Philadelphia Personal Injury Lawyer Blog

In Pennsylvania, under most circumstances, an employee cannot sue its employer if he/she is injured while working.  Instead, the employee must file for workers' compensation which may cover work-loss benefits and medical benefits related to the injury.  However, if a negligent third party is the cause of the employee's injury, the employee may bring a lawsuit to recover from the tortfeasor.  For example, if a construction worker is hit by a negligent motorist while fixing the road for PennDOT, he/she would be able to file a workers' compensation claim against PennDOT and would also be able to file a lawsuit against the negligent motorist.

Even though the worker may bring both a workers' compensation claim and a third party lawsuit he/she will only be allowed to recovery once for his damages.  The underlying purpose of the Pennsylvania Workers' Compensation Act is to allow the employee to be made whole for his injury, but not receive a double benefit.   To achieve this purpose, the legislature permits an employer to be subrogated to the extent a negligent third party causes a compensable injury.  ("Subrogation" allows an employer to "stand in the shoes" of the injured employee so to transfer the employees claim to the employer.)   The Act provides that the employer be reimbursed for "compensation" payments paid due to the wrongful act of the third party.

What does this mean in regards to your personal injury claim?  Generally speaking, if you receive workers' compensation benefits and then settle your personal injury claim, your recovery will be reduced by the benefits paid by your employer minus reasonable attorney's fees and costs (prorated between the employer and employee).   In Pennsylvania, an employer has an absolute right to subrogation.   Therefore, if the third party claim settles for less than the value of the workers compensation lien, the employee may receive no recovery for pain and suffering.  This scenario is commonplace because settlement values are usually less than a victim's "total damages" due to issues with disputed liability, causation, and damages.   To avoid this inequitable result, it is important to negotiate the workers' compensation lien down prior to settlement.  Usually, lien adjustors will compromise a lien so to facilitate a settlement when risks associated with a jury trial are explained. 

Medicare has implemented a $300 threshold for certain Liability Insurance cases.  If all of Medicare's criteria are met, the MSPRC will not recover against the beneficiary's settlement, judgment, award or other payment.

If you're a beneficiary, what does this mean for you?

As of September 6, 2011, if you've received a lump sum settlement of $300 or less, and your case meets certain conditions, Medicare will not recover from that settlement. These conditions include:

1. Your settlement is related to an alleged physical trauma-based incident, not an alleged exposure, ingestion, or implantation, and
2. You do not have any additional settlements related to the same alleged incident.

This threshold specifically excludes settlements where an insurer is paying your medicals bills directly or on an ongoing basis.  This threshold also does not apply if a demand letter was already issued for your case.   

SOURCE

Although this is a low threshold, the bigger story is that Medicare may be starting to adjust its policies to make the system less convoluted.   The byzantine system is a nightmare for any personal injury attorney seeking compensation in a case where Medicare has paid bills.  Medicare's statutory right to subrogation has made it impossible for personal injury attorneys to settle cases expeditiously due to red tape, incompetence and understaffed Medicare offices.   A threshold on liability settlements is a small step in the right direction towards creating a system that is fair for victims.