A few days ago, the Pennsylvania Supreme Court weighed in on the latest of the seemingly never-ending mutations of an employer’s “absolute” right to subrogation under Section 319 of the Workers’ Compensation Act. Few and far between are the instances where subrogation can be thwarted. Before the court, in somehow a matter of first impression, was presented the propriety of an insurer actually attempting to seek subrogation against its own insured.  Historically, the law has generally supported a equitable prohibition against such a practice. Of course, history has never met Section 319 of the act!

Normally, subrogation in the workers’ compensation context stems from an automobile policy. In the matter of Arlet v. Workers’ Compensation Appeal Board (Commw. of Pa.), the Supreme Court was presented with potential subrogation from a commercial hull policy, which is essentially akin to an automobile policy, except for a boat. Moreover, in a bizarre role reversal, the carrier in Arlet seeking subrogation was actually the Hull policy carrier seeking subrogation against workers’ compensation payments, and not the other way around. The Pennsylvania Commonwealth Court in the underlying decision in Arlet found Section 319 to be equally applicable to any employer or insurance company that makes payment for an injury and disability that is initially found not to be compensable under the Workers’ Compensation Act, by appealing to the plain language of paragraph two of the section.