Rawle’s Reports, August 2015: Employers Beware: Limitations of Immunity Under PA Workers’ Comp Act
Employers Beware: Limitations of Immunity Under Pennsylvania Workers’ Compensation Act
by Claudio J. DiPaolo
Prior to the enactment of the Workers’ Compensation Act of Pennsylvania (Act) in 1915, the only recourse workers had to obtain a monetary recovery for workplace injuries was to initiate a negligence lawsuit against employers in civil courts. Under the common law system, three restrictive defenses gradually developed: contributory negligence, fellow servant rule, and assumption of risk. These three defenses, all of which involved some element of fault, became known as the “unholy trinity.” 1 Despite these common defenses, Pennsylvania employers became increasingly concerned about large jury verdicts, while a significant number of injured workers remained uncompensated. Thus, both sides recognized the need for the “grand bargain” of 1915 in which workers agreed to limit their remedies to a set schedule of benefits, and in exchange, employers agreed to a lenient administrative scheme expediting the payment of benefits. In essence, the previously available remedies under tort law were prohibited under the “exclusive remedy” provision of the Act so as to expedite the payment of benefits to injured workers.
Section 303 (a) of the Act 2 states, in pertinent part:
The liability of an employer under this act shall be exclusive and in place of any, and all other liability to such employees, his legal representative, husband or wife, parents, dependents, next of kin or anyone otherwise entitled to damages in any action at law or otherwise on account of any injury or death as defined in section 301 (c)(1) and (2) or occupational disease as defined in section 108.
In most instances, Section 303 (a) of the Act divested the Courts of Common Pleas of jurisdiction to entertain causes of action based upon workplace injuries. However, employers could still elect to opt out of the Act and, as such, could be directly sued by workers in common law. In the 1974 amendments to Section 303, all common law tort actions were prohibited against direct, statutory, temporary and borrowing employers. 3
Of note, immunity is not considered an affirmative defense and, therefore, can be raised at any time, or by the court sua sponte. 4 In fact, where compensability is found by a workers’ compensation judge, a tort suit against the same employer will be dismissed. Thus, there are circumstances in which a prospective employer may wish to pursue such a designation in order to shield itself from civil liability.
Still, immunity for employers is not absolute in the workplace setting. An employer can be joined in a civil action by a third party, if an express contract of indemnity exists between the third party and the employer. There are also classes of “non-employees” who are able to sue their employers directly, notwithstanding the exclusivity provision of the Act. Indeed, home workers, domestic service workers, agricultural workers, conscientious objectors, volunteers, interns, and independent contractors retain the option of bringing a civil action against a quasi-employer for injuries sustained during the performance of work duties. Additionally, an executive of a corporation may still opt out of the Act if the executive has a certain ownership interest in a subchapter S or C Corporation, as defined by the Tax Reform Code of 1971. 5 Normally, parent corporations are immune from injuries sustained by employees of one of their direct subsidiaries. When, however, there is an established parent-subsidiary relationship between corporations and each corporation operates as a separate entity, engaged in different functions, only the corporation that controls the work of the employee will be immune from liability. 6
When an employer is uninsured for workplace injuries, the injured employee has various options to obtain relief, as the employer can obviously not assert immunity. For example, an injured worker may initiate claims under the employer’s uninsured and under-insured motor vehicle policies. Further, if an employer fails to purchase workers’ compensation insurance, or fails to obtain certification of self-insured status, that same employer can be sued civilly in the event of a workplace injury. 7 The uninsured employer may also face criminal or civil penalties for its failure to procure workers’ compensation coverage. However, it is important to note that when a worker elects to sue his or her employer in a direct action for failure to insure, the worker would likely not have a claim against the employer’s general liability policy since workplace injuries are usually excluded from such coverage. 8 In such circumstances, the Uninsured Employers Guaranty Fund (UEGF) 9 was legislatively created for the sole purpose of providing benefits to employees of uninsured employers. However, the UEGF would retain a subrogation interest with respect to any recovery realized by a worker against the uninsured employer or any other third party.
Another notable exception to the exclusivity provision of the Act arises when the injury is caused by an intentional act of a third person or a co-employee, without regard to the worker’s employment activities. 10 Similarly, an employer is not immune from tort liability for its “intentional” acts, but the injured worker will need to prove gross or reckless conduct in order to circumvent the immunity provisions of the Workers’ Compensation Act. Indeed, an employer was considered to have engaged in “outrageous conduct” when it intentionally withheld and altered lead absorption tests, causing injuries to its employees. 11
Furthermore, the dual capacity exception provides that if the worker was not injured in the course of employment but was on the employer’s premises at the time of the injury, the exclusivity provision does not apply. 12 However, the dual capacity doctrine has been severely limited in its application by the Courts. 13
An employer’s immunity from civil suit remains even if the workers’ compensation claim is barred by the expiration of the statute of limitations. 14 However, this may not necessarily be true when the statute of repose deprives the injured worker of any relief under the Act. In November of 2013, the Pennsylvania Supreme Court in Tooey v. AK Steel Corp. held that no specific recovery exists for the injured worker under the Act for an occupational disease which does not manifest itself prior to the expiration of the 300-week period prescribed by Section 301(c)(2) of the Act, 77 P.S. §481. The Court reasoned that benefits are not recoverable as a threshold matter in such a factual scenario, and thus, the injured worker is left without a remedy, invalidating employer immunity. 15 This represents a significant shift in Pennsylvania law which will potentially give rise to an increase in tort actions against employers by those employees who have developed latent occupational diseases.
Immunity is also inapplicable in other contexts, such as employer spoliation 16; discrimination based on sex, age or race 17; wrongful discharge 18; and injuries barred by third party “personal animus.” 19 An employee is also free to pursue remedies against his or her employer under OSHA. 20 Finally, an employee may seek redress against the employer for sexual harassment under the Pennsylvania Human Relations Act 21; as well as initiate causes of action for defamation and malicious abuse of process.
In summary, while Pennsylvania employers are afforded great protection by the exclusivity provision of the Workers’ Compensation Act, one must be mindful of the limitations of, and exceptions to, that immunity. An employer that presumes they are provided safe harbor by the Act may be gravely mistaken.
1 Haller, JS. “Industrial accidents – Workers’ Compensation Laws and the Medical Response”. Western J. of Med. 1988; 148: 341-348.
2 77 P.S. § 481.
3 See Cranshaw Const. Inc. v. Ghrist, 290 Pa. Super. 286, 434 A.2d 756 (1981).
4 Section 303 (b) of the Workers’ Compensation Act, 77 P.S. § 481(b).
5 Section 104 of the Workers’ Compensation Act, 77 P.S. § 22.
6 Kiehl v. Action Mfg. Co., 535 A.2d 571 (Pa. 1987); Mohan v. Publicker Industries, Inc., 222 A.2d 876 (Pa. 1966).
7 Workers’ Compensation Act § 305, 77 P.S. § 501.
8 Inman v. Nationwide Mutual Ins. Co., 641 A.2d 329 (Pa. Super. 1994). The worker may still recover from the employer’s or his own auto carrier for first-party benefits.
9 Workers’ Compensation Act § 303(b), 77 P.S. § 481(b).
10 Workers’ Compensation Act § 301 (c)(1), 77 P.S. § 411(1); Poyser v. Newman & Co., 522 A.2d 548 (Pa. 1987).
11 Martin v. Lancaster Battery Co., 606 A. 2d 444 (Pa. 1992)
12 Workers’ Compensation Act § 303(b), 77 P.S. § 481(b).
13 See Health v. Church’s Fried Chicken, Inc., 546 A.2d 1120 (Pa. 1988)
14 Workers’ Compensation Act § 303(b), 77 P.S. § 481(b).
15 Tooey v. AK Steel Corp., 81 A.3d 851 (Pa. 2013).
16 Minto v. J.B. Hunt Transport, Inc., 971 A.2d 1280 (Pa. Super. 2009).
17 See Michelson v. Exxon Research and Eng’g Co., 808 F.2d 1005 (3d Cir. 1987).
18 Michelson, supra.; Shick v. Shirey, 716 A.2d 1231 (Pa. 1998) (cause of action exists against employer where a worker alleges a discharge in retaliation for filing a workers’ compensation claim); See also Rothrock v. Rothrock Motor Sales, Inc., 833 A.2d 511 (Pa. 2005) (a supervisor was permitted to maintain a cause of action for wrongful discharge arising from his refusal to file a subordinate for pursing a workers’ compensation claim).
19 Workers’ Compensation Act § 303(b), 77 P.S. § 481(b).
20 McMullen v. WCAB (C&D Technologies, Inc.), 858 A.2d 147 (Pa. Cmwlth. 2004).
21 See Wolk v. Saks Fifth Ave., Inc., 728 F.2d 221 (3d Cir. 1984).
Claudio J. DiPaolo, Chair of Rawle & Henderson LLP’s Workers’ Compensation Section, has focused his practice in the area of workers’ compensation for over 15 years. He has defended workers’ compensation claims on behalf of self-insured corporations, insurance carriers, and various political entities.
Claudio began his career with an appointment to the Pennsylvania Department of Labor and Industry as an opinion writer, during which he drafted administrative law decisions involving adjudicated workers’ compensation matters. In this capacity, he also assisted in the editing of the treatise, Pennsylvania Workers’ Compensation: Practice and Procedure. He has given presentations to various groups and clients throughout the country in regard to establishing workplace safety programs, reducing workers’ compensation costs, compliance with federal and state employment laws, and effective claims handling.
Claudio studied Art History in Rome, Italy, and Political Science at Duquesne University. He earned his J.D. degree from the Delaware campus of the Widener University School of Law in 1993. He has been selected as a 2015 Pennsylvania Super Lawyer by Super Lawyers and Law & Politics Magazine.
Claudio can be reached directly at: (215) 575-4343 • firstname.lastname@example.org