Wheatley v. Pyramid Hotel Grp.
| Docket Number | 2 C.D. 2022 |
| Decision Date | 25 January 2024 |
| Parties | Wesley Wheatley, Petitioner v. Pyramid Hotel Group (Workers' Compensation Appeal Board), Respondent |
| Court | Pennsylvania Commonwealth Court |
Wesley Wheatley (Claimant) has petitioned this Court to review an adjudication of the Workers' Compensation Appeal Board (Board), which affirmed the decision of the Workers' Compensation Judge (WCJ), denying Petitioner's penalty petition. After review, we affirm.
In October 2018, Claimant was employed as a cook by Pyramid Hotel Group (Employer). He suffered an injury that resulted in an aggravation of his preexisting asthma, preexisting Type 2 diabetes, and ultimately resulted in diabetic ketoacidosis. Claimant was hospitalized for five days, and Claimant's private healthcare carrier (Insurer) covered the costs of his hospitalization and treatment.
Subsequently, Claimant filed a claim petition pursuant to the Workers' Compensation Act (the Act).[2] On May 13, 2020, the WCJ granted his claim petition, found that he had sustained a work-related injury, and ordered Employer to pay Claimant total disability benefits at the weekly rate of $773.33 from October 8, 2018, through October 28, 2018; partial disability benefits at the weekly rate of $520.00 from October 28, 2018, through October 8, 2019; and Claimant's reasonable and necessary medical expenses related to his work-related injury. The WCJ suspended partial disability benefits as of October 8, 2019, and terminated Claimant's benefits concerning his work-related aggravation of his preexisting diabetic condition and work-related ketoacidosis as of March 28, 2019. Employer remained liable for Claimant's ongoing medical expenses for treatment of the aggravation of his preexisting asthma.
On August 3, 2020, Claimant demanded payment for the costs of his hospitalization as constructive trustee for Insurer. See Notice of Lien.[3] Shortly thereafter, on August 24, 2020, Claimant filed a penalty petition asserting unpaid medical bills, an assertion Employer answered and rejected.
Although the precise timing is unclear, but apparently after Claimant filed his penalty petition and sometime in September 2020, Claimant also filed an "addendum" with the Board seeking "penalties . . . and other remedies . . . ." Addendum to Claimant's and Defendant's Appeal at 2 (undated and unpaginated) (Addendum to Appeal).[4] Employer responded that Insurer's subrogation rights were waived as untimely raised and that Claimant lacked standing to assert Insurer's lien. See Resp. to Claimant's Prayer for Relief at 6 (undated and unpaginated).
The WCJ agreed with Employer and denied the penalty petition. Subsequently, Claimant appealed to the Board, arguing that Insurer could not waive rights of which it lacked knowledge, that Claimant could demand payment as constructive trustee for Insurer, or in the alternative, that he was entitled to reimbursement directly pursuant to Frymiare v. Workmen's Compensation Appeal Board (D. Pileggi & Sons), 524 A.2d 1016 (Pa. Cmwlth. 1987). The Board affirmed, finding that neither Insurer nor Claimant had timely asserted "subrogation rights." See Bd. Dec., 12/3/21, at 4-5.[5] Claimant timely petitioned this Court for review.
Claimant contends that he is entitled to direct compensation of his reasonable, necessary, and related medical expenses, including hospital bills, pursuant to Frymiare, 524 A.2d at 1026.[7] See Claimant's Br. at 5.
Claimant summarily argues that he should be compensated directly for the costs of his in-patient hospitalization and other costs. See Claimant's Br. at 8. According to Claimant, Frymiare stands for the proposition that, where an employer has an obligation to pay medical expenses, the obligation may not be avoided on the basis that some other source may have initially defrayed the costs. See id. at 9. Further, Claimant concisely contends that there is no timeliness requirement to bring a Frymiare claim before the WCJ or the Board. See id. at 10. According to Claimant, the timeliness requirement of Section 319 applies only to a third-party payor seeking subrogation. See id.
Briefly, Employer responds that Claimant's reliance on Frymiare is misplaced because that case did not address the timeliness of a Section 319 claim but rather to whom a claim was payable. See Employer's Br. at 13-14. According to Employer, Frymiare is "wholly irrelevant to the present matter." Id. at 13 (emphasis in original).[8]
An employer or insurer that has made payments for medical expenses later deemed compensable under the Act is entitled to subrogation upon agreement of the parties or if the right "is established at the time of hearing before the referee or the [B]oard."[9] Section 319 of the Act, 77 P.S. § 671 (footnote omitted).[10]However, the right is not "automatic or absolute." Independence Blue Cross v. Workers' Comp. Appeal Bd. (Frankford Hosp.), 820 A.2d 868, 872 (Pa. Cmwlth. 2003) (citing 77 P.S. § 671). Because subrogation is an equitable concept, a claim must be made during the pendency of the claim proceedings, or it will be waived. See Frankford Hosp., 820 A.2d at 872; see also Baierl Chevrolet v. Workmen's Comp. Appeal Bd. (Schubert), 613 A.2d 132 (Pa. Cmwlth. 1992) (subrogation claim must be asserted during the pendency of a workers' compensation proceeding); see also Humphrey v. Workmen's Comp. Appeal Bd. (Supermarket Serv.), 514 A.2d 246, 251 (Pa. Cmwlth. 1985);[11] Workmen's Comp. Appeal Bd. v. Olivetti Corp. of Am., 364 A.2d 735, 737 (Pa. Cmwlth. 1976) ( that subrogation claims may not be raised for the first time on appeal).
In Frankford Hospital, the claimant suffered a work-related injury. See Frankford Hosp., 820 A.2d at 870. After her employer denied her claim, she submitted her expenses to her insurers, Blue Cross and Pennsylvania Blue Shield (Blue Shield). See id. Subsequently, a WCJ granted her claim petition and the employer appealed; during this time, her insurers continued to pay her medical expenses. See id. While the appeal was pending, the claimant and the employer settled, and the claimant received a lump sum payment, from which she reimbursed Blue Shield. See id. The settlement agreement, which did not reference Blue Cross, stated that there was no further Section 319 subrogation lien. See id. A WCJ approved the agreement. See id.
Thereafter, Blue Cross filed (1) a review petition seeking subrogation because it had paid a significant amount of the claimant's work-related medical expenses and (2) a penalty petition seeking to set aside the agreement due to fraudulent misrepresentations regarding the medical expenses and subrogation lien. See id. Upon review, the Board affirmed the dismissal of these petitions because Blue Cross had not timely asserted its subrogation lien. See id. Upon further review, this Court affirmed. Id.
The Frankford Hospital Court rejected Blue Cross' argument that it had an absolute statutory right to subrogation under Section 319. See id. at 871. To the contrary, the Court observed that See id. Accordingly, "subrogation . . . is not self-executing and must be asserted with reasonable diligence." See id. (citing Baierl; Humphrey).
The Frankford Hospital Court further observed that Blue Cross had not offered "to prove an agreement for subrogation . . . [or] a request for subrogation at any of the hearings on the claim petition and agreement, and there was no offer to prove a request directed to any [other] party that a subrogated interest be protected." Id. at 872 (emphasis added). Finally, there was no evidence suggesting fraudulent concealment of the proceedings, which may otherwise excuse an insurer's tardiness. See id.
Thus, the right to subrogation under Section 319 must be established by agreement or contested litigation at hearings held during the pendency of claim proceedings. See id. Further, the right to subrogation must be timely invoked, and a party asserting subrogation rights must exercise reasonable diligence in protecting its interest. Id.
In Frymiare, this Court extended the right of subrogation under Section 319 to the injured employee. In that case, the claimant was injured in the course of his employment. Frymiare, 524 A.2d at 1017. A portion of his medical expenses were paid by a medical plan provided by the claimant's wife's employer. Id. Neither the wife's employer nor its insurer sought subrogation, but the claimant sought direct payment of the amounts paid. Id. at 1017-18. The referee denied the claim, and the Board affirmed. Id.
On appeal, the Frymiare Court considered whether the claimant could demand reimbursement from his employer for medical bills paid by a third party that did not seek subrogation. Id. at 1018. The Court rejected the employer's argument that paying the claimant would amount to "double dipping." Id. at 1019. Rather, the Court reasoned, the employer "is responsible to pay medical expenses of a claimant injured in the course of his employment, and this obligation may not be avoided on the basis that some other [third-party] source . . . may have initially defrayed such costs." Id. at 1019. Thus, under these circumstances, simultaneous recovery is possible. Id.
In summary, when the claimant has...
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