Liberty Mutual Ins. Co. v. Domtar Paper Co.: Third-Party Lawsuits and Workers’ Compensation

Liberty Mutual Ins. Co. v. Domtar Paper Co., a case from the Supreme Court of Pennsylvania, involved claimant who slipped and fell while working for a trucking company. Claimant was in a parking lot owned by one company and leased to another at time of the accident.

trucker.jpgFollowing the work-related injury, claimant filed a workers’ compensation claim with trucking company’s workers’ compensation insurance carrier, and insurance carrier paid claimant around $33,000 in benefits as compensation for his injury.

Following payment of claimant’s workers’ compensation benefits award, employer’s insurance company filed an action against parking lot owner and parking lot lessee seeking reimbursement for money paid to claimant on grounds accident was due to their negligence. Insurance company listed itself as having assumed claimant’s rights, though claimant himself never filed any action against defendants.

Insurance company filed its claim on a standard workers’ compensation basis, which essentially permits an insurance company, or self-employed insurer to seek reimbursement for money paid in workers’ compensation benefits. However, the way this normally works, as our Charlotte workers’ compensation attorneys can explain, is that an injured worker collects worker’s compensation and then sues a negligent third-party defendant. If the claimant receives a settlement or jury verdict, insurance company is entitled to reimbursement for any benefits paid to prevent claimant from a double recovery.

It is unusual for an insurance company to file an action directly against a third-party when claimant has not done so, and this is the basis for which defendants moved to dismiss the action against them. Trial court agreed with defendants and dismissed the cause of action against them, since it was only the claimant who had the right to directly bring an action in this situation, and he had chosen not to do so.

Insurance company appealed dismissal of its lawsuit, arguing trial judge had erred in not allowing them to assume claimant’s rights with respect to a lawsuit against a third party. In their first appeal, state supreme court affirmed trial court’s holding an insurance company did not have independent rights to seek reimbursement from claimant. When considering the reason for the right of reimbursement was to prevent an injured employee from double recovery, it makes sense, as claimant in this case has only had a single recovery, and did not seek any additional damages from third-party alleged tortfeasors.

At this point, workers’ compensation insurance company appealed to the state supreme court. During this appeal, court reviewed the case pursuant to a de novo standard. A de novo review means the court will look at the evidence and lower court’s record anew; therefore, they will pay no deference to the lower court’s ruling. While, normally, an appellate court will not dispute a lower court’s findings of facts, as that court is deemed in a better position to hear the evidence first hand and make a finding, in this case, there was no dispute as to the fact, and this was purely a question of how to apply the law.

Ultimately, the state supreme court affirmed the rights of an injured employee to sue a third-party tortfeasor are exclusive to injured employee, and an insurance company has no independent rights.

If you have been injured at work, contact the Lee Law Offices at 800-887-1965.

Additional Resources:
Liberty Mutual Ins. Co. v. Domtar Paper Co., April 27, 2015, Pennsylvania Supreme Court

More Blog Entries:
Bike v. Johnson & Johnson Health Care – Workers’ Comp Benefits in Spite of Underlying Injury, March 28, 2015, Charlotte Workers’ Compensation Lawyer Blog

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