$1.4M workers' comp settlement upheld, despite carrier objections

A workers’ compensation insurance carrier was unable to undo a $1.4 million third-party settlement, despite arguments that it wasn’t given a full hearing to contest the breakdown of the accord, the Pennsylvania Superior Court has ruled.

On August 29, 2022, a unanimous three-judge panel rejected Hartford Insurance Group’s attempts to undue a trial court’s approval of the settlement, which amounted to $580,000 for the injured worker, John Gleason, and $870,000 in a loss of consortium claim to his wife, Elaine.

The breakdown is significant because in Pennsylvania employers and carriers facing workers’ compensation litigation are not entitled to subrogate loss of consortium claims to the spouses of injured workers.

The Hartford had argued that the breakdown of the settlement, with 60% going to the spouse, was a “ploy” that would allow the plaintiffs to hold onto more of the settlement by circumventing the carrier’s the workers’ compensation subrogation lien. The carrier contended that the trial court did not allow it to be fully heard regarding its challenges to the settlement breakdown.

However, Judge James Gardner Colins, who wrote the court’s opinion, said the carrier largely failed to preserve its challenges regarding the adequacy of the trial court’s proceedings.

“Because insurer did not raise any purported procedural irregularities prior to or during the hearing at issue in this appeal, we are constrained to find that insurer’s due process argument is waived,” says Colins, who was joined by Judges Jack Panella and Carolyn Nichols.

The suit stemmed from an incident where Gleason, a field service technician for Medical Imaging Group, was performing maintenance on an MRI machine, when an explosion happened, causing him to be badly burned.

After filing suit, the Gleasons and the defendants, which did not include Hartford, reached a proposed $1.45 million settlement, and the parties petitioned for court approval. Hartford, which was not a party to the case, sought to challenge the settlement. Since no parties objected a hearing was convened. According to Colins, the Gleasons sought to have live testimony on the loss of consortium issue, but the trial court agreed with Hartford and only allowed the parties to present briefs and oral arguments on the topic.

A week after the hearing, the court again approved the settlement, and the then carrier filed an appeal to the Superior Court. In an unusual move procedurally, the carrier formally filed its petition to intervene several months later.

The carrier challenged the decision, but Colins said Hartford waived most of its issues since the carrier didn’t file its motion to intervene until months after both the court’s initial approval and the carrier’s initial appeal. Further, Colins said, the carrier didn’t object during the proceedings, and that he agreed that the carrier had been given a full and fair opportunity to submit evidence before the court.

“The trial court invited insurer to engage in negotiations with plaintiffs and defendants regarding the settlement apportionment prior to the hearing, yet insurer expressly declined to even participate in discussions until the amount of consortium was determined by the court,” Colins says.

Regarding Hartford’s argument that there was insufficient evidence to allow the settlement’s 60% loss of consortium breakdown, Colins rejected that argument, too.

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“Insurer’s evidence did not in any way rebut the findings of the harm to Mrs. Gleason,” Colins says. “Moreover, insurer offered no evidence to show that the apportionment of the settlement constituted a ‘ploy’ to evade the subrogation lien.”

Thomas Hurd of McElroy, Deutsch, Mulvaney & Carpenter, who represented the Gleasons, said he was gratified by the Superior Court’s decision.

“The injured party made a very good recovery, but his wife, as often happens in these types of cases, was really struggling,” Hurd says. “While his treatment was going to be covered by the workers’ compensation carrier, her treatment was not.”

Counsel for Hartford, David Kunz of the Dombrowski Group, declined to comment for the story without first speaking with his client.