Notice of a Work Injury in PA Workers’ Compensation

No matter what kind of company one works for, as long as one is an “employee,” as defined in the Pennsylvania Workers’ Compensation Act (and not otherwise excluded by other laws, such as federal employees, military personnel, maritime workers and railroad workers), one is entitled to workers’ compensation benefits if an injury is suffered while at work. This is true whether one works for a sole proprietor, small corporation or a major international conglomerate.

When a work injury takes place in PA, notice is required to be given to the “employer” within 120 days of the injury. Failure to do so can result in the injured worker being barred from receiving any workers’ compensation benefits for the injury. This can get more complicated when we are dealing with a sole proprietorship or a small corporation, where the owner is the injured worker. To whom must this notice be provided?

The Commonwealth Court of Pennsylvania recently addressed this issue in Erie Insurance Property & Casualty Company v. Heater (Workers’ Compensation Appeal Board). In this case, the injured worker was the owner of a sole proprietorship. By definition, the “employer” had notice of the work injury as soon as the injured worker had the injury, since they are the same entity.

On September 28, 2015, Claimant was coming down off a ladder, when he tripped over a shovel and fell suffering a “a C3 teardrop fracture and spastic quadriparesis, for which he underwent immediate surgery, including an extensive fusion from C2 to T1.” While it is unclear when the workers’ compensation insurance carrier was notified, a Notice of Denial (NCD) was issued on February 24, 2017. There is no evidence that notice was provided to the insurance carrier within 120 days of the injury.

The underlying litigation before the Workers’ Compensation Judge (WCJ) was complicated, being appealed and remanded back to the WCJ twice, for reasons not relevant to our discussion. Ultimately, the WCJ granted the Claim Petition, finding that notice to the “employer” was instantaneous, since Claimant was also “employer.” This was affirmed by the Workers’ Compensation Appeal Board (WCAB).

Upon further appeal, however, the Commonwealth Court of Pennsylvania reversed the decision, finding that notice was not given within 120 days, barring Claimant from receiving any workers’ compensation benefits. The Court examined the PA Workers’ Compensation Act (Act), as well as existing cases on the subject. If there is a different legal entity than the injured worker, such as with a corporation, then notice to the “employer” is satisfied by the knowledge held by the injured worker (when the injured worker is the owner). This is to respect the existence of a different legal entity from that of the injured worker. If this distinction was not respected, explained the Court, we would be disregarding the entire meaning of a corporation (which is a separate legal entity).

But, as here, if the entity is a sole proprietorship, then there is no separate legal entity from the injured worker. Thus, a reporting requirement within a single legal entity would be an absurd result (and one not in compliance with the Act).

The Court further noted that this determination did not end the issue. Instead, the Court had to reconcile the fact that the language in the Act says that notice must be provided to the “employer.” In no part does it mention any requirement of notice to the insurance carrier. However, the Court reasoned that “Section 401 of the Act provides that ‘employer,’ when used in this article, shall mean the employer as defined in article one of this act, or his duly authorized agent, or his insurer if such insurer has assumed the employer’s liability . . . .’” This can signify that, in circumstances such as these, the “insurance carrier” is within the definition of “employer.”

In summing up the case, the Court concluded, “For the foregoing reasons, we hold that, under these circumstances, where a claimant is both the injured employee and the sole proprietor/employer, the ‘employer’ to whom the claimant must notify of a work-related injury for the purposes of Section 311 is the insurer that bears the ultimate liability for the claim.”