Gleason, J. v. Alfred I. Dupont Hospital

2021 Pa. Super. 156, 260 A.3d 256

• Court: Superior Court of Pennsylvania
• Decided: August 5, 2021
• Docket: 1872 EDA 2020
• Status: Published

Opinion

J-A17042-21

2021 PA Super 156

JOHN GLEASON AND ELAINE : IN THE SUPERIOR COURT OF GLEASON, H/W : PENNSYLVANIA : : v. : : : ALFRED I. DUPONT HOSPITAL FOR : CHILDREN AND NEMOURS : No. 1872 EDA 2020 FOUNDATION : : : JOHN GLEASON AND ELAINE : GLEASON, H/W : : : v. : : : HSC BUILDERS & CONSTRUCTION : MANAGERS : : : APPEAL OF: THE HARTFORD : INSURANCE GROUP, WORKER’S : COMPENSATION LIENHOLDER

Appeal from the Order Entered August 20, 2020 In the Court of Common Pleas of Philadelphia County Civil Division at No(s): No. 160502115, No. 170503992

BEFORE: McLAUGHLIN, J., KING, J., and PELLEGRINI, J.*

OPINION BY PELLEGRINI, J.: Filed: August 5, 2021

The Hartford Insurance Group, workers’ compensation lienholder, (The

Hartford) appeals from the order entered in the Court of Common Pleas of

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* Retired Senior Judge assigned to the Superior Court. J-A17042-21

Philadelphia County (trial court) denying its second petition to intervene in

this personal injury action between John and Elaine Gleason, H/W

(collectively, the Gleasons) and Alfred I. DuPont Hospital for Children, et al.

(Dupont Hospital). The Hartford challenges the trial court’s determination that

this appeal is premature and claims that the court erred in denying it party

status. We reverse the trial court’s order and remand with instructions to

allow the requested intervention.

I.

A.

The relevant facts and procedural history of this case are as follows. Mr.

Gleason was employed as an MRI Field Service Technician by Medical Imaging

Group (MIG). The Hartford provides workers’ compensation insurance to MIG.

On May 29, 2015, while Mr. Gleason was performing maintenance on an MRI

machine at Dupont Hospital, a fire and explosion occurred in the main

distribution panel. Mr. Gleason’s hair, skin and clothing caught fire and he

suffered severe burns, scarring, disfigurement and temporary blindness. The

Gleasons filed two actions against various defendants in 2016 and 2017,

alleging negligence and loss of consortium. The defendants answered the

complaints and filed cross-claims and the actions were consolidated in

February 2018.

The Gleasons reached a proposed settlement agreement with the

defendants and they filed a petition seeking the trial court’s approval of its

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terms on December 12, 2019. The agreement provided for a total settlement

payment of $1.45 million dollars. That sum was allocated between the

Gleasons, with $580,000 to Mr. Gleason and $870,000 to Mrs. Gleason for the

loss of consortium claim. On December 25, 2019, all defendants joined in

support of the Gleasons’ petition without taking a position on the allocation

between the spouses. The trial court approved the unopposed settlement on

January 27, 2020, after oral argument.1 Because the cross-claims were not

disposed of by the settlement agreement, the case remained listed for trial.

B.

The Hartford has paid $988,474 to and on behalf of Mr. Gleason in

medical expenses, wage loss benefits and to fund a medical set aside account

for his future medical expenses. The Gleasons offered to pay The Hartford

$352,287, representing the amount remaining from Mr. Gleason’s settlement

after deduction of attorneys’ fees and costs.2

1 Although it was not a party to the litigation, The Hartford filed an appeal from the trial court’s order approving settlement, which this Court quashed. (See Gleasons’ Brief, at 4-5).

2 Because a loss of consortium claim is derivative in nature and arises from

the impact of the spouse’s physical injuries on the marriage rather than from the injuries themselves, there is no identity of funds. An employer, therefore, has no subrogation interest in a spouse’s recovery for loss of consortium. See Thompson v. W.C.A.B. (USF&G Co.), 781 A.2d 1146, 1154–55 (Pa. 2001). Our Courts have recognized the potential for abuse in this context because settlement agreements can be fraudulently structured to defeat a valid subrogation interest. See id.

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On April 20, 2020, The Hartford filed a petition to intervene, seeking

protection of its statutory lien interest under Section 319 of the Pennsylvania

Workers’ Compensation Act (WCA).3 The trial court entered an order denying

The Hartford’s request to intervene on May 14, 2020.

The Hartford filed a second petition to intervene, which the trial court

denied on August 20, 2020. This timely appeal followed. The trial court filed

a Rule 1925(a) opinion on February 9, 2021, stating that The Hartford’s appeal

is premature and not ripe for our review. See Pa.P.A.P. 1925. The court

requested that the appeal “be suspended until the conclusion of trial on the

outstanding cross-claims.” (Trial Court Opinion, 2/09/21, at 2).4

3 Section 319 of the WCA is codified at 77 P.S. § 671 and governs the subrogation rights of an employer and its insurance carrier. See Suburban Delivery v. W.C.A.B. (Fitzgerald), 858 A.2d 219, 222 (Pa. Cmwlth. 2004). The Act requires subscribing employers to provide compensation to injured employees, regardless of fault, either through insurance or self-insurance. See Thompson, supra at 1153. In exchange, employers are vested with “the absolute right of subrogation respecting recovery from third-party tortfeasors who bear responsibility for the employee’s compensable injuries.” Id. (citation omitted).

4 The cross-claims remained outstanding at the time the trial court filed its opinion. (See Trial Ct. Op., at 2). The court’s March 19, 2021 trial work sheet indicates that the last remaining cross-claim proceeded to binding arbitration and all other claims have been resolved. (See Trial Work Sheet, 3/19/21).

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II.

On appeal, The Hartford contends that the trial court’s order denying

intervention is final and appealable because the ruling denies it party status

and prevents it from receiving notice of all filings in this case. It maintains

that the order has the practical effect of denying it the ability to fully protect

its subrogation rights, and that it impacts its standing to appeal the January

2020 order approving settlement. The Hartford argues that party status is

necessary to adequately protect its lien rights by challenging the unfair

40/60% apportionment of the settlement proceeds between Mr. and Mrs.

Gleason. It claims that the higher allocation to Mrs. Gleason for her loss of

consortium claim is designed to shield the settlement proceeds from its

recovery of the statutory lien.

It is well settled that, “[i]n order for this Court to have jurisdiction, an

appeal must be from an appealable order.” Commonwealth v. Mitchell, 72

A.3d 715, 717 (Pa. Super. 2013) (citation omitted). Generally, an appellate

court only has jurisdiction to review final orders. See Pa.R.A.P. 341.

With regard to orders denying intervention, “Pennsylvania law does

allow for an appeal as of right from [such orders] in circumstances that meet

the requirements of the collateral order doctrine as embodied in Pennsylvania

Rule of Appellate Procedure 313. See Pa.R.A.P. 341 (note).” In re Barnes

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Found, 871 A.2d 792, 794 (Pa. 2005).5 “A collateral order is an order

separable from and collateral to the main cause of action where the right

involved is too important to be denied review and the question presented is

such that if review is postponed until final judgment in the case, the claim will

be irreparably lost.” Pa.R.A.P. 313(b). Thus, the collateral order doctrine

permits an appeal from an order that satisfies the three requirements of

separability, importance and irreparability. See Shearer, supra at 858. We

construe this doctrine narrowly to “avoid undue corrosion of the final order

rule, and to prevent delay resulting from piecemeal review of trial court

decisions. ” Id. (citation omitted).

With regard to the first prong of the collateral order doctrine, an order is separable from the main cause of action if it is entirely distinct from the underlying issue in the case and if it can be resolved without an analysis of the merits of the underlying dispute. With regard to the second prong, a right is important if the interests that would go unprotected without immediate appeal are significant relative to the efficiency interests served by the final order rule. Notably, the rights must be deeply rooted in public policy going beyond the particular litigation at hand. With regard to the third prong, a right sought to be asserted on appeal will be ‘irreparably lost’ if, as a practical matter, forcing the putative appellant to wait until final judgment before obtaining appellate review will deprive the appellant of a meaningful remedy.

5 “Whether an order is appealable under the collateral order doctrine under

Pa.R.A.P. 313 is a question of law, subject to a de novo standard of review, and the scope of review is plenary.” Shearer v. Hafer, 177 A.3d 850, 855 (Pa. 2018) (citation omitted).

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Keesee v. Dougherty, 230 A.3d 1128, 1132 (Pa. Super. 2020) (citation

omitted).

In the instant case, the issue of whether The Hartford has the right to

be granted party status is a discrete claim that has no bearing on the

underlying negligence and loss of consortium dispute. The order is, therefore,

separable from the main cause of action. Turning to the second prong, the

ability of an insurance carrier that has paid substantial workers’ compensation

benefits to and on behalf of an employee to recover its statutory lien from the

award of money the employee has received in a civil lawsuit is too important

to be denied review, as the carrier has an absolute right to recovery and its

interest outweighs any efficiency interest in discouraging piecemeal litigation.

Furthermore, as previously noted, our Courts have recognized the potential

for fraud in this context where a derivative loss of consortium claim is

involved. As to the third prong, we find that denying review of the court’s

decision on intervention would impact The Hartford’s standing and ability to

ever challenge the 60% apportionment of the settlement proceeds to the loss

of consortium claim, which it asserts is unfair and designed to shield the

settlement funds.

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Having found that the requirements of the collateral order doctrine have

been met and that this Court has jurisdiction over this appeal, we turn to the

merits of The Hartford’s claim it is entitled to intervention.6

C.

As we previously noted, under Section 319 of the WCA, an employer or

insurance carrier that pays workers’ compensation benefits to an injured

employee is entitled to recover a portion of the benefits from any award of

money the employee receives in a civil lawsuit. Section 319 provides specific

direction for the distribution of an employee’s settlement from a third-party

tortfeasor between the employee and the employer or insurance carrier. See

Dep't of Labor & Indus. Bureau of Workers' Comp. v. Workers’

Compensation Appeal Board (Excelsior Ins.), 58 A.3d 18, 20 (Pa. 2012).

“At its most basic, Section 319 provides that the employer [or carrier] shall

recover from the settlement the amount it previously paid to the claimant,

minus the claimant’s legal costs of recovering that amount.” Id.

Additionally, Pennsylvania Rule of Civil Procedure 2327 governs

intervenor status. This Rule provides: “At any time during the pendency of

an action, a person not a party thereto shall be permitted to intervene therein

[if] . . . (2) such person is so situated as to be adversely affected by a

6 We review a trial court’s decision whether to allow intervention for an abuse

of discretion. See Johnson v. Tele-Media Co. of McKean Cty., 90 A.3d 736, 739 (Pa. Super. 2014).

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distribution or other disposition of property in the custody of the court or of

an officer thereof; or . . . (4) the determination of such action may affect any

legally enforceable interest of such person whether or not such person may

be bound by a judgment in the action.” Pa.R.C.P. 2327 (emphasis added).

“Under this rule, an insurance carrier who has paid workers’

compensation benefits may intervene in an employee’s third party

action in order to protect and preserve the carrier’s right of subrogation.”

Van Den Heuval v. Wallace, 555 A.2d 162, 163 (Pa. Super. 1989) (citations

omitted; emphasis added).

In Van Den Heuval, this Court determined that a workers’

compensation carrier was entitled to intervene in a third-party tort action to

the extent of the workers’ compensation benefits which it had paid to the

employee. The Court noted that it was unrealistic to suggest that the carrier’s

interest could be adequately protected by a subsequent action against the

employee. It observed that if the third-party action settled without notice to

the carrier, the subrogation claim would essentially be “at the mercy of the

employee who, having received payment, can dispose of the settlement

proceeds as he chooses.” Id. at 163. The panel concluded that the trial

court’s order denying intervention had “the practical effect of denying relief to

[the carrier], which cannot fully protect its subrogation interest in any other

way [and therefore] that the order denying intervention in this case is an

appealable order.” Id.

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Likewise, in this case, lack of party status denies The Harford the ability

to fully protect its subrogation interest and left it without recourse to

effectively challenge the consortium apportionment contained in the

unopposed settlement agreement. Although The Hartford paid nearly one

million dollars to and on behalf of Mr. Gleason as a result of the workplace

accident, the settlement agreement was structured in a manner that limited

its lien to approximately $350,000.

In sum, based on the foregoing legal authority and our review of the

certified record, we conclude that the trial court’s order denying The Hartford

intervention in this action was final and appealable as a collateral order. We

further conclude that the trial court abused its discretion when it disallowed

intervention by The Hartford, which was necessary to fully protect its

subrogation rights and to challenge the apportionment of the settlement

proceeds between Mr. and Mrs. Gleason for the loss of consortium claim.

Order reversed. Case remanded with instructions to allow the requested

intervention. Jurisdiction relinquished.

Judgment Entered.

Joseph D. Seletyn, Esq. Prothonotary

Date: 8/5/21

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