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HomeMy WebLinkAbout03-21-86 (2) IN RE: IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNSYLVANIA ESTATE OF DAVID G. ROLAND ORPHANS COURT DIVISION NO. 232 ORPHANS 1978 MEMORANDUM OF LAW RE: OBJECTIONS OF PENNSYLVANIA MANUFACTURERS ASSOCIATION INSURANCE COMPANY TO SECOND AND FINAL ACCOUNT AND PROPOSED DISTRIBUTION OF COMMONWEALTH NATIONAL BANK, GUARDIAN OF THE ESTATE OF DAVID G. ROLAND On April 6, 1978, Robert W. Roland, Sr., was employed as a journeyman electrician by General Electrical Services Company. He was assigned by his employer to a job site at Hershey Foods Corporation, 19 East Chocolate Avenue, Hershey, Pennsylvania. While so employed, Mr. Roland suffered fatal injuries when a conveyor was activated and Mr. Roland was carried into an elevator. At the time of his death, Mr. Roland was the father of three children, Robert W. Roland, Jr., Christine J. Roland, and David G. Roland. All of the children resided with Mr. Roland and were dependent upon him. At the time of Decedent's injury and death, Pennsylvania Manufacturers Association Insurance Company ("PMA") was General Electrical Services Company's workmen's compensation insurance carrier. In accordance with the Workmen's Compensation Act, PMA paid workmen's compensation benefits to Commonwealth National Bank, Guardian of David G. Roland, pursuant to the terms and provisions of the Workmen's Compensation Act. From May 15, 1978, through October 11, 1985, PMA paid a total of $35,127.46 in workmen's compensation benefits to Commonwealth National Bank. As the result of Robert W. Roland, Sr.'s injury and death, a civil action was commenced by Commonwealth National Bank, Administrator of the Estate of Robert W. Roland, Sr., in the Court of Common Pleas of Dauphin County, to Docket No. 2968-S-1978, against Hershey Foods Corporation, a third party tortfeasor. The action was commenced under the Survival Act and Wrongful Death Act. The case was tried to a jury which returned a verdict in favor of Plaintiff and against Hershey Foods. Hershey Foods appealed the case to the Superior Court. On April 25, 1984, while the appeal was pending, the case was settled pursuant to a structured settlement with total payments equaling $797,762.00. Commonwealth National Bank, Guardian of the Estate of David G. Roland, and David G. Roland in his own right were beneficiaries of the aforesaid settlement. Pursuant to the terms and conditions of the settlement, Commonwealth National Bank, Guardian of David G. Roland, received the sum of $12,000 on April 26, 1984. In addition thereto, David G. Roland or his estate will receive $155,840.00. -2- PMA has made claim and demand upon Commonwealth National Bank for reimbursement of compensation paid to the estate of David Roland pursuant to the terms and conditions of the Workmen's Compensation Act. PMA's claim for subrogation reimbursement has been denied by Commonwealth National Bank. The bank has been given due notice of PMA's claim both through written correspondence and through a lawsuit that PMA has instituted in the Court of Common Pleas of Dauphin County to Docket No. 1356-S-1985, against, inter alia, Commonwealth National Bank, in which PMA seeks to recover its subrogation lein. The account presented to this Court acknowledges receipt of $19,825.38 in workmen's compensation benefits from June 21, 1982, through October 15, 1985. The account does not reflect payments made by PMA for the benefit of David G. Roland for the period of April 6, 1978, through June 20, 1982. The schedule of proposed distribution makes no provision for payment of PMA's claim for subrogation reimbursement. Furthermore, the Statement of Account and Proposed Distribution fails to acknowledge PMA as a creditor of the minor's estate. PMA's right to subrogation reimbursement is provided for by Section 319 of the Pennsylvania Workmen's -3- Compensation Act, Act of June 2, 1915, P.L. 736, as amended, 77 P.S. ~671, which provides in pertinent 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... Section 305 of the Act, 77 P.S. ~501, provides that every employer liable to pay workmen's compensation shall insure the payment in any insurance company unless the employer is exempted by the Department of Labor and Industry from such insurance. This Section of the Act goes on to state, "such insurer shall assume the employer's liability hereunder and shall be entitled to all the employer's immunities and protection hereunder..." Id. (emphasis added). Thus, when Section 319 of the Act and Section 305 of the Act are read in conjunction, it is clear that the insurance company that pays workmen's compensation benefits is entitled to the subrogation rights afforded the employer under Section 319 of the Act. Furthermore, an insurance company is entitled to be subrogated whether the employee or his dependents recover against the third party pursuant to a settlement or by -4- a judgment on a jury verdict. See, Rollins Outdoor Advertising v. W.C.A.B., 506 P.A. 592, 487 A.2d 794 (1985); Trumble v. Paris Linen and Decorating Shops, 95 Montgomery County 125, affirmed 294 Pa. Super 629, 377 A.2d 1004 (1977), petition for allowance of appeal denied November 10, 1977. By the express language of Section 319 of the Act, an employer (insurer), shall be subrogated to the extent of the compensation payable under the Act. When the word "shall" is used in a statute, it ordinarily creates a mandatory duty. See, ~, In Re: Amendment of Clinton County Budget, 13 D&C 3d 389 (1980); Commonwealth v. Levesque, 97 Dauphin 475 (1975). Thus, it is obvious that the General Assembly intended that an insurer that pays workmen's compensation benefits should be reimbursed from any recovery that an injured worker, or his dependents, obtains from a third party tortfeasor, either by way of verdict or settlement. The reason for this mandatory reimbursement is obvious: it prevents double recovery. The General Assembly's intent is made even clearer in a further provision of Section 319 which provides, "any recovery against such third person in excess of the compensation theretofore paid by the employer shall be paid forthwith to the employee, his personal representative, his estate or his dependents..." 77 P.S. ~671. This provision makes -5- it clear that the insurer is entitled to be reimbursed from any third party recovery for all compensation theretofore paid, and only if there is an excess after the insurer is reimbursed does the employee, his legal representative, or his dependents participate in the recovery. In the case at bar, the total monetary payouts under the structured settlement equal $797,762.00. Of that figure, $177,840.00 is payable to David G. Roland. PMA has paid workmen's compensation benefits to David Roland's guardian in the amount of $35,127.46. The guardian, however, in its Statement of Account and Schedule of Proposed Distribution makes absolutely no provision for payment of PMA's claim. Rather, the bank proposes to distribute the entirety of the account's balance, $32,498.74, to David Roland. The bank's abject refusal to honor PMA's subrogation lien is clearly contrary to the law. It is submitted that the express language of the Workmen's Compensation Act makes PMA a bona fide creditor of the minor's estate. Consequently, it is respectfully requested that the Court direct Commonwealth National Bank to honor PMA's right to subrogation reimbursement and to direct the bank to pay over to PMA the total sum sought to be distributed to the minor. In the alternative, it is requested that the Court enter an order -6- . , . to directing the bank to hold the sum sought to be distributed to the minor in an interest bearing escrow account pending resolution of the lawsuit that PMA filed against Commonwealth National Bank, et al., in the Court of Common Pleas of Dauphin County. PETERS & WASILEFSKI ") Date: /~t~ 21 /9X'{, i-', rr----- r .,":i1 ),:; · lir ~i By: \) --lj J ! ''/'-- JOS~H C. PHILI,r PS 2~31 North Fro~t Street Harrisburg, PA 17110 (717) 238-7555 -7-