Injured Worker Left With No Penalty Payments

A majority of the en banc Commonwealth Court left certain workers’ compensation claimants a bit nowhere when it held that neither the Workers’ Compensation Security Fund, nor an employer whose insurer has become insolvent, may be deemed liable for penalties assessed for the fund’s failure to timely pay employees’ covered medical expenses.

Considering an apparent issue of first impression, the majority in Constructo Temps Inc. v. Workers’ Compensation Appeal Board, PICS Case No. 06-1217 (Pa. Commw. Sept. 8, 2006) Cohn Jubelirer, J.; Friedman & Smith-Ribner, JJ., concurring & dissenting (28 pages), ruled that absent wrongdoing on the employer’s part, an employer that obtains workers’ compensation coverage from an insurer that is later declared insolvent cannot be held liable if the Workers’ Compensation Security Fund fails to pay for its employee’s medical treatments. The employer passes its obligations under the Workers’ Compensation Act to its insurer, and by operation of law, the Fund assumes such an insolvent insurer’s liabilities, the majority observed. Further, because precedent dictates that the Fund does not meet the act’s definition of “insurer” or “employer,” the Fund is simply not subject to the act’s penalty provisions, the majority reasoned.