Davish v. Gidley

611 A.2d 1307, 417 Pa. Super. 145, 1992 Pa. Super. LEXIS 2325

• Court: Superior Court of Pennsylvania
• Decided: July 24, 1992
• Docket: 2638
• Status: Published

Opinions

POPOVICH, Judge.

This is an appeal from the order of the Court of Common Pleas of Philadelphia County, which denied New Jersey Manufacturers Insurance Company’s petition to intervene. Herein, appellant seeks to intervene in appellee Francis X. Davish’s third-party action in order to assert its statutory right of subrogation as set forth in the New Jersey Workers’ Compensation Act, N.J.S.A. §§ 34:15-1 et seq. However, Appellee contends the lower court properly determined that the law of Pennsylvania controlled and, therefore, properly disallowed intervention pursuant to the Pennsylvania Motor Vehicle Financial Responsibility Law, 75 Pa. C.S.A. § 1720, which prohibits subrogation of workers’ compensation benefits from a claimant’s tort recovery. Although the lower court originally denied appellant’s petition to intervene, in its Pa.R.A.P. 1925 opinion, the lower court candidly admits it erred in denying appellant’s petition to intervene and, upon reflection, would permit intervention. We agree with the lower court’s more recent assessment of the case, and, upon remand for trial, we direct the lower court to permit appellant to intervene.¹

The record reveals the following facts: Appellee, a resident of Pennsylvania, was an employee of Starr Transit Company, a New Jersey corporation with its principal place of business in Trenton, New Jersey. Starr Transit operated a depot in Philadelphia County where appellee reported to work each day. On July 3, 1987, while engaged in the course of his employment, appellee was involved in a motor vehicle accident in Pennsylvania.

Appellant is a duly organized and licensed insurance company with its principal place of business in West Trenton, New Jersey. At all relevant times hereto, appellant was the workers’ compensation carrier for appellee’s employer. Following the accident, appellee sought workers’ compensation benefits pursuant to the New Jersey Workers’ Compensation Act, N.J.S.A. § 34:15-1 et seq., and was awarded temporary and permanent disability benefits and all medical expenses.² To date, appellant has paid approximately $41,379.19 to appellee under the provisions of the New Jersey Workers’ Compensation Act. Significantly, appellee could have chosen to apply for workmen’s compensation benefits pursuant to the Pennsylvania Workmen’s Compensation Act, 77 Pa.S.A. § 1 et seq., but chose to pursue the greater recovery offered under the New Jersey Workers’ Compensation Act, N.J.S.A. § 34:15-1 et seq3

After recovering his New Jersey workers’ compensation benefits, appellee filed suit in Pennsylvania against the tortfeasors involved in the motor vehicle accident. Appellee then sought to intervene in the action in order to protect its statutory right of subrogation guaranteed under New Jersey Law. N.J.S.A. § 34:15-40. The lower court denied the petition on the basis that subrogation is not permitted under Pennsylvania law, citing 75 Pa.C.S.A. § 1720. This appeal followed.⁴

The issue before us is whether New Jersey or Pennsylvania law should be applied in determining appellant’s right to subrogation. Allstate v. McFadden, 407 Pa.Super. 537, 539, 595 A.2d 1277, 1278 (1991). See e.g., Van Den Heuval, 382 Pa.Super. 242, 555 A.2d 162; Myers v. Commercial Union Assurance Companies, 319 Pa.Super. 21, 465 A.2d 1032 (1983). In a conflict-of-law case, the law to be applied is that of the state having the more significant contacts with the matter in dispute. Griffith v. United Air Lines, Inc., 416 Pa. 1, 203 A.2d 796 (1964); McFadden, 407 Pa.Superior Ct. at 542, 595 A.2d at 1279; Myers, 319 Pa.Superior Ct. 26, 465 A.2d at 1035. Under Pennsylvania’s choice-of-law standard, the jurisdiction having more interest in the problem and which is more intimately concerned with the outcome, is the forum whose law should apply. McFadden, 407 Pa.Superior Ct. at 537, 595 A.2d at 1277, citing Spratley v. Aetna Casualty & Surety Co., 704 F.Supp. 595 (E.D.Pa.1989). Under the most significant contacts rule, the paramount consideration is: "... an analysis of the extent to which one state rather than another has demonstrated, by reason of its policies and their connection and relevance to the matter in dispute, a priority of interest in the application of its rule of law.” McSwain v. McSwain, 420 Pa. 86, 94, 215 A.2d 677, 682 (1966).

Instantly, looking at the interests and contacts of New Jersey, we find that New Jersey has a significant interest in payments under its Workers’ Compensation Law and the subrogation by New Jersey employers to monies paid to its employees by third-party tortfeasors. In addition, the employer in this case is a New Jersey corporation, although it regularly conducts business in Pennsylvania. Most significantly, Appellee elected to recover workers’ compensation benefits pursuant to the more favorable New Jersey Workers’ Compensation Law.

Pennsylvania, on the other hand, has an interest in enforcing its Motor Vehicle Financial Responsibility Law which does not permit subrogation of workers’ compensation benefits. In addition, appellee and two of the alleged tortfeasors are residents of Pennsylvania, and the accident occurred in this state. Although appellee is employed by New Jersey corporation, he reports to his job at his employer’s depot located in Pennsylvania and works primarily within Pennsylvania.

We recognize that this court has previously held that the state where the workers’ compensation policy is regulated is the state with more significant contacts regarding workers’ compensation subrogation. See McFadden, 407 Pa.Superior Ct. 542, 595 A.2d at 1279; Van Den Heuval, supra; Myers, supra; Lewis v. Chemetron Corp., 448 F.Supp. 211, (W.D.Pa.1978). Following those decisions, we find that New Jersey is the state with the most significant interest in determining the right of a New Jersey employer to subrogate where it has made workers’ compensation payments to a Pennsylvania employee pursuant to the New Jersey Workers’ Compensation Law. Instantly, neither appellee’s residency in Pennsylvania nor the accident’s situs in this Commonwealth is an overriding consideration. The fact that the accident occurred in Pennsylvania merely triggered appellee’s right to workers’ compensation under either the New Jersey Workers’ Compensation Law or the Pennsylvania Workmen’s Compensation Law. We must remember that, “The law does not require us to apply the law of the state whose contacts are most numerous, but rather demands a sensitivity to the relative importance of each of the several contacts to the substantive policy of workmen’s compensation.” Lewis, 448 F.Supp. at 213, citing Elston v. Industrial Lift Truck, 420 Pa. 97, 216 A.2d 318 (1966). Significantly, appellee made his own choice of law when he elected to collect workers’ compensation benefits under New Jersey law. Accordingly, we conclude that appellant should be permitted to intervene in order to protect its statutory right of subrogation.

Having determined that appellant is permitted to intervene in order the protect its subrogation rights, we must also comment upon what damages appellee is entitled to collect. In general, the purpose of subrogation is to preclude a double recovery by the claimant. See Lattimer v. Boucher, 189 N.J.Super. 33, 39, 458 A.2d 528, 530 (1983). In New Jersey, double recovery is prevented by granting the right of subrogation to the workers’ compensation carrier from a claimant’s tort recovery in a motor vehicle case. In New Jersey, the injured party can recover for medical expenses and lost wages from the third-party tortfeasor.

On the other hand, Pennsylvania prevents a double recovery in a manner quite different from that of New Jersey. While a workmen’s compensation carrier has absolutely no right of subrogation from a claimant’s tort recovery under the MVFRL, 75 Pa.C.S.A. § 1720, the claimant, in an action for damages from the third-party tortfeasor arising out of a motor vehicle accident, is “precluded from recovering the amount of benefits paid or payable under ... workers’ compensation[.]” 75 Pa.C.S.A. § 1722. See Postorino v. Schrope, 736 F.Supp. 639 (E.D.Pa.1990) (pedestrian who was injured in motor vehicle accident in course of his employment and whose medical expenses and lost wages were paid through workers’ compensation was foreclosed from introducing medical expense and wage loss evidence in tort action by operation of 75 Pa.C.S.A. § 1722). Thus, in the ordinary case, appellee would be precluded from recovering the amount of his workers’ compensation benefits in this third-party tort action, pursuant to 75 Pa.C.S.A. § 1722. However, since we have determined that appellant is permitted to intervene in order to protect its subrogation rights guaranteed by New Jersey law, we must permit appellee to plead and prove his wage loss and medical expense damages in accordance with New Jersey law. Although such a ruling is in conflict with 75 Pa.C.S.A. § 1722, to rule otherwise would entitle appellant to subrogate that which appellee would not be permitted to recover.

Order denying intervention reversed. Case remanded for further proceedings in accordance with the provisions of this opinion.

MONTEMURO, J., files a dissenting opinion.

1 . In Van Den Heuval v. Wallace, 382 Pa.Super. 242, 245, 555 A.2d 162, 163 (1989), we stated: “Although an order denying a Petition to Intervene is generally deemed interlocutory, where the practical effect of such an Order is the denial of relief to which an intervenor is entitled and which he can obtain in no other way, the Order is appealable.” (Citations omitted). In Van Den Heuval, supra, we concluded that an out-of-state workmen's compensation carrier was entitled to be subrogated in the third-party action to the extent of the workmen’s compensation benefits which it had paid. In so deciding, we noted that it was unrealistic to suggest that the carrier’s interest could be protected by a subsequent action against Van Den Heuval in a different forum. In regard to the issue of whether the present appeal is interlocutory, Van Den Heuval, supra, is directly on point and factually indistinguishable from the case sub judice. Thus, we find that the present action is properly before us.

2 . Appellee was represented by counsel at the time of his application for workers’ compensation benefits in New Jersey.

3 . In general, under Pennsylvania law, an injured employee may recover 662A% of his wages for total disability during the duration of his disability. 77 Pa.S.A. § 511. For a partial disability, a Pennsylvania employee is entitled to 662A% of the difference between his wages and the "earning power” of the employee after his disability, during the duration of his disability. 77 Pa.S.A. § 512. In New Jersey, an employee is entitled to 70% of his wages for his disability, total or partial, for the duration of his disability. N.J.S.A. § 34:15-12.

4 . As previously noted, the lower court, in its Pa.R.A.P.1925 opinion, concluded it had erred and, upon reflection, would grant the petition to intervene, citing Van Den Heuval, supra.