Workers’ Compensation; Heart and Lung Benefit Subrogation from Recovery under the Dram Shop Act
Alpini v. Workers’ Comp. Appeal Bd. (Tinicum Twp), 260 A.3d 1101 (Pa. Cmwlth. 2021) (unreported), allocatur granted Jan. 4, 2022, appeal docket 2 MAP 2022
Christopher Alpini was employed by Tinicum Township as a police officer. On April 17, 2011, Alpini was on-duty and sitting in his patrol car when Steven Warrington, who was intoxicated, struck Alpini’s car with his vehicle. The crash caused injuries to Alpini’s spine, ribs, and pelvis, which required ongoing treatment. The Township made payments to Alpini pursuant to the Heart and Lung Act.
Alpini sued Warrington for negligence under the Motor Vehicle Financial Responsibility Law (MVFRL). He also sued Jimmy D’s and Lou Turks, two bars, for overserving Warrington in violation of the Dram Shop Act. In general, the MVFRL does not allow subrogation for recovery arising out of the use of a motor vehicle, but the Dram Shop Act has no such restrictions. Alpini eventually settled all claims for $1,325,000.00: $25,000 from Warrington, $375,000 from Lou Turks, and $925,000 from Jimmy D’s.
The Township filed a workers’ compensation modification petition seeking subrogation from Alpini’s recovery from the bars under the Dram Shop Act claim and asserted a lien of $364,024.60, comprised of $186,063.41 in indemnity benefits and $177,961.19 in medical benefits. The workers’ compensation judge granted the Township’s petition. Both Alpini and the Township appealed the decision to the Workers’ Compensation Appeal Board (WCAB), which affirmed the decision, and remanded the matter to the workers’ compensation judge (WCJ) to determine the method by which the Township would be permitted to recoup its lien. On remand, the WCJ found that the Township met its burden to establish that it had a subrogable interest in Alpini’s $1.3 million settlement with the bars, entitling the Township to a net recovery of $341,319.93.
Alpini eventually appealed to the Commonwealth Court, arguing that the Township does not have subrogation rights against his Heart and Lung benefits. In support, Alpini relied on Stermel v. Workers’ Compensation Appeal Board (City of Philadelphia), 103 A.3d 876 (Pa. Cmwlth. 2014), in which Commonwealth Court held that the MVRFL did not allow an individual to recover loss of wages from the City of Philadelphia because the lost wages were covered by the Heart and Lung Act, thus, as a matter of law, his recovery was the net of his Heart and Lung benefits, and Pennsylvania State Police v. Workers’ Compensation Appeal Board (Bushta), 184 A.3d 958 (Pa. 2018), in which the Supreme Court held that the State Police were not entitled to subrogation for benefits paid under the Heart and Lung Act.
Commonwealth Court held that the Workers’ Compensation Board did not err as a matter of law when it decided that the Township could subrogate payments it made under the Workers’ Compensation Act and the Heart and Lung Act from Alpini’s settlement with the bars under the Dram Shop Act. The court reasoned that although Alpini’s recovery generally concerned the use of a motor vehicle, the liability of the bars did not arise from the use of a motor vehicle, but from their negligence in serving alcohol to a visibly intoxicated patron. The court explained that – consistent with the MVFRL, Stermel, and Bushta – when a third-party recovery arises from the use of a motor vehicle, employers may not seek subrogation for workers’ compensation benefits paid or for Heart and Lung Act reimbursements; however, that restriction does not apply to recovery stemming from a different cause of action not arising under the MVFRL. Because Alpini’s complaint against the bars fell under the Dram Shop Act, and because the language of his settlement agreement specifically delineated the damages allocated against Warrington and the bars, the $1.3 million settlement with the bars was legally available to the Township’s subrogation claim.
The Pennsylvania Supreme Court granted allocatur to consider the following issue:
Is an employer that paid Heart and Lung Act benefits entitled to subrogation from a claim in which the employee was injured and asserted motor vehicle negligence- and Dram Shop Act-based claims?