimant] under a Jones Act policy of insurance, despite the Commonwealth Court's initial holding in this case that [Claimant] was not a seaman and/or crewmember entitled to the benefits which [Insurer] should not have paid him?

Arlet v. Workers’ Compensation Appeal Board , 255 A.3d 190, (Table) (Pa. 2021) (order granting allowance of appeal).

It is as well to note at the outset those issues that are not encompassed within the question accepted for review. As related in the factual and...