Claims Against Uninsured Employers’ Guaranty Fund Not Defeated Easily

We have discussed the Uninsured Employers Guaranty Fund (UEGF) on this blog before. This is the Fund that was created in 2007 to provide benefits to injured workers when an employer fails to carry Pennsylvania workers’ compensation insurance (in direct violation of PA law). Though the UEGF has now been around for more than eight years, there have been some unanswered questions about actions against the UEGF; with a recent decision from the Commonwealth Court of Pennsylvania, however, two of these questions have now been answered.

In the matter of Jose Osorio Lozado v. Workers’ Compensation Appeal Board (Dependable Concrete Work and Uninsured Employers Guaranty Fund), the Commonwealth Court of PA had to address whether filing a civil action for damages, or providing late notice to the UEGF, constituted a complete bar to recovery against the UEGF. In a well-reasoned and logical decision, the Court held neither of these things would bar the injured worker from receiving the benefits he needed.

Once the injured worker in this matter determined that his employer failed to carry Pennsylvania workers’ compensation insurance, he (through his attorneys) knew that he had the choice of whether to proceed through the PA workers’ compensation system or sue his employer for negligence in the State Court System (this is not typically a choice for an injured worker – the protection employers ordinarily receive from civil liability is lost by the failure to carry insurance). Since the injured worker was unsure whether he would be able to receive benefits in the PA workers’ comp system (given that the UEGF contests every claim), civil suit was filed merely to protect the “statute of limitations.” The attorney for the injured worker specifically asked the civil court to hold the suit pending the outcome for the workers’ comp case.

Meanwhile, under the Pennsylvania Workers’ Compensation Act, an injured worker has 45 days from when he or she knows the employer has no insurance to provide notice of their claim to the UEGF. Here, the PA Bureau of Workers’ Compensation sent a letter to the injured worker notifying him that his employer had no insurance. More than 45 days elapsed before notice of the claim was provided to the UEGF.

When the injured worker finally filed a Claim Petition against the UEGF, the Workers’ Compensation Judge (WCJ) denied relief. Specifically, the WCJ found that the Claim Petition was not actionable since the injured worker filed a civil action (in other words, the WCJ found that the injured worker had to pick one recourse or the other, and by filing the civil suit, he selected that relief). The WCJ also found that the failure to provide notice to the UEGF within the allotted 45 days was a complete bar to recovery.

On appeal, the Workers’ Compensation Appeal Board (WCAB) disagreed with the WCJ that the failure to provide notice was a complete bar to recovery. Instead, the WCAB felt that benefits could be awarded as of the date notice was provided. However, the WCAB affirmed the denial of the Claim Petition, since, as the WCJ held, the injured worker selected civil remedy rather than workers’ compensation in this case.

Upon further appeal, the Commonwealth Court of Pennsylvania reversed the denial of the Claim Petition. First, the Court agreed with the WCAB – the failure to provide notice of the injury to the UEGF within the 45 days was not a complete bar to the claim. As the WCAB said, benefits can still be awarded from the date the notice was given. The Court simply looked at the words of the statute, noting that the legislature did not say failure to provide notice within the 45 days would be a total bar to the claim; such wording was used in other parts of the Act.

The Court went on to say that the injured worker merely filed the civil suit to protect the statute. No recovery was made in the civil suit. In fact, the Court found it significant that the injured worker asked the civil court to hold proceedings on that case pending the outcome of the workers’ compensation case. This, said the Court, showed the intention of the injured worker was primarily to receive the workers’ compensation benefits. On these facts, the Court held, this cannot be seen as the injured worker “selecting” the civil remedy over the workers’ compensation system, and to bar the injured worker from the workers’ comp benefits would be unjust.