INSURANCE-FINANCIAL RESPONSIBILITY LAW-SUBROGATION-WORKERS’ COMPENSATION-HLA BENEFITS

Alpini v. Workers’ Comp. Appeal Bd. (Tinicum Twp.), 2023 Pa. LEXIS 684 (S. Ct. May 16, 2023) (Brobson, J.). Section 1720 of the Motor Vehicle Financial Responsibility Law (MVFRL), 75 Pa. C.S. § 1720, provides, in relevant part that, “[i]n actions arising out of the maintenance or use of a motor vehicle, there shall be no right of subrogation or reimbursement from a claimant’s tort recovery with respect to workers’ compensation benefits . . . or benefits paid or payable by a program, group contract or other arrangement whether primary or excess.” In this discretionary appeal, we must determine whether Section 1720 precludes Tinicum Township (Employer) from subrogating against Christopher Alpini’s (Claimant) third-party settlement of claims that he made pursuant to Section 493 of the Liquor Code, commonly referred to as the Dram Shop Act, for payments that Employer made to Claimant under what is commonly referred to as the Heart and Lung Act (HLA). Stated more simply, we must determine whether Claimant’s Dram Shop Act claims “arose out of the maintenance or use of a motor vehicle” such that Employer is precluded from subrogating against Claimant’s third-party settlement of such claims for the payments that Employer made to Claimant under the HLA. Upon careful review, we hold that Claimant’s Dram Shop Act claims “arose out of the maintenance or use of a motor vehicle,” and, therefore, Section 1720 precludes Employer from subrogating against Claimant’s settlement of such claims. Because the Commonwealth Court reached the opposite conclusion, we reverse the order of that court. Having set forth the statutory framework and relevant precedent under which the present controversy arose, we now turn to the underlying facts and procedural history of this case, which are not in dispute. On April 17, 2011, while working for Employer as a police officer, Claimant sustained work-related injuries to his spine, ribs, left knee, left hip, and pelvis, when an intoxicated driver (Driver) struck Claimant’s patrol car with his vehicle. Employer issued a temporary notice of compensation payable, accepting liability for Claimant’s work-related injuries. The temporary notice of compensation payable thereafter converted to a notice of compensation payable by operation of law. Employer, however, paid HLA benefits to Claimant, and Claimant signed over his workers’ compensation wage loss benefits to Employer as required by the HLA. Claimant and his wife filed a civil action against the third-party tortfeasors responsible for Claimant’s work-related injuries—i.e., Driver, Sue-Deb, Inc. d/b/a Jimmy D’s (Jimmy D’s), and 500 Jansen Inc. d/b/a Lou Turks (Lou Turks). Claimant asserted a cause of action against Driver for negligence and separate causes of action against Jimmy D’s and Lou Turks (collectively, Tavern Owners) for violations of the Dram Shop Act—i.e., for selling/furnishing liquor to Driver while he was visibly intoxicated. On September 16, 2013, Claimant and his wife executed a General Release Settlement (Settlement Agreement), whereby they settled their claims against Driver and Tavern Owners in exchange for a total settlement of $1,325,000—$25,000 paid by Driver and his insurance company; $375,000 paid by Lou Turks; and $925,000 paid by Jimmy D’s. After deductions for attorneys’ fees ($435,906) and legal costs ($17,280), Claimant received a net recovery of $871,814. Thereafter, Employer filed a modification petition, seeking subrogation from Claimant’s third-party recovery relative to Tavern Owners only. Employer asserted a total subrogation lien of $364,024.60, which was comprised of $186,063.41 in wage loss benefits and $177,961.19 in medical benefits. The Commonwealth Court concluded, inter alia, that the Board did not commit an error of law by determining that Employer could subrogate against Claimant’s third-party settlement with Tavern Owners stemming from liability under the Dram Shop Act for the payments that Employer made to Claimant under the HLA. Applying that clear and unambiguous interpretation of Section 1720 of the MVFRL to the facts of this case, we must conclude that the “action” through which Claimant asserted his Dram Shop Act claims against Tavern Owners “arose out of the maintenance or use of a motor vehicle.” Claimant and his wife filed a single lawsuit/judicial proceeding against both Tavern Owners and Driver, wherein they set forth a cause of action against Driver for negligence and separate causes of action against Tavern Owners for violations of the Dram Shop Act. It is that lawsuit/judicial proceeding as a whole, and not the individual causes of action that Claimant and his wife asserted against Tavern Owners for violations of the Dram Shop Act, that constitute the “action” for purposes of Section 1720. Additionally, that action originated, stemmed, and/or resulted from the motor vehicle collision involving Driver’s vehicle and Claimant’s patrol car—i.e., from Driver striking Claimant’s patrol car with his vehicle. For these reasons, we hold that Section 1720 clearly and unambiguously precludes Employer from subrogating its payment of HLA benefits against Claimant’s third-party settlement of his Dram Shop Act claims with Tavern Owners because the action that Claimant and his wife filed against Tavern Owners “arose out of the maintenance or use of a motor vehicle.”