Pep Boys, Inc. v. WCAB (Young)

In Pep Boys, Inc. v. Workers' Compensation Appeal Board (Young), 818 A.2d 601 (Pa. Cmwlth. 2003), the insurer voluntarily agreed to compromise its subrogation lien and accept less money than it was entitled to receive in order "to facilitate the settlement of a third-party action." Id. at 603. The insurer subsequently sought to recover the compromised amount from the Supersedeas Fund. Id. In resolving the issue before it, this Court examined the language in Section 319, which provides: "Where the compensable injury is caused in whole or in part by the act or omission of a third party, the employer shall be subrogated to the right of the employe . . . against such third party to the extent of the compensation payable under this article by the employer." 77 P.S. 671 (quoted in Young, 818 A.2d at 604). The Court then held: Pursuant to this statutory mandate, an insurer must seek subrogation for the full amount of compensation it is owed from the third-party tortfeasor responsible for the work injury. If, as here, the insurer voluntarily chooses to compromise the lien amount it is entitled to receive by way of statutory subrogation, it cannot then recoup the compromised amount through the Fund. Although Insurer was entitled to receive the full amount of its workers' compensation lien from the proceeds of the third-party tortfeasor settlement pursuant to Section 319 of the Act, it chose to compromise that amount. The Fund may not be used to finance Insurer's compromise. Young, 818 A.2d at 604.