J.O. Lozado v. WCAB (Dependable Concrete Work and UEGF)

IN THE COMMONWEALTH COURT OF PENNSYLVANIA

Jose Osorio Lozado, :

:

Petitioner :

:

v. : No. 21 C.D. 2014

:

Workers’ Compensation Appeal : Argued: May 6, 2015

Board (Dependable Concrete Work :

and Uninsured Employers Guaranty :

Fund), :

:

Respondents :

BEFORE: HONORABLE DAN PELLEGRINI, President Judge

HONORABLE RENÉE COHN JUBELIRER, Judge

HONORABLE ROBERT SIMPSON, Judge

HONORABLE MARY HANNAH LEAVITT, Judge

HONORABLE P. KEVIN BROBSON, Judge

HONORABLE PATRICIA A. McCULLOUGH, Judge

HONORABLE ANNE E. COVEY, Judge

OPINION BY

JUDGE COHN JUBELIRER FILED: August 5, 2015

Jose Osorio Lozado (Claimant) petitions for review of an Order of the

Workers’ Compensation Appeal Board (Board) affirming the Decisions of a

Workers’ Compensation Judge (WCJ) denying Claimant’s “Claim Petition for

Benefits from the Uninsured Employers Guaranty Fund [Fund] and Uninsured

Employer” (Claim Petition). The WCJ denied Claimant’s Claim Petition because

Claimant failed to provide timely notice to the Fund that his former employer,

Dependable Concrete Work (Employer), was uninsured and because, after

providing notice to the Fund, Claimant did not wait the requisite time period before

filing his Claim Petition against the Fund. The Board affirmed on different

grounds, holding that Section 305(d) of the Workers’ Compensation Act1 (Act)

barred the Claim Petition because Claimant had previously elected to pursue an

action at law against Employer. For the reasons that follow, we reverse and

remand to the Board for further proceedings.

I. The Uninsured Employers Guaranty Fund

We begin with a brief description of the Fund and the governing provisions

of the Act.2 The Fund was created in 2006 to provide workers’ compensation

benefits to workers, injured in the course and scope of their employment, where

their employers did not have workers’ compensation insurance. Section 1602(c) of

1

Act of June 2, 1915, P.L. 736, as amended, 77 P.S. § 501(d). Section 305(d) provides

that “[w]hen any employer fails to secure the payment of compensation under this act as

provided in sections 305 and 305.2, the injured employe or his dependents may proceed either

under this act or in a suit for damages at law as provided by article II.” Id.

2

The Fund was created by Act 147 of 2006, which added Article XVI to the Act. See

Sections 1601-1608 of the Act, added by Section 7 of the Act of November 9, 2006, P.L. 1362,

as amended, 77 P.S. §§ 2701-2708. There is limited case law addressing the Fund’s functions

and procedures. See, e.g., Trautman v. Workers’ Compensation Appeal Board (Blystone Tree

Service and Pennsylvania Uninsured Employers Guaranty Fund), 104 A.3d 600 (Pa. Cmwlth.

2014) (addressing the Fund’s liability for unreasonable contest fees); Pennsylvania Uninsured

Employers Guaranty Fund v. Workers’ Compensation Appeal Board (Lyle), 91 A.3d 297 (Pa.

Cmwlth. 2014) (holding that when an employee learns that an employer is uninsured is a

question of fact); Pennsylvania Uninsured Employers Guaranty Fund v. Workers’ Compensation

Appeal Board (Dudkiewicz), 89 A.3d 330 (Pa. Cmwlth. 2014) (addressing joinder of parties).

2

the Act, 77 P.S. § 2702(c).3 The Fund is financed through assessments upon

insurers and self-insured employers, reimbursements or restitutions recovered by

the Fund, interest on money held by the Fund, and infusions of cash from the

treasury. Section 1602(b) of the Act, 77 P.S. § 2702(b); Section 1607(b) of the

Act, 77 P.S. § 2707(b).4

The Fund is not an insurer and is “not [] subject to penalties, unreasonable

contest fees or any reporting and liability requirements under section 440”5 of the

3

The purpose of the Fund is set forth in Section 1602(c) of the Act, which states:

The administrator shall establish and maintain the fund for the exclusive purpose

of paying to any claimant or his dependents workers’ compensation benefits due

and payable under this act and the act of June 21, 1939 (P.L. 566, No. 284),

known as The Pennsylvania Occupational Disease Act, and any costs specifically

associated therewith where the employer liable for the payments failed to insure

or self-insure its workers’ compensation liability under section 305 at the time the

injuries took place.

77 P.S. § 2702(c).

4

Subsection (b) of Section 1607 was added by Section 3 of the Act of June 30, 2011, P.L.

86, 77 P.S. § 2707(b). This section was intended to be a temporary infusion of cash into the

Fund. David B. Torrey & Andrew E. Greenberg, Workers’ Compensation in Law and Practice §

11:40 (2008, Supp. 2014).

5

77 P.S. § 996, added by Section 3 of the Act of February 8, 1972, as amended. Section

440 states, in its entirety:

(a) In any contested case where the insurer has contested liability in whole or in

part, including contested cases involving petitions to terminate, reinstate, increase,

reduce or otherwise modify compensation awards, agreements or other payment

arrangements or to set aside final receipts, the employe or his dependent, as the

case may be, in whose favor the matter at issue has been finally determined in

whole or in part shall be awarded, in addition to the award for compensation, a

reasonable sum for costs incurred for attorney’s fees, witnesses, necessary

(Continued…)

3

Act; however, it does have “all of the same rights, duties, responsibilities and

obligations as an insurer.” Sections 1601 and 1602(e) of the Act, 77 P.S. §§ 2701,

2702(e). An injured worker may recover from the Fund by first providing the

Fund with notice of a claim “within 45 days after the worker knew that the

employer was uninsured.” Section 1603(b) of the Act, 77 P.S. § 2703(b). The

Fund must start its inquiry into whether to commence making payments to an

injured employee within ten days of receiving notice of a claim by demanding

proof of insurance for the injured worker from the employer. Section 1605(a) of

the Act, 77 P.S. § 2705(a). If the Fund does not receive proof of insurance within

14 days, “there shall be rebuttable presumption of uninsurance.” 77 P.S. §

2705(a). If the claim is not voluntarily accepted by the Fund within 21 days of

receiving notice of the claim, an injured worker may file a claim petition with the

Bureau of Workers’ Compensation (Bureau). Section 1603(d) of the Act, 77 P.S. §

2703(d). The claim petition must name “both the employer and the [F]und as

defendants.” Section 1604 of the Act, 77 P.S. § 2704.

medical examination, and the value of unreimbursed lost time to attend the

proceedings: Provided, That cost for attorney fees may be excluded when a

reasonable basis for the contest has been established by the employer or the

insurer.

(b) If counsel fees are awarded and assessed against the insurer or employer, then

the workers’ compensation judge must make a finding as to the amount and the

length of time for which such counsel fee is payable based upon the complexity of

the factual and legal issues involved, the skill required, the duration of the

proceedings and the time and effort required and actually expended. If the insurer

has paid or tendered payment of compensation and the controversy relates to the

amount of compensation due, costs for attorney’s fees shall be based only on the

difference between the final award of compensation and the compensation paid or

tendered by the insurer.

Id.

4

The Fund is required to “exhaust all remedies at law” to seek reimbursement

from the uninsured employer for any payments made by the Fund as a result of an

award or a voluntarily accepted injury. Section 1605(b) of the Act, 77 P.S. §

2705(b). The Department of Labor and Industry may, on the Fund’s behalf,

investigate, prosecute, and seek restitution from an uninsured employer for not

insuring the payment of compensation. Id. The Fund may also seek

reimbursement through asserting its right to subrogation over any recovery an

injured employee receives from the employer or a third party. Section 1606 of the

Act, 77 P.S. § 2706.

II. Procedural History

This case involves two simultaneously issued WCJ Decisions (hereinafter

referred to as “Employer Decision” and “Fund Decision”). The Employer

Decision resulted from a claim and penalty petition which Claimant filed against

Employer on April 15, 2009, in which Claimant sought benefits for “a work injury

suffered on or about May 11, 2007.” (WCJ Decision (Employer Decision),

Findings of Fact (FOF) ¶ 1.) After it was filed, on April 28, 2009, the Bureau

informed Claimant’s counsel that its “research indicate[d] that the employer did

not have workers’ compensation insurance on the date of the alleged injury.”

(WCJ Decision (Fund Decision), FOF ¶ 2.) Shortly thereafter, on May 11, 2009,

the last day Claimant could file a personal injury action within the applicable two

year statute of limitations period, Claimant filed a praecipe for a writ of summons

with the Prothonotary of the Philadelphia County Court of Common Pleas (trial

court) seeking damages from Employer for his injury. (Employer Decision, FOF ¶

2; Civil Docket at 3, R.R. at 15a.) Pursuant to Section 7361 of the Judicial Code,

5

42 Pa. C.S. § 7361, and local rule, this matter was referred to compulsory

arbitration. (Civil Docket at 7, R.R. at 19a.)

The Fund Decision resulted from a “Notice of Claim Against Uninsured

Employer” (Notice of Claim) and the Claim Petition at issue here, both of which

Claimant filed in January 20106 while resolution of the Claimant’s tort action was

pending, in which Claimant sought benefits from the Fund for the alleged May 11,

2007 work-related injury. (Fund Decision, FOF ¶¶ 3, 4.) While the petitions

against both Employer and the Fund were pending, the arbitrator in Claimant’s tort

action against Employer awarded Claimant a default judgment of $50,000 in

damages on May 28, 2010. (Employer Decision, FOF ¶ 5.) Claimant appealed the

arbitration award for a de novo trial in the trial court shortly thereafter. (Civil

Docket at 8, R.R. at 20a.)

Claimant’s Claim Petition against the Fund and the claim and penalty

petitions against Employer were assigned to the same WCJ for disposition. (Fund

Decision, FOF ¶ 5.) The WCJ issued two separate decisions and orders denying

and dismissing both of Claimant’s petitions - against Employer and against the

Fund. With regard to Claimant’s claim and penalty petitions against Employer, the

WCJ reasoned that Section 305(d) of the Act, 77 P.S. § 501(d), requires a claimant

to choose between pursuing a tort remedy and seeking benefits under the Act.

6

Claimant’s Claim Petition was filed on January 5, 2010. (Claim Petition for Benefits

from the Uninsured Employer Guaranty Fund and Uninsured Employer, R.R. at 6a-7a.) The

Notice of Claim does not appear in the certified record; however, the Fund admitted in its

Answer to the Claim Petition that Claimant filed the Notice of Claim on January 25, 2010.

(Answer to Claim Petition ¶ 1, R.R. at 10a.)

6

(Employer Decision, Conclusions of Law (COL) ¶¶ 1-3.) According to the WCJ,

once an injured employee files a civil action, he forfeits his ability to seek benefits

under the Act. (Employer Decision, COL ¶¶ 2-3.) With regard to Claimant’s

Claim Petition against the Fund, the WCJ denied relief for two reasons: 1) because

Claimant did not file the Notice of Claim within 45 days of learning that Employer

was uninsured as required by Section 1603(b) of the Act; and 2) because Claimant

filed his Claim Petition against the Fund concurrently with the Notice of the Claim

instead of waiting 21 days as required by Section 1603(d) of the Act. (Fund

Decision, COL ¶¶ 1-4.)

Claimant appealed both WCJ Decisions, which were consolidated by the

Board on appeal. Upon review, the Board affirmed both Decisions. The Board

held that Section 305(d) of the Act barred all of Claimant’s petitions because

Claimant forfeited his ability to pursue a remedy against both Employer and the

Fund under the Act by initiating his tort action. With respect to its holding that

Section 305(d) barred Claimant’s Claim Petition against the Fund, the Board

reasoned that the Fund was “established for the exclusive purpose of paying to any

claimant . . . benefits due and payable under the Act,” and Claimant is not due any

benefits because he elected a civil remedy. (Board Decision at 5.) Although the

Board ultimately concluded that Claimant’s Claim Petition against the Fund was

barred by Section 305(d), the Board also determined that the WCJ erred by

concluding that a claimant’s failure to file notice within 45 days of learning that an

employer is uninsured, as required by Section 1603 of the Act, completely bars a

claim against the Fund. (Board Decision at 4.) According to the Board, Section

1603 of the Act “does not act as a complete bar to compensation, but instead bars

7

the claimant from receiving compensation until such time as he has provided [the

Fund] with notice.” (Board Decision at 4.) The Board further declined “to

interpret Section 1603 as barring a claimant from receiving compensation where he

fails to follow the 21 day waiting period for filing his claim petition” against the

Fund because the plain language of Section 1603 did not provide for such a bar.

(Board Decision at 4.)

III. Claimant’s Appeal

Claimant now petitions this Court for review of the Board’s Order only with

respect to the Board’s affirmance of the WCJ’s Fund Decision dismissing

Claimant’s Claim Petition against the Fund.7 The Board’s affirmance of the

WCJ’s Employer Decision dismissing Claimant’s claim and penalty petitions

against Employer is not before this Court.

This appeal presents two issues of first impression. First, whether a claim

petition against the Fund is barred by Section 305(d) of the Act where, after

learning that an employer is uninsured, a claimant preserves a civil remedy by

filing a “savings action” at law against an uninsured employer. Second, whether a

claimant’s failure to give timely notice to the Fund that his or her employer is

uninsured acts as a complete or partial bar to a claim against the Fund.

7

“Our scope of review in a workers’ compensation appeal is limited to determining

whether necessary findings of fact are supported by substantial evidence, whether an error of law

was committed, or whether constitutional rights were violated.” Elberson v. Workers’

Compensation Appeal Board (Elwyn, Inc.), 936 A.2d 1195, 1198 n.2 (Pa. Cmwlth. 2007). Our

review is plenary when examining questions of law. Land O’Lakes, Inc. v. Workers’

Compensation Appeal Board (Todd), 942 A.2d 933, 936 n.3 (Pa. Cmwlth. 2008).

8

A. Whether Claimant’s Claim Petition is barred by Section 305(d) of

the Act

Since the Act was amended in 1974, it has served as a complete substitute

for common law tort actions by “provid[ing] the exclusive means by which a

covered employee can recover against an employer for injury in the course of his

employment.” Kline v. Arden H. Verner Company, 469 A.2d 158, 159 (Pa. 1983).

Section 303(a) of the Act establishes that an employer’s liability under the Act is

exclusive and an employer is immune from suit under the common law. 77 P.S. §

481(a). Our Supreme Court has described this provision as

a version of the historical quid pro quo employers received for being

subjected to a no-fault system of compensation for worker injuries.

That is, while the employer assumes liability without fault for a work-

related injury, he is relieved of the possibility of a larger damage

verdict in a common law action. . . . The 1974 change in the statutory

formulation of the exclusivity principle reflects another, even larger

change which the legislature made that same year: a change from an

elective system of workmen’s compensation, as existed before, to one

that is mandatory. Since, by the express language of section 303(a),

the statutory compensation is “in place of any and all other liability”

on the part of the employer for a worker’s injury in the course of

employment, the conclusion must follow that the section denies a

worker any cause of action at law against his employer for such an

injury. So strong is the principle of exclusivity we have held that it is

a nonwaivable defense, even when not timely raised.

Lewis v. School District of Philadelphia, 538 A.2d 862, 867 (Pa. 1988) (internal

citations omitted).

Notwithstanding the strength of the exclusivity principle in workers’

compensation law, an employer loses its immunity when it does not fulfill its

obligations under the quid pro quo bargain and may be sued at common law where

it fails to insure for workers’ compensation liability. Section 305(d) of the Act, 77

9

P.S. § 501(d). Pursuant to Section 305(d): “[w]hen any employer fails to secure

the payment of compensation under this act as provided in sections 305 and 305.2,

the injured employe or his dependents may proceed either under this act or in a suit

for damages at law as provided by article II.” Id. In Liberty by Liberty v.

Adventure Shops, Inc., 641 A.2d 615, 616 (Pa. Super. 1994), our Superior Court

interpreted this provision as “offer[ing] the employee an election either to proceed

under the Act and accept its compensation schedules or to secure relief outside the

Act by an action at law for damages against his employer.” Id.

The exclusivity principle, which applies to civil actions against the

employer, does not foreclose civil actions seeking damages from third parties who

bear some responsibility for the claimant’s injuries, concurrent with proceedings

against an employer under the Act. When a claimant recovers from a third party

through a civil action, Section 319 of the Act8 allows an employer to assert

subrogation rights against any recovery of damages the claimant receives from a

liable third party; this avoids a double recovery by the claimant while also more

8

77 P.S. § 671. Section 319 of the Act provides in relevant part:

Where the compensable injury is caused in whole or in part by the act or omission

of a third party, the employer shall be subrogated to the right of the employe, his

personal representative, his estate or his dependents, against such third party to

the extent of the compensation payable under this article by the employer;

reasonable attorney’s fees and other proper disbursements incurred in obtaining a

recovery or in effecting a compromise settlement shall be prorated between the

employer and employe, his personal representative, his estate or his dependents.

Id.

10

equitably allocating the burden of compensation to those who are responsible for

the injury.

The Board determined that Claimant forfeited his right to bring a claim

against the Fund because Claimant pursued a civil action for damages against

Employer. On appeal, Claimant and the Fund make numerous arguments.

Claimant contends that the exclusivity principle does not apply at all to claims

against the Fund because Section 305(d) only bars his proceeding against

Employer. Claimant argues that the Fund is part of a separate scheme to

compensate injured employees, which is evidenced by Section 1606 of the Act, 77

P.S. § 2706, which gives him the right file a direct suit for damages against his

Employer without forfeiting his right to pursue benefits against the Fund. Section

1606 provides:

Nothing contained in this article shall serve to abrogate the provisions

of section 305(d) allowing the claimant or dependents to bring a direct

suit for damages at law as provided by Article II. The fund shall be

entitled to assert rights to subrogation under section 319 for recovery

made from the employer or any other third party.

77 P.S. § 2706 (emphasis added). Claimant interprets the plain language of

Section 1606 as providing the Fund with the right to subrogation against any

recovery a claimant receives from an employer as it would from any other third

party.

In the alternative Claimant argues that, even if the exclusivity principle

would apply, in this case he did not “proceed” in a tort action against Employer

within the meaning of Section 305(d). According to Claimant, he filed a praecipe

11

for a writ of summons with the trial court before he knew whether the Fund would

provide compensation to him, as a “savings action” in order to preserve his rights,

and the rights of any other potentially interested parties, to receive some

compensation. Claimant further contends that the fact that he has stayed his tort

action pending resolution of the instant matter, and has never recovered any

damages, demonstrates that he did not “proceed” in his tort action.

In response, the Fund argues that the General Assembly maintained the

exclusivity principle of Section 305(d) when it established the Fund and that

Claimant misconstrues Section 1606 by asserting that he may bring a suit against

Employer as he would a third party. The Fund asserts that it has all the rights and

liabilities of an insurer and, as such, it is only liable if the uninsured employer

would be liable and has defaulted on his obligation. Moreover, the Fund argues

that Claimant did, in fact, “proceed” in a suit for damages at law, as that word is

used in Section 305(d) of the Act, when he commenced his civil action by filing a

praecipe for a writ of summons with the trial court.

We need not decide, in this case, whether the exclusivity principle applies in

all cases. Even assuming, arguendo, that the exclusivity principle does apply, we

find that, under the facts of this case, Claimant did not violate Section 305(d) when

he filed a civil action to preserve his ability to recover in tort prior to the expiration

of the statute of limitations. Claimant faced a practical dilemma at a time when the

Fund was new and little guidance was available.9 The statute of limitations for

9

Claimant argues that he filed the civil suit against Employer out of an abundance of

caution. While the Fund was new, there was experience and case law under a statute which

(Continued…)

12

personal injury negligence actions is two years, Section 5524 of the Judicial Code,

42 Pa. C.S. § 5524, while claim petitions under the Act must be filed within three

years after the injury, Section 315 of the Act, 77 P.S. § 602. Claimant filed his

claim petition against Employer on April 15, 2009, and received a letter from the

Bureau alerting Claimant to the fact that its research indicated that Employer

lacked insurance on April 28, 2009. (Fund Decision, FOF ¶¶ 1, 2.) Claimant had

only 13 days after receiving the letter from the Bureau to file a civil action before

the applicable statute of limitations had run; he filed a praecipe to issue a writ of

summons the day the statute of limitations on a tort action had run. (Civil Docket,

R.R. at 14a-15a.) Claimant then waited almost 11 months to file his complaint in

the trial court. (Civil Docket, R.R. at 18a.) Claimant could not hold off on filing

his complaint indefinitely at the risk of forfeiting his claim. See Lamp v. Heyman,

366 A.2d 882, 889 (Pa. 1976) (holding that “a writ of summons shall remain

established a plan to provide compensation for residents injured in a motor vehicle-related

accident who have no available source for insurance, the Pennsylvania Financial Responsibility

Assigned Claims Plan (Plan) under the Motor Vehicle Financial Responsibility Law, 75 Pa. C.S.

§§ 1751-57. Under the Plan, a resident of the Commonwealth injured in a motor vehicle-related

accident may receive benefits when, “through no fault of their [sic] own, [the injured person has]

no other available source of insurance coverage.” Pennsylvania Financial Responsibility

Assigned Claims Plan v. English, 664 A.2d 84, 86 (Pa. 1995). However, under the Plan, a civil

suit must be filed to preserve any claims prior to receiving compensation. The Plan is solely

financed through subrogation and “claimants seeking recovery from the [Plan] forfeit their right

to recover from the [Plan] where the claimants extinguish the insurer’s right to subrogation

against a tortfeaser.” Melendez v. Pennsylvania Assigned Claims Plan, 557 A.2d 767, 768 (Pa.

Super. 1989). A claim may be filed with the Plan “within four years from the date of the

accident,” 75 Pa. C.S. § 1757(a), but a civil action must be filed within two years. Section 5524

of the Judicial Code, 42 Pa. C.S. § 5524. Given that no clarifying case law was yet issued from

this Court at the time Claimant filed his civil action, Claimant likened his responsibilities under

the Act to the requirements of the Motor Vehicle Financial Responsibility Law and took steps to

preserve the Fund’s right to subrogation out of fear that he would otherwise lose his claim under

the Act.

13

effective to commence an action only if the plaintiff then refrains from a course of

conduct which serves to stall in its tracks the legal machinery he has just set in

motion”). Employer did not file an answer to the complaint or appear before the

arbitrator, leading the arbitrator to award Claimant a default judgment of $50,000.

(Civil Docket, R.R. at 19a.) Claimant did not accept the judgment, appealed the

arbitrator’s award to the trial court, and later filed a motion to stay proceedings

pending resolution of the instant matter, which was granted. (Civil Docket, R.R. at

20a; Trial Ct. Order, October 20, 2010.10) According to Claimant, he did only

what was necessary to preserve his civil action under the local rules until he could

determine whether he had a claim under the Act. The fact that Claimant

commenced the action with a praecipe for a writ of summons, delayed filing his

complaint for 11 months, and requested that his tort action be stayed pending

resolution of his workers’ compensation claim shows that Claimant’s first choice

was not to recover tort damages. Claimant has yet to recover from his civil action

and has taken no steps to bring the action to final disposition.

We are mindful that, because the Act “was intended to benefit the injured

employee,” we must construe its provisions “liberally in the employee’s favor in

order to effectuate [the Act’s] humanitarian objectives.” Cruz v. Workers’

Compensation Appeal Board (Kennett Square Specialties), 99 A.3d 398, 406 (Pa.

2014). Accordingly, “borderline interpretations will be decided in favor of the

10

The trial court orders were not included in the certified record. However, “[i]t is well

settled that this Court may take judicial notice of pleadings and judgments in other proceedings

where appropriate.” Lycoming County v. Pennsylvania Labor Relations Board, 943 A.2d 333,

335 n.8 (Pa. Cmwlth. 2007).

14

claimant.” Id. In light of the humanitarian purposes of the Act, we do not find that

Claimant’s actions here bar his workers’ compensation claim against the Fund.

Accordingly, we conclude that Claimant may maintain his workers’ compensation

claim against the Fund.

B. Whether Claimant’s Claim Petition is completely or partially

barred by Section 1603 of the Act

We next turn to the issue of whether Claimant gave timely notice to the

Fund of his claim and, if not, whether the lack of timely notice acts as a complete

bar or only a partial bar to his claim against the Fund. The WCJ found that

Claimant did not give timely notice to the Fund. The Board agreed, but found that

the lack of timely notice would not have been a complete bar to his recovery. The

applicable provision of the Act, Section 1603(b), provides that:

An injured worker shall notify the fund within 45 days after the

worker knew that the employer was uninsured. The department shall

have adequate time to monitor the claim and shall determine the

obligations of the employer. No compensation shall be paid from the

fund until notice is given and the department determines that the

employer failed to voluntarily accept and pay the claim or

subsequently defaulted on payments of compensation. No

compensation shall be due until notice is given.

77 P.S. § 2703(b).

Claimant argues that the WCJ erroneously found that he did not give timely

notice to the Fund. Contrary to the WCJ’s factual finding, Claimant asserts that

the April 28, 2009 letter sent by the Bureau to Claimant’s counsel did not put

Claimant on notice that Employer was uninsured. Claimant contends that the WCJ

disregarded conflicting evidence that clearly shows that he could not be reasonably

15

charged with actual knowledge that Employer was neither insured nor self-insured

until at least the time he submitted his Notice of Claim to the Fund. Claimant

argues further that the Board correctly rejected the WCJ’s legal conclusion that a

claim petition is completely barred if a claimant does not provide notice to the

Fund within 45 days of learning that an employer is uninsured. Claimant asserts,

however, that the Board misinterpreted Section 1603 when it held that Section

1603 permits a partial bar to compensation absent a showing of prejudice to the

Fund. Claimant argues that his benefits should not be delayed because the Fund

was not prejudiced by his filing the Notice of Claim beyond 45 days.11

In response, the Fund contends that Claimant’s knowledge of Employer’s

lack of insurance is well established in the record. Further, the Fund argues that

the WCJ was correct when she concluded that Claimant’s Claim Petition against

the Fund was completely barred because Claimant did not follow the statutory

mandate requiring Claimant to file notice with the Fund within 45 days of learning

that Employer lacked insurance. According to the Fund, the Board’s holding to the

contrary neglects the plain and mandatory language of Section 1603.

We first address Claimant’s contention that the Board erred by concluding

that Claimant did not provide the Fund with timely notice of his claim because the

11

Claimant also argues that the WCJ erred by barring his Claim Petition against the Fund

because he did not wait 21 days between giving the Fund notice of his claim and filing his Claim

Petition as required by Section 1603(d) of the Act, 77 P.S. § 2703(d). As stated previously, the

Board rejected the WCJ’s conclusion because the plain language of Section 1603 does not

support such a bar. (Board Decision at 4.) Because the Fund does not contest this issue, we will

not consider it here.

16

Board’s finding that the Bureau’s April 28, 2009 letter provided Claimant with

knowledge that Employer was uninsured was not supported by the evidence.

We recently addressed the issue of whether a communication from the

Bureau provided a claimant with knowledge that his employer was uninsured in

Pennsylvania Uninsured Employers Guaranty Fund v. Workers’ Compensation

Appeal Board (Lyle), 91 A.3d 297 (Pa. Cmwlth. 2014). There, the claimant

suffered a work injury in July 2008. Id. at 298. After failing to recover from his

employer’s automobile liability insurer, the claimant filed a claim petition against

employer. The Bureau informed the claimant by letter on October 3, 2008 that his

employer “may not have workers’ compensation insurance.” Id. Claimant then

filed a claim petition against the Fund on October 28, 2008. Id. at 298-99. The

WCJ and the Board held that the claimant had knowledge of his employer’s lack of

insurance when he attempted to recover from his employer’s automobile insurance

carrier. On appeal, we reversed and held that the WCJ applied the incorrect legal

standard of when the claimant “should have known,” instead of when the claimant

obtained actual knowledge of his employer’s insurance status. Id. at 303. We

concluded that the Bureau’s letter afforded the requisite knowledge even though it

“did not expressly state that Employer did not have valid workers’ compensation

insurance.” Id. at 304.

“[W]hether a claimant ‘knew’ [that his employer was uninsured] is a factual

determination.” Id. Here, the WCJ determined that Claimant was made aware that

Employer was uninsured upon receipt of the April 28, 2009 letter from the Bureau

and that the Notice of Claim, filed more than eight months later in January 2010,

17

was untimely because it was not filed within 45 days. (Fund Decision, FOF ¶¶ 2-

3.) A review of the April 28, 2009 letter from the Bureau shows that the content

therein provided Claimant with actual knowledge that Employer lacked workers’

compensation insurance.12 The April 28, 2009 letter from the Bureau informing

Claimant that Employer “did not have workers’ compensation insurance on the

date of the alleged injury,” (Bureau’s Letter to Claimant (April 28, 2009), R.R. at

5a), is more definitive than the equivocal letter in Lyle, which we found to be

sufficient to commence the 45-day notice period. Thus, we conclude that

substantial evidence supports the WCJ’s finding that Claimant was on notice as of

April 28, 2009 that Employer was uninsured on the date of his alleged work injury;

thus, the Notice of Claim filed with the Fund in January 2010 exceeded the 45-day

requirement of Section 1603(b) of the Act.

12

The Bureau’s letter states, in its entirety:

The Bureau has received a Claim Petition (LIBC-362) for the above-named

individual. Our research indicates that the employer did not have workers’

compensation insurance on the date of the alleged injury. Therefore, the claimant

may also wish to seek benefits from the Uninsured Employer Guaranty Fund

(Fund).

To seek benefits from the Fund, a claimant must complete and file a Notice of

Claim Against Uninsured Employer, Form LIBC-551. The claimant may seek an

award of benefits against the Fund by filing a Claim Petition for Benefits from the

Uninsured Employer Guaranty Fund and Uninsured Employer, Form LIBC- 550.

For your convenience, copies of Forms LIBC 550 and 551 are enclosed. If you

have any questions about these forms, please contact the Helpline at the above

number.

(Bureau’s Letter to Claimant (April 28, 2009), R.R. at 5a.)

18

We must next determine the effect of Claimant’s late filing. The WCJ held

that Claimant’s Claim Petition against the Fund was completely barred by the late

filing. The Board disagreed and concluded:

[T]he WCJ erred in finding that Claimant’s Claim Petition against [the

Fund] was barred by Section 1603 where he did not provide [the

Fund] with timely notice of his claim. . . . Section 1603 provides that

no compensation shall be paid or is due until notice is given. Further,

after receiving notice, [the Fund] is to process the claim in accordance

with the provisions of the Act. Thus, pursuant to the plain language

of Section 1603, the failure of a claimant to provide timely notice

does not act as a complete bar to compensation, but instead bars the

claimant from receiving compensation until such time as he has

provided [the Fund] with notice.

(Board Decision at 4.)

At issue here is the construction of the phrase: “[a]n injured worker shall

notify the fund within 45 days after the worker knew that the employer was

uninsured” when it is followed by “[n]o compensation shall be paid from the fund

until notice is given,” and that “[n]o compensation shall be due until notice is

given.” 77 P.S. § 2703(b).13 Importantly, the statute does not provide that

13

The Bureau adopted a policy statement on January 20, 2007 “so that all parties [would]

have a clear understanding of their rights and obligations under the act” until the Board

promulgated regulations governing the Fund. 34 Pa. Code § 123.801. With respect to notice, the

Bureau’s policy states:

(a) For purposes of Article XVI of the act (77 P. S. §§ -- ), an injured worker who

seeks benefits from the Uninsured Employer Guaranty Fund (Fund) shall

notify the Fund of a claim within 45 days from the date upon which the

injured worker knew that the employer was uninsured.

(b) Compensation will not be paid from the Fund until notice is given.

34 Pa. Code § 123.802. We note that the Board has yet to promulgate regulations.

19

compensation will not be paid “unless notice is given.” Instead, Section 1603(b)

states that compensation will not be paid “until notice is given.” 77 P.S. § 2703(b)

(emphasis added).

The Board noted in its opinion that Section 1603(b) stands in contrast to

other portions of the Act where the General Assembly enacted a complete bar to

benefits by delineating between provisions providing that no compensation “shall

be due until” notice is given and provisions stating that no compensation “shall be

allowed unless” notice is given. (Board Decision at 4 n.2.) The Board pointed to

Section 311 of the Act, which provides:

Unless the employer shall have knowledge of the occurrence of the

injury, or unless the employe or someone in his behalf, or some of the

dependents or someone in their behalf, shall give notice thereof to the

employer within twenty-one days after the injury, no compensation

shall be due until such notice be given, and, unless such notice be

given within one hundred and twenty days after the occurrence of

the injury, no compensation shall be allowed.

77 P.S. § 631 (emphasis added). We have interpreted Section 311 as establishing a

scheme where compensation is payable from the date of the disability if the

claimant gives notice “within 21 days of the date he knew or should have known of

the injury and its relationship to its employment.” Martincic v. Workmen’s

Compensation Appeal Board (Greater Pittsburgh International Airport), 529 A.2d

600, 602 (Pa. Cmwlth. 1987). “If, however, the claimant gives notice after the 21

days has elapsed but within 120 days of the date he knew or should have known of

his injury, compensation is then payable from the date that notice was given.” Id.

According to the Board in the case sub judice, “if the legislature wanted to

completely bar a claimant from receiving compensation for his failure to provide

20

[the Fund] with timely notice of his claim . . . it certainly could have done so by

adding language” similar to Section 311 to Section 1603. (Board Decision at 4

n.2.)

We agree with the Board. The plain text of Section 1603(b) does not

specifically bar a claimant who does not meet the 45-day notice requirement from

ever receiving compensation from the Fund. Like the mandatory language of

Section 311, which requires notice within 21 days, the intent of Section 1603(b) is

to apprise the Fund “of the claim and to give the opportunity for a thorough

investigation while the events are recent.” Township of Upper Darby v.

Workmen’s Compensation Appeal Board, 417 A.2d 1319, 1321 (Pa. 1980).

Unless the Fund is given the opportunity to investigate the claim while the events

are recent, it will not be responsible for paying compensation incurred prior to

notice being received by the Fund. Section 1603(b) does not serve as a bar to all

compensation; instead, it strongly compels a claimant to quickly provide the Fund

with notice by imposing a consequence for the delay. Accordingly, we hold that

not providing the Fund with notice within 45 days of discovering that an employer

is uninsured does not act as a complete bar to compensation, but like Section 311

of the Act, delays the provision of compensation to the date notice is given.

Claimant argues further that by interpreting Section 1603(b) in a manner that

bars recovery for any lost wages or medical expense incurred prior to submission

of an untimely claim, the above interpretation does not comport with the plain

meaning of the statute. According to Claimant, such a reading would bar recovery

for lost wages or medical expenses for any claim, whether timely or not. We

21

disagree. Our interpretation allows for compensation for past medical treatment or

lost wages so long as a claimant notifies the Fund of the claim within 45 days.

However, those that do not meet the statutory deadline are only entitled to

compensation for medical treatment or lost wages incurred from the date notice

was provided.

Finally, Claimant contends that by interpreting Section 1603(b) in a manner

that causes a delay in benefits would only be warranted upon a showing that the

Fund was substantially prejudiced. Claimant analogizes the Fund’s obligation to

automobile liability insurers’ obligations under the “notice-prejudice rule.” Under

this rule, “unless the insurer establishes prejudice resulting from the insured’s

failure to give notice as required under the policy, the insurer cannot avoid its

contractual obligation.” Ario v. Underwriting Members of Lloyd’s of London

Syndicates, 996 A.2d 588, 598 (Pa. Cmwlth. 2010) (citing Brakeman v. Potomac

Insurance Company, 371 A.2d 193, 198 (Pa. 1977)).

We decline to extend the “notice-prejudice rule,” which has not been applied

in the workers’ compensation area, to actions involving the Fund. The cases in

which this rule has been applied all involve situations where an insured is required

under a contract to provide the insurer with notice “promptly,” “as soon as

practicable” or “within a reasonable time.” See, e.g., Brakeman, 371 A.2d at 195

(requiring notice “as soon as practicable”); Ario, 996 A.2d at 598 (same);

American States Insurance Company v. Estate of Braheem, 918 A.2d 750, 756 (Pa.

Super. 2007) (requiring “prompt written notice”). In contrast to a vague deadline

set in a contract between parties who freely entered into an agreement, Section

22

1603(b) is a statutory requirement that sets a clear 45-day notice requirement.

Nowhere in Section 1603(b) does the General Assembly limit its application to

instances where the Fund shows it was substantially prejudiced.

IV. Conclusion

In conclusion we reverse in part, and affirm in part, the Board’s Order. The

Board erred when it held that Claimant’s Claim Petition against the Fund was

barred by Section 305(d) of the Act as a result of Claimant preserving his civil

remedy by filing a “savings action” at law against an uninsured employer.

However, the Board correctly concluded that Claimant did not entirely forfeit his

Claim Petition against the Fund by not complying with the 45-day notice

requirement set forth in Section 1603 of the Act. We, therefore, reverse that

portion of the Board’s Order affirming the WCJ’s Decision dismissing Claimant’s

Claim Petition against the Fund and remand this matter to the Board for further

proceedings consistent with this opinion. The Board’s Order is affirmed in all

other respects.

RENÉE COHN JUBELIRER, Judge

23

IN THE COMMONWEALTH COURT OF PENNSYLVANIA

Jose Osorio Lozado, :

:

Petitioner :

:

v. : No. 21 C.D. 2014

:

Workers’ Compensation Appeal :

Board (Dependable Concrete Work :

and Uninsured Employers Guaranty :

Fund), :

:

Respondents :

ORDER

NOW, August 5, 2015, the Order of the Workers’ Compensation Appeal

Board (Board), entered in the above-captioned matter, is REVERSED insofar as it

relates to Jose Osorio Lozado’s Claim Petition against the Uninsured Employers

Guaranty Fund. This matter is REMANDED to the Board with directions for the

Board to REMAND to a Workers’ Compensation Judge to conduct further

proceedings consistent with the foregoing opinion. The Board’s Order is

AFFIRMED in all other respects.

Jurisdiction relinquished.

RENÉE COHN JUBELIRER, Judge