PA Workers’ Comp Insurance Carriers Get No Credit Against Future Medical Benefits
When an injured worker in PA settles a personal injury case against a third party (typically from a work-related car accident, a products liability case or similar), the workers’ compensation insurance carrier has its hand out to get repaid for the wage loss and medical benefits provided to the injured worker. For past wage loss and medical benefits, that remains the law. For future medical benefits, however, things have changed dramatically.
Recently, the Supreme Court of Pennsylvania issued a decision in Whitmoyer v. Workers Compensation Appeal Board (Mountain Country Meats). The Court found that while a workers’ compensation insurance carrier is entitled to a credit against future workers’ compensation wage loss benefits (when a third party settlement is more than the insurance carrier has already paid), the insurance company is NOT entitled to a credit against future medical benefits. This represents a large change in practice.
When a third party case is settled in the presence of a workers’ comp case in PA, there is a specific form one uses to calculate both the lien (how much the workers’ compensation insurance carrier is getting back for money they have already paid) and the “balance of recovery” (dealing with how the money above the lien amount is treated for future payments). The balance of recovery is used to calculate the “reimbursement rate” for future payments. Instead of having to pay the entire amount due for future obligations, the workers’ comp insurer would only have to pay that amount times the reimbursement rate, typically less than half. This form is called a “Third Party Settlement Agreement” (TPSA).
Though the official TPSA issued by the Pennsylvania Bureau of Workers’ Compensation (LIBC-380) says “The employer/insurer is responsible for ___ percent of any future weekly benefits and medical expenses to satisfy its pro rata share . . ., “ the Supreme Court of PA in Whitmoyer found that this credit only applies to wage loss benefits, and not medical (which still must be paid in its entirety).
The Court observed that the language in the Pennsylvania Workers’ Compensation Act (Act) dealing with future payment obligations is different than the language talking about payments which have already been made. Since the words of a statute must be given meaning, said the Court, this difference in language requires that the two types of payments be examined separately. Specifically, in talking about future payments, the Act speaks of a credit against “any future instalments of compensation.” The Court found that since medical bills are not payable in installments, as wage loss benefits are, this language must mean the future credit does not apply to future medical bills.
While Courts exist to interpret laws, rather than make them, sometimes the interpretation of a law has the actual impact of changing the law. The use of a TPSA to give the workers’ compensation insurance carrier a future credit against both wage and medical benefits has been so ingrained in the system, that this decision will dramatically change how the forms are done (and will likely inspire the Bureau to change/correct the language on the TPSA stating that the future credit applies to both wage and medical). This is a tremendous victory for the injured worker in PA. Ultimately, the Court followed the letter of the law, which is all we can ask of the judicial branch.