UEGF Held to Same Rules as Other Parties in PA Workers’ Comp

We have previously discussed the Pennsylvania Uninsured Employers Guaranty Fund (UEGF) and how that fund fills in when an employee is injured while working for an employer who failed to carry PA workers’ compensation insurance coverage. The UEGF is certainly an improvement over the way things used to be (when being injured working for an uninsured employer often resulted in no benefits at all), though there is a long way to go before the UEGF could be said to mirror the “remedial” nature of the Pennsylvania Workers’ Compensation Act, which is designed to benefit the injured worker. A recent decision of the Commonweal Court of Pennsylvania does take a step in the right direction.

One of the problems with the UEGF, as it currently functions, is that it operates, in some ways, above the law. For example, a workers’ compensation insurance carrier in PA can be assessed penalties if it violates the Pennsylvania Workers’ Compensation Act; the UEGF is not subject to penalties for any reason. A regular insurance company can be assessed counsel fees if it presents an “unreasonable contest;” again, the UEGF is immune to this risk. We have wondered where the lines would be drawn to hold the UEGF to any responsibility.

In Pennsylvania Uninsured Employers Guaranty Fund v. Workers’ Compensation Appeal
Board (Dudkiewicz)
, the injured worker fell from a roof while working for a subcontractor who failed to carry workers’ comp insurance. As often happens in cases like this, the UEGF filed a “Petition for Joinder,” which brings other parties into the case (other subcontractors or the general contractor), to give the Workers’ Compensation Judge (WCJ) a different party to assign liability.

A Petition for Joinder, by the rules, must be filed within 20 days of “the first hearing at which evidence is received regarding the reason for which joinder is sought.” The Joinder must also set forth the specific factual and legal basis for the Joinder. In this case, the WCJ found that the UEGF had knowledge of the need to pursue a Joinder on February 9, 2010 (when the injured worker testified about what companies were working on the jobsite), yet the UEGF did not file for Joinder against one party until May 27, 2010, and another on September 3, 2010. The WCJ dismissed both Joinder Petitions, as they were untimely, and failed to state the reasons for the Joinder. In the final decision, the WCJ granted the Claim Petition against the uninsured employer (and the UEGF). This was appealed to the Workers’ Compensation Appeal Board (WCAB), who affirmed the decision of the WCJ (A technical issue was remanded to the WCJ, but not relevant to our discussion).

On appeal to the Commonwealth Court of Pennsylvania, the decision of the WCJ was again affirmed. First, the Court denied the argument that testimony of a party is not “evidence” to trigger the 20 day period. The important thing, said the Court, was the testimony put the UEGF on notice of the need for a Joinder. Similarly, the Court denied the suggestion by the UEGF that it is not an “insurer” and should be held to a different rule (or, more like, should not be held to any rules). In a curt dismissal, the Court said, “We reject the suggestion that where UEGF fails to pursue its rights in a
timely manner, the property remedy is for this Court to disregard the policies
underlying joinder practice and the twenty-day limit set forth in §131.36(d).”

While we continue to wish the UEGF could be subject to the same standards the other insurance carriers must face, we are heartened to see some responsibility placed on them.