Hankee v. Wilkes-Barre/Scranton Intern. Airport

• Decision Date: 13 November 1992
• Docket Number: WILKES-BARRE
• Parties: Richard W. HANKEE and Jamie Hankee, his wife, Appellants, v./SCRANTON INTERNATIONAL AIRPORT, Appellee, Aetna Casualty and Surety Company, Intervenor/Appellee. Frederick G. SCHRAMM and Betty Jane Schramm, his wife, v. ALLEGHENY COUNTY SANITATION AUTHORITY, Appellee, Carson-Pirie-Scott and Liberty Mutual Insurance Company, Intervenors-Appellees. APPEAL OF Frederick G. SCHRAMM.
• Court: Pennsylvania Supreme Court

Page 614

616 A.2d 614

532 Pa. 494

Richard W. HANKEE and Jamie Hankee, his wife, Appellants, v. WILKES-BARRE/SCRANTON INTERNATIONAL AIRPORT, Appellee, Aetna Casualty and Surety Company, Intervenor/Appellee.

Frederick G. SCHRAMM and Betty Jane Schramm, his wife, v. ALLEGHENY COUNTY SANITATION AUTHORITY, Appellee,

Carson-Pirie-Scott and Liberty Mutual Insurance Company,

Intervenors-Appellees.

APPEAL OF Frederick G. SCHRAMM.

Supreme Court of Pennsylvania.

Argued Oct. 24, 1991.

Decided Nov. 13, 1992.

James T. McHale, Scranton, Bruce J. Phillips, Thomas L. Cooper, Pittsburgh, for appellants.

Paul A. Barrett, Scranton, for Aetna Cas. & Sur. Co.

Joseph P. Lenahan, Scranton, for Wilkes-Barre/Scranton Int. Airport.

Terry L.M. Bashline, Pittsburgh, for Int.-Carson-Pirie-Scott.

Stephanie G. Spaulding, Pittsburgh, for Allegheny County Sanitation Authority.

Before NIX, C.J., and LARSEN, FLAHERTY, McDERMOTT, ZAPPALA, PAPADAKOS, and CAPPY, JJ.

OPINION

ZAPPALA, Justice.

These are consolidated appeals from orders of the Commonwealth Court. We begin by briefly recounting the facts and procedural history of the separate cases.

No. 86 W.D. Appeal Docket 1990

On July 12, 1984, the vehicle that Frederick Schramm was driving was struck from behind by a vehicle driven by an employee of the Allegheny County Sanitation Authority (ALCOSAN). As the accident occurred while Schramm was in the course of his employment, he received worker's compensation payments from Liberty Mutual Insurance Company, the carrier for Carson-Pirie-Scott, his employer. Schramm and his wife filed a complaint against ALCOSAN in December of 1985, alleging the negligence of ALCOSAN's employee and asserting loss of earnings, pain and suffering, medical expenses, and loss of consortium. At a pre-trial conference in January of 1988, the Schramms agreed to settle the claims for $45,000. Carson-Pirie-Scott and Liberty Mutual claimed a right of subrogation ¹ against the proceeds of the settlement under Section 319 of the Workmen's Compensation Act, 77 P.S. § 671. ² Acting on a Petition to Distribute Proceeds of Settlement, common pleas court ordered that the proceeds be distributed to Liberty Mutual, and Commonwealth Court affirmed. 131 Pa.Cmwlth. 126, 569 A.2d 994.

No. 190 E.D. Appeal Docket 1990

On September 2, 1983, Richard Hankee, a pipe fitter employed by Honeywell, Inc., was injured while working at the Wilkes-Barre/Scranton International Airport, a municipal authority formed by Luzerne and Lackawanna Counties. Aetna Casualty and Surety Company, Honeywell's worker's compensation insurance carrier, paid Hankee benefits pursuant to the Act. In November of 1984, Hankee and his wife filed a complaint against the Airport alleging the negligence of the Airport as a cause of his injuries and asserting loss of earnings and earning capacity, medical expenses, loss of enjoyment of life, and loss of consortium. Aetna, asserting Honeywell's right of subrogation to Hankee's rights against the Airport to the extent of compensation paid, ³ filed a Petition to Intervene, which the common pleas court denied. Commonwealth Court reversed, 131 Pa.Cmwlth. 668, 571 A.2d 13, on the authority of that court's en banc decision in Schramm.

The controlling question common to these appeals is whether compensation paid pursuant to the Pennsylvania Workmen's Compensation Act constitutes "benefits under a policy of insurance" in accordance with 42 Pa.C.S. § 8553(d). That section of the Governmental Immunity Subchapter of the Judicial Code provides

If a claimant receives or is entitled to receive benefits under a policy of insurance other than a life insurance policy as a result of losses for which damages are recoverable under subsection (c), ⁴ the amount of such benefits shall be deducted from the amount of damages which would otherwise be recoverable by such claimant.

The Schramms and the Hankees argue that worker's compensation does constitute "benefits under a policy of insurance." From this, they further argue that Section 8553(d) would bar recovery of these amounts in their actions against the government agencies, and thus such amounts would not constitute any part of their settlements or judgments. Accordingly, the Schramms conclude that Liberty Mutual has no right of subrogation against the proceeds of their settlement with ALCOSAN, and the Hankees conclude that Aetna had no right to intervene in their action against the Wilkes-Barre/Scranton International Airport.

Both appellants argue that the Commonwealth Court's holding ignores the rules of statutory construction. According to the appellants, the plain language of Section 8553(d) requires that worker's compensation benefits be deducted from any award against a municipal government. This argument is supplemented by reference to the rule that the express statement of exceptions in a statute shall be construed to exclude any other exceptions, 1 Pa.C.S. § 1924, thus the conclusion that the exception for life insurance policy benefits precludes the finding of an exception for worker's compensation benefits. The appellants also note the rules that the legislature is presumed to favor the public interest as against any private interest, 1 Pa.C.S. § 1922(5), and that Section 8553, being the statute latest in date of final enactment, should prevail, see 1 Pa.C.S. § 1936. ⁵

These arguments are inadequate, for they rest on the facile premise, which almost amounts to begging the question, that Section 8553(d) applies whenever the plaintiff can be compensated with funds that cover the type of loss that occurred. Yet it is quite apparent that Section 8553(d) makes no reference whatsoever to the Workmen's Compensation Act or benefits payable thereunder, and there are many plausible distinctions between insurance policy benefits and worker's compensation benefits received by an employee, even where the latter payments are made by an insurance carrier pursuant to a policy with an employer.

As the appellees note, the Workmen's Compensation Act does not define the compensation received by injured employees as insurance, and several cases have observed, in broad context, that the Act does not render employers insurers of the life and health of their employees. See, e.g., Monahan v. Seeds & Durham, 336 Pa. 67, 6 A.2d 889 (1939). Rather, it has been recognized from the outset that the Act is remedial social legislation, which substitutes a relatively quick and inexpensive scheme to provide certain compensation for lost earnings, in place of the common law process under which any damages would be recoverable only after a suit against the appropriate parties, subject to available defenses and, of course, any expenses and delays inherent in the system. ⁶ Under this scheme, employees are able to obtain compensation without regard to fault--either their own, that of a third party, or even the lack of fault on the part of the employer--while employers are subject to payment of benefits at a set rate, receive immunity from being otherwise subjected to liability for damages, and have a right of subrogation to the extent of compensation paid in the event a third party is held responsible for the injury. Although an employer may secure its obligation to pay compensation by contracting with an insurer, and an injured employee may receive payments directly from the insurance carrier, in determining the nature of the benefits it cannot be ignored that the employer is obligated to provide the compensation without regard to the obtaining of insurance, and if insurance is obtained it is the employer, not the employee, that is the insured. ⁷

The appellants also argue that allowing the workers' compensation carriers to be subrogated to their rights against the municipalities would be inconsistent with the nature of subrogation. The Schramms rely on the fact that a subrogee's claim is no greater than that of the party to whose rights he is subrogated. Since Schramm is barred by Section 8553(d) from recovering as damages any amount received as workers' compensation benefits, the subrogee can assert no interest in the money paid in settlement of the claim. The Hankees argue in a similar vein that the Commonwealth Court's holding produces the absurd result that any verdict against a municipality would be reduced by the amount of compensation received, yet the plaintiff would still be subject to the workers' compensation subrogation, thus having his recovery reduced a second time.

The flaw in these arguments is that, again, they beg the question. They assume that workers' compensation payments are "benefits under a policy of insurance" for purposes of Section 8553(d). The Schramms' argument is correct as far as it goes, but it does nothing to establish why a judgment against a municipality should be reduced by the amount of workers' compensation payments received. The Hankees' argument is further flawed in that it fails to follow the assumption through to its logical conclusion. If a plaintiff does not recover these damages from the third party tortfeasor/municipality, the employer (or its insurance carrier) has nothing to be subrogated to. Thus there is no second reduction of the recovery and no absurd result as argued. Conversely, if a plaintiff can recover these damages from the municipality, there is no reason why the employer (or its insurance carrier) should be denied the subrogation right provided in Section 319 of the Act.

Finally, the appellants argue...