holding that Section 319 of the WCA “is written in mandatory terms and, by its terms, admits of no express exceptions, equitable or otherwise. Furthermore, it does more than confer a ‘right’ of subrogation upon the employer; rather, subrogation is automatic”
How later courts described this case
- holding that Section 319 of the WCA “is written in mandatory terms and, by its terms, admits of no express exceptions, equitable or otherwise. Furthermore, it does more than confer a ‘right’ of subrogation upon the employer; rather, subrogation is automatic”
- concluding that absent deliberate, bad faith conduct by the employer, the right to subrogation is automatic and absolute
- "It bears noting that barring a claim entirely ... is the most extreme of sanctions and not one ineluctably commanded by Schmid. "
- stating an employer’s right to subro-gation can be abrogated only by choice
Written by the judges who cited it.
The opinion
NIGRO, Justice,
dissenting.
I respectfully dissent from the majority opinion since I believe that an employer’s subrogation rights as set forth in § 319 of the Workers’ Compensation Act are subject to equitable principles. Accordingly, I would hold that under the facts of the instant case, Appellants should be barred from enforcing their subrogation rights under § 319.
The majority’s conclusion that, absent a finding of bad faith, the statutory subrogation rights of § 319 are absolute and never subject to equity contravenes the precedent of this Court. In Meehan v. City of Philadelphia, 184 Pa.Super. 659 , 136 A.2d 178 (1957), the Superior Court, quoting this Court, specifically rejected the argument that equitable principles were not applicable to the subrogation rights of § 319, stating, “We have many times said that subrogation is a matter of pure equity, and is never allowed where it would be inequitable to do so.” Id. at 181 (quoting Smith v. Yellow Cab. Co., 288 Pa. 85 , 135 A. 858, 860 (1927)).
In my view, the instant case is a prime example of why this Court has long held that subrogation pursuant to § 319 is *436 subject to equitable principles. Here, due to Craig: Welding’s loss of evidence vital to Claimant’s third-party action, the trial court determined that the defendant tortfeasors’ ability to prepare a defense was prejudiced. 1 Since Craig Welding’s spoliation of the evidence was the solé cause of the prejudice, the trial court ruled that Claimant was precluded from presenting any evidence regarding lost wages or medical bills 2 — damages to which Appellants would have a right of subrogation. Moreover, because Craig Welding’s conduct cost Claimant the opportunity to secure a substantially larger settlement or trial verdict, the trial court fashioned the parties’ settlement to preclude Appellants from subrogating any of the settlement proceeds by eliminating any recovery for lost wages or medical bills. Thus, the trial court provided equitable relief not only for the defendant tortfeasors by reducing their liability, but also for Claimant by taking into account his lost opportunity of securing a larger recovery.
Despite the fact that Craig Welding’s conduct substantially reduced Claimant’s potential recovery at trial, the majority would nevertheless add insult to injury by allowing Claimant’s recovery to be further reduced by Appellants’ subrogation claim, which is approximately $105,000. The result of the majority’s decision is that all parties, with the exception of Claimant, benefit from Craig Welding’s conduct: Appellants benefit by receiving their full subrogation rights and the defendant tortfeasors benefited at trial since their liability was reduced by at least $113,000, if not substantially more. Claimant, however, is forced to suffer a loss of $105,000 through no fault of his own.
*437 Moreover, Appellants’ inaction at trial provides further support for precluding subrogation on equitable grounds. Although counsel for USF & G and its claim personnel were present for both the argument regarding the lost evidence and the trial court’s ruling that barred Claimant’s recovery for lost wages and medical bills, counsel did not attempt to intervene or otherwise protect Appellants’ subrogation interest. Instead, counsel sat silently by while the trial court explicitly prevented Claimant from recovering any damages for lost wages or medical bills-the exact damages to which the majority finds Appellants have a right of subrogation.
While the majority recognizes the possibility that an employer’s bad faith can defeat his “absolute” right to subrogation, such a narrow exception does nothing to rectify the injustice that results from holding that Appellants are entitled to subrogation in the instant case. The circumstances of this case clearly show why equity principles should, as this Court has long held, continue to apply to subrogation claims under § 319.
. Claimant presented the testimony of an engineer who was hired by USF & G to be present at the inspection of the crane in 1988. At the time of inspection, the engineer was of the opinion' that the accident was caused by bolts that had malfunctioned. At trial, due to Craig Welding's loss of the bolts, the engineer could not determine whether the bolts were original equipment on the crane or had been replaced post-manufacture. The engineer also could not determine whether the bolts failed due to their design or from improper maintenance.
. Claimant sought approximately $113,000 in medical expenses. (N.T. 11/18/93 at 4.)