Issue: Whether a carrier can lose their subrogation interest under the Act based on the conduct of an employer.

 

Background: The claimant was injured in the course and scope of his employment while operating motorcycle. The claimant subsequently pursued a third party claim on a theory of improper maintenance and requested that no repairs be made until his expert in the third party case had a chance to inspect the cycle. That request notwithstanding, the employer had the cycle repaired, and the claimant argued that their conduct should divest the employer of their statutory subrogation interest.

 

Ruling: The workers’ compensation judge denied the claimant’s request on the grounds that the repairs were performed as the result of a miscommunication rather than bad faith and the Board affirmed. On appeal, the Commonwealth Court affirmed the ruling because there was no evidence of bad faith conduct on behalf of the employer.

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Practical Significance: While the employer in Glass did not lose their subrogation interest, the court’s holding demonstrates that a carrier may lose their interest if the insured acts in bad faith. As such, when there appears to be a viable third party claim stemming from a work-related accident, carriers should thoroughly investigate, document, and secure, to the greatest extent possible, property or other materials relating to the potential claim.