       IN THE COMMONWEALTH COURT OF PENNSYLVANIA

Craig M. Whitmoyer,                    :
                        Petitioner     :
                                       :
            v.                         :   No. 614 C.D. 2015
                                       :   Argued: September 14, 2016
Workers' Compensation Appeal           :
Board (Mountain Country Meats),        :
                       Respondent      :


BEFORE:     HONORABLE MARY HANNAH LEAVITT, President Judge
            HONORABLE ROBERT SIMPSON, Judge
            HONORABLE P. KEVIN BROBSON, Judge
            HONORABLE PATRICIA A. McCULLOUGH, Judge
            HONORABLE ANNE E. COVEY, Judge
            HONORABLE JULIA K. HEARTHWAY, Judge
            HONORABLE JOSEPH M. COSGROVE, Judge


OPINION
BY JUDGE SIMPSON                       FILED: December 1, 2016


            In this factually complex workers’ compensation appeal involving an
employer’s subrogation rights, we are asked whether those rights extend beyond
indemnity payments and also reach payments toward medical bills. Although this
issue has already been decided, new arguments are raised in reliance on recent
Supreme Court decisions.


            Craig Whitmoyer (Claimant) argues the workers’ compensation
authorities erred in granting Mountain Country Meats’ (Employer) petition to
modify a compensation agreement reached after a third-party negligence claim was
resolved. The parties refer to the compensation agreement at issue as a “third-
party settlement agreement.”    The modification reflected additional medical
expenses Employer paid for Claimant’s 1993 work injury.                   The third-party
settlement agreement contemplated that, after payment of the employer’s accrued
(past) workers’ compensation lien, the $189,416.27 balance of the claimant’s third-
party negligence recovery would constitute a fund for credit against “future
workers’ compensation payable.”1               The primary issue is whether the term
“compensation” in Section 319 of the Workers’ Compensation Act2 (Act) (relating
to subrogation of employer to rights of employee against third persons)
encompasses medical expenses in addition to indemnity benefits. Concluding that
it does, we affirm.


                                         I. Background
                We summarize the pertinent facts found by the Workers’
Compensation Judge (WCJ) and the procedural history as follows. In January
1993, Claimant sustained a work-related amputation of his right arm at the distal
forearm. WCJ’s Op., 10/17/13, Finding of Fact (F.F.) No. 1; Reproduced Record
(R.R.) at 65a.


                Several agreements followed, the third of which is the most important
now. First, in April 1993, Employer3 entered into a supplemental agreement that
“confined [Claimant’s work injury] to the specific loss of the amputation of the


       1
           Reproduced Record (R.R.) at 64a.
       2
           Act of June 2, 1915, P.L. 736, as amended, 77 P.S. §671.
       3
         Employer has been and is represented throughout the proceedings by its workers’
compensation insurance carrier, Selective Insurance Company of America (Selective). We refer
to both Employer and Selective, as pertinent to the discussion, throughout this opinion.



                                                 2
right upper extremity at the distal forearm.”       F.F. No. 2; R.R. at 66a.   The
supplemental agreement stated the defined injury entitled Claimant “to a 20 week
healing period and 370 weeks of specific loss benefits [at $237.50 per week after
5/22/93].” F.F. No. 2; R.R. at 66a. The supplemental agreement also stated: “The
20 week healing period expires on 5/21/93. Compensation was paid from 1/2/93
thru [sic] 5/21/93 for 20 weeks at a rate of $158.33 per week for a total of
$3,166.60, which includes both the waiting period and the healing period.” R.R. at
66a.


             Second, as memorialized in a December 16, 1994, stipulation of facts
signed by Claimant and Employer, Claimant commuted the weekly payments
agreed on by the parties in the supplemental agreement into a lump sum payment
of $69,994.64 for his specific loss. R.R. at 69a-70a. The stipulation also stated:
“[Employer] remains responsible for all reasonable, necessary, and related medical
expenses and/or treatment for [Claimant’s] work injuries.” R.R. at 70a. At this
point, Employer’s only on-going liability for payments under the Act was for
Claimant’s medical bills.


             Third, about five years later, in April 1999, Claimant and Employer
entered into the controlling agreement, the “third-party settlement agreement,”
reflecting Claimant’s recovery of $300,000 from Hollymatic Corporation and
Dantro Associates. F.F. No. 3; R.R. at 64a. As to past-paid benefits, the third-
party settlement agreement indicates Employer was entitled to a subrogation lien of
$110,583.73, minus $28,955.86 for Employer’s pro rata share of the third-party
litigation costs, for a net lien recovery of $81,627.87. R.R. at 64a.



                                          3
             What remains at issue here is the rest of Claimant’s recovery from the
third-party tortfeasor. The balance of the recovery in the negligence claim was
$189,416.27.     The third-party settlement agreement stated the “BALANCE         OF

RECOVERY   shall constitute [a] fund for credit against future workers’ compensation
payable, subject to reimbursement to [C]laimant of expenses of recovery at the rate
of 37% on credit used.” Id. (Emphasis added.) Thus, Employer would be liable to
Claimant for 37% of future medical expenses up to the balance of recovery,
representing Employer’s share of the litigation costs incurred by Claimant in his
negligence action. F.F. No. 3. The emphasized language quoted above is the basis
for the current contest.


             The parties further stipulated: (1) the third-party settlement agreement
contains accurate figures and calculations; (2) Claimant reimbursed Selective
$81,627.87, the amount of Employer’s net lien according to the third party
settlement agreement; (3) as of February 2013, Selective paid $206,670.88 in
medical benefits for Claimant’s work injury; and, (4) Claimant did not pay any
amount toward these bills.


             About a month later, in a May 26, 1999 letter that included a check for
the $81,627.87 accrued (past) lien amount, Claimant’s counsel advised Selective
“it is [Claimant’s] position that no credit can be applied to future medical bills.
Instead, under Section 319 such credit only applies to ‘future installments of
compensation’” and “[f]uture medical expenses [do] not constitute ‘installments of
compensation.’” R.R. at 63a; see also F.F. No. 5.




                                         4
             At this point, the only on-going liability of the Employer under the
third-party settlement agreement was to pay Claimant a portion of related medical
bills (representing a payment toward litigation costs), until the balance of recovery
fund was exhausted.


             As stipulated by the parties, Employer paid all the medical bills for
several years, while the Claimant did not pay any of his related medical bills. In
September 2012, Employer filed its modification petition, which is currently
before us. Hearings ensued before the WCJ.


             Employer submitted the deposition testimony of Jodi Bell, a current
supervisor for Selective, who, during 1998 and 1999 was a claims representative
who worked on Claimant’s case. F.F. No. 6(a). The WCJ made the following
additional findings based on Bell’s testimony:

             b.    Ms. Bell became aware of a $300,000 settlement.

             c.   Ms. Bell received the [1999 Supplemental]
             Agreement, signed it and filed it with the Bureau of
             Workers’ Compensation.

             d.    She received the $81,627.87 lien reimbursement
             check and Claimant’s counsel’s May 26, 1999 letter.

             e.     Ms. Bell did not have authority to agree to the
             interpretation of the future installments of compensation
             as outlined in the May 26, 1999 letter.

             f.      Ms. Bell did not respond to the May 26, 1999
             letter.




                                         5
F.F. Nos. 6(b)-(f). The WCJ found Bell’s uncontradicted deposition testimony
credible. F.F. No. 7. Claimant did not present any evidence other than the May
26, 1999 letter. F.F. No. 9.


               In addition, the WCJ determined the parties agreed that, as of
February 2013, Selective paid $206,670.88 in medical bills for Claimant’s work
injury. F.F. No. 4(c). Claimant did not reimburse Employer or Selective from the
balance of recovery fund for any medical expenses paid for Claimant’s work
injury. F.F. No. 4(d).


               Based on his findings and conclusions, the WCJ modified the third-
party settlement agreement. In particular, the WCJ modified the percentage of
Employer’s reimbursement to Claimant of negligence action litigation expenses of
recovery from 37% “to 26.09% on credit used for future medical expenses up to
$189,416.27.”4 F.F. No. 8.5


               Claimant appealed to the Workers’ Compensation Appeal Board
(Board), arguing he never signed the third-party settlement agreement; thus, it was
unenforceable. He also asserted the WCJ erred in concluding Section 319 of the
       4
          As discussed more fully below in note 8, the method of recovery of negligence action
litigation expenses is not at issue. Therefore, the “percentage calculation” is not important to our
disposition. Claimant took the position that no medical bills should be involved as a matter of
law, and that the third-party settlement agreement did not apply to his situation.
         The only significance of the “percentage calculation” here is that it concretely evinces the
WCJ’s rejection of Claimant’s positions.
       5
          In an Amended/Corrected Decision, the WCJ indicated that, contrary to what he stated
in his initial decision, Claimant did, in fact, submit written argument in this matter. In all other
respects, the WCJ’s initial decision remained unchanged.



                                                 6
Act applies to medical expenses as well as indemnity benefits. The import of
Claimant’s arguments was that he could retain the entire “balance of recovery.”


            As to Claimant’s assertion that he never signed the third-party
settlement agreement, the Board concluded Claimant abandoned that argument by
failing to address the issue in his brief. Even if Claimant preserved the issue,
Bell’s credited testimony belied that position because she indicated that not only
did Claimant’s counsel prepare the third party settlement agreement, but he
remitted payment of Employer’s accrued (past) lien pursuant to the agreement.
The Board noted that Bell apparently filed this document with the Bureau of
Workers’ Compensation without objection from Claimant or his counsel.


            Further, citing Deak v. Workmen’s Compensation Appeal Board
(USX Corp.), 653 A.2d 52 (Pa. Cmwlth. 1994), the Board rejected Claimant’s
contention that Section 319 of the Act only applied to indemnity benefits. The
Board stated: “It is well settled that medical expenses are compensation payments
subject to subrogation rights against a claimant’s recovery from a third party and
subject to a credit toward future compensation where the recovery exceeds
compensation paid at the time of recovery.” Bd. Op., 3/20/15, at 7.


            The Board also rejected Claimant’s assertions that the parties entered
into a separate contract based on correspondence from Claimant’s counsel to Bell
(including the May 26, 1999 letter) in which, Claimant argued, the parties agreed
credit would not be applied to future medical expenses. The Board reasoned that




                                        7
the letters reflected no express agreement on Selective’s part to abide by
Claimant’s request and no meeting of the minds.


              Further, the Board rejected Claimant’s assertion that Selective’s
failure to act in response to those communications resulted in a waiver of
Selective’s right to a credit for future medical expenses.              Finally, the Board
rejected Claimant’s argument that Employer and Selective should be equitably
estopped from asserting a claim for a credit against future medical expenses,
concluding Selective never agreed to forego its right to future credit for medical
costs, and, although subrogation is an equitable doctrine, the legislature’s adoption
of the doctrine in the Act, created no equitable exceptions to an employer’s
subrogation rights. Claimant now petitions for review to this Court.


                                          II. Issues
              On appeal,6 Claimant asks whether the Board erred in interpreting the
phrase “instalments of compensation” in Section 319 of the Act as encompassing
medical expenses in addition to indemnity benefits. In the alternative, Claimant
asks whether the Board erred in concluding that: (1) no binding agreement existed
in which Employer or Selective agreed that no subrogation lien credit would be
applied to medical expenses; (2) Employer did not waive or release its rights to a
credit for future medical expenses; and, (3) Employer and Selective are not
estopped from asserting a credit for future medical expenses.


       6
         Our review is limited to determining whether the WCJ’s findings of fact were supported
by substantial evidence, whether an error of law was committed or whether constitutional rights
were violated. Phoenixville Hosp. v. Workers’ Comp. Appeal Bd. (Shoap), 81 A.3d 830 (Pa.
2013).



                                              8
                                 III. Discussion
            A. Section 319 of the Act – Meaning of “Compensation”
                                 1. Contentions
            Claimant first asserts Selective is not entitled to a credit applied to
future medical expenses (and thus not entitled to a modification of the payment of
medical expenses incurred after satisfaction of a subrogation lien) because medical
expenses do not constitute “instalments of compensation” under Section 319 of the
Act. Thus, Claimant argues Section 319 of the Act does not allow a credit against
medical expenses incurred after payment of a third-party lien.


            Claimant contends that, in support of its conclusion that Selective was
entitled to a credit against future medical expenses, the Board cited only Deak. He
acknowledges that, while that may have been the holding of Deak, the Court in that
case relied only on Dasconio v. Workmen’s Compensation Appeal Board
(Aeronca, Inc.), 559 A.2d 92 (Pa. Cmwlth. 1989) in support of its conclusion.
Claimant asserts a close examination of Dasconio calls into question whether the
Board properly relied on it in reaching its decision. To that end, Dasconio did not
address the precise issue presented here, whether the phrase “instalments of
compensation” in Section 319 of the Act includes medical expenses.


            Here, Claimant contends, the Board summarily included medical
expenses in the definition of “compensation” without appreciating the effect that
the phrase “future instalments” has in modifying the term “compensation.”
Claimant acknowledges that, when used in Section 319’s phrase “the amount of
compensation paid or payable at the time of recovery or settlement,” the term
“compensation” includes medical expenses paid to that date.          He maintains,


                                         9
however, “compensation” is not defined in the Act, and, as employed in the Act,
the term does not always include medical expenses.


             To that end, he asserts that in Giant Eagle, Inc. v. Workers’
Compensation Appeal Board (Givner), 39 A.3d 287 (Pa. 2012), our Supreme
Court’s Opinion Announcing the Judgment of the Court (OAJC), states: “When we
examine Article III of the Act, the shifting and sometimes uncertain nature of the
General Assembly’s use of the term ‘compensation’ is readily apparent.              In
general, however, Article III uses the word ‘compensation’ most frequently to
denote wage loss benefits.” Id. at 291. Claimant argues that, when interpreting
what “compensation” may be suspended under Section 314(a), 77 P.S. §651(a),
when a claimant fails to attend an ordered examination, the judgment in Giant
Eagle was that “compensation” as used in Section 314(a) need not always include
medical expenses. Id. at 298.


             Claimant asserts that, in applying Section 319 to determine the extent
of the credit after satisfying the past lien, the effect of the adjective “instalments”
cannot be overlooked. He contends that, in giving effect to the words of the
legislature, statutory words should not be interpreted in isolation, but must be read
with reference to the context in which they appear.


             Claimant maintains the word “installments” appears elsewhere in the
Act. In particular, Section 308 provides: “Except as hereinafter provided, all
compensation payable under this article shall be payable in periodical installments,
as the wages of the employe were payable before the injury.” 77 P.S. §601.



                                          10
Claimant argues that while payments for indemnity benefits are clearly
installments of compensation, medical expenses, on the other hand, are not to be
paid periodically. Instead, Section 306(f.1)(1)(i) of the Act requires the employer
to provide payment for medical services “as and when needed.” 77 P.S. §531(1)(i)
(emphasis added). Claimant maintains that the Supreme Court in Giant Eagle,
noted that, given the latter language, “medical expenses are not to be paid in
installments ….” Id. at 293. Thus, he contends medical expenses cannot be
considered part of “instalments of compensation.”


             Further, Claimant asserts, while considering the context of Section
319 within the Act as a whole, it is worth noting that this Court in Dasconio,
considered the language of the Section 306(f)(1) (now Section 306 (f.1)(1)(i)), to
expressly declare “the medical expenses aspect of compensation remains an aspect
for which the employer is liable—all the medical expenses related to the
compensable injury.” Id. at 228. Claimant argues this is buttressed by Section
306(f.1)(7) of the Act, which states:

             A provider shall not hold an employe liable for costs related to
             care or service rendered in connection with a compensable
             injury under this act. A provider shall not bill or otherwise
             attempt to recover from the employe the difference between the
             provider’s charge and the amount paid by the employer or the
             insurer.

77 P.S. §531(7).


             Thus, Claimant contends imposing a credit on medical expenses
incurred after resolution of the subrogation lien violates Section 306(f.1) of the
Act. To that end, the employer would no longer be liable for “all the medical

                                        11
expenses,” and the claimant would become “liable for costs related to care.”
Pet’r’s Br. at 13.


               Claimant further notes the Act must be liberally construed to
effectuate its humanitarian objectives. Hannaberry HVAC v. Workers’ Comp.
Appeal Bd. (Snyder, Jr.), 834 A.2d 524 (Pa. 2003).                       As such, borderline
interpretations are to be construed in the injured party’s favor. Id.


               Mindful of those principles and giving effect to the language of the
sections cited above, Claimant argues, it becomes quite apparent that, when the
credit in the amount of third-party recovery or settlement in excess of the prior lien
is applied to future compensation, under the terms of Section 319 of the Act, it is
only to be applied to those future payments representing indemnity benefits, not
medical expenses. Otherwise, Claimant asserts, the word “instalments” is rendered
meaningless.7




       7
          Claimant also posits several reasons why the legislature limited the credit’s application
in this manner. First, keeping in mind the humanitarian objectives of the Act, not changing the
employer’s obligation following a third-party settlement or recovery provides for payment of
medical expenses in an efficient manner, allowing proper medical treatment to the injured
worker to continue uninterrupted. Next, an employer or its insurance carrier is in a position to
adjust the amount of a provider’s bill in a manner that an individual claimant is not able to do.
Additionally, Claimant argues, not applying a credit to medical expenses means that the grace
period of the credit can be easily determined and the exact length set because only the
unchanging weekly compensation obligation is included, while including credited medical
expenses creates a bookkeeping nightmare because the dollar amount of medical bills can vary
greatly over the course of treatment. Finally, Claimant asserts, the interpretation is consistent
with the requirement of Section 306(f.1)(7) of the Act, 77 P.S. §531(7), that only the employer or
its insurer is liable for claimant’s medical expenses.



                                                12
             For these reasons, Claimant contends the Board erred in affirming the
WCJ’s grant of Employer’s petition to modify payment of medical expenses
because Section 319 of the Act does not allow a credit against medical expenses
incurred after payment of the third-party lien.


                                     2. Analysis
             Section 319 of the Act provides:

             Where the compensable injury is caused in whole or in part by
             the act or omission of a third party, the employer shall be
             subrogated to the right of the employe … against such third
             party to the extent of the compensation payable under this
             article by the employer …. Any recovery against such third
             person in excess of the compensation theretofore paid by the
             employer shall be paid forthwith to the employe … and shall be
             treated as an advance payment by the employer on account of
             any future instalments of compensation.

77 P.S. §671 (emphasis added).


             Our Supreme Court identified several purposes for an employer’s
right to subrogation:

             [T]he rationale for th[e] right of subrogation is threefold: to
             prevent double recovery for the same injury by the claimant, to
             ensure that the employer is not compelled to make
             compensation payments made necessary by the negligence of a
             third party, and to prevent a third party from escaping liability
             for his negligence. Stark v. Posh Construction Co., [162 A.2d 9
             (Pa. Super. 1960)]. As Judge Spaeth has noted, ‘[t]his result is
             just, because the party who caused the injury bears the full
             burden; the employee is ‘made whole,’ but does not recover
             more than what he requires to be made whole; and the
             employer, innocent of negligence, in the end pays nothing.’
             Arnold v. Brobonus, [390 A.2d 271, 274 (Pa. Super. 1978)
             (Judge Spaeth concurring and dissenting)].

                                         13
Dale Mfg. Co. v. Bressi, 421 A.2d 653, 654 (Pa. 1980).


             The notion that employers are entitled to recover from the proceeds of
a claimant’s third-party recovery up to the total amount is based on long-held
policy considerations that Pennsylvania courts recognized in Section 319 of the
Act, one of which is that an employer that bears no responsibility for an injury
sustained by an employee should reap suitable benefits when a claimant succeeds
in suing a negligent actor. The Superior Court, which formerly possessed appellate
jurisdiction over appeals from Board orders, held these rationales favoring
employers extend to all components of a tort settlement, including pain and
suffering. Bumbarger v. Bumbarger, 155 A.2d 216 (Pa. Super. 1959). One noted
exception to this rule operates to exclude awards for loss of consortium to an
employee’s spouse. Darr Constr. v. Workmen’s Comp. Appeal Bd. (Walker), 715
A.2d 1075 (Pa. 1998).


             In Fortwangler v. Workers’ Compensation Appeal Board (Quest
Diagnostics), 113 A.3d 28 (Pa. Cmwlth. 2015), we described the two primary
periods of benefits entitlement that may be at issue in a subrogation matter:

                    An employer’s subrogation right is both automatic and
             absolute, and ‘can only be abrogated by choice.’ There are two
             aspects to an employer’s subrogation rights: the compensation
             previously paid to a claimant by an employer is the accrued or
             ‘past’ aspect and the credit toward compensation payable is the
             ‘future’ aspect to be paid subsequently upon settlement of the
             accrued lien. Calculation of an employer’s future subrogation
             rights is dependent upon the amount of the claimant’s recovery
             from the third-party settlement and the amount of compensation
             previously paid to a claimant by the employer. An employer’s
             settlement of its accrued lien for a lesser sum of money has no


                                         14
               bearing on the calculation of the employer’s future subrogation
               rights because the settlement does not change the amount of
               compensation that the employer previously paid.


Id. at 33 (citations omitted).


               Where a claimant obtains a third-party recovery before an employer’s
duty to make indemnity benefit payments is complete, an employer may realize a
“grace period,” during which its usual weekly compensation payments may be
modified, based on the amount of the recovery. See USX Corp. v. Workmen’s
Comp. Appeal Bd. (Backos), 606 A.2d 1259, 1261 (Pa. Cmwlth. 1992). Here, no
grace period is at issue because Claimant and Employer commuted Claimant’s
weekly compensation indemnity benefits to a lump sum payment. Instead, this
case centers on the nature of the benefits subject to an employer’s subrogation
lien.8


               In Deak, this Court, relying on our decision in Dasconio, rejected a
claimant’s assertion that Section 319 of the Act provided for subrogation only for

         8
          In Zacour v. Workers’ Compensation Appeal Board (Mark Ann Industries), 824 A.2d
336 (Pa. Cmwlth. 2003), this Court addressed the calculation method to be used when a claimant
is no longer entitled to indemnity benefits but is still entitled to medical expenses. The only
issue before this Court in Zacour was “the correct percentage [the] [e]mployer must pay to [the]
[c]laimant to reflect the costs attributable to medical expenses paid from the [b]alance of
[r]ecovery.” Id. at 340.
         Here, Claimant does not challenge the method the WCJ employed in arriving at the
modification of the actual percentage of medical expenses for which Employer is required to pay
Claimant going forward. Rather, as noted above, the issue here is whether medical expenses are
subject to a credit against a balance of recovery in a subrogation matter under Section 319 of the
Act. Thus, although the WCJ did not expressly describe the method he used to arrive at the
downward shift of Employer’s liability to Claimant for expenses of recovery (pro rata share of
litigation expenses) for his future medical expenses from 37% to 26.09% (up to the $189,416.27
balance of recovery), Claimant does not challenge that calculation.



                                               15
indemnity benefits. Deak, 653 A.2d at 54. In Dasconio we opined that the
reference to “compensation” in Section 319 of the Act encompassed both medical
expenses and indemnity benefits. Dasconio, 559 A.2d at 103. More particularly,
in Dasconio, we stated the following as to whether or not an employer was entitled
to a future credit for the payment of future medical expenses against a balance of
recovery received by the claimant in a third-party suit:

                    The medical expenses in dispute are only those incurred
             by the claimant after the date of the tort settlement, when the
             insurer sought to stop paying for medical expenses on the basis
             of its view that such expenses should be paid out of the credit
             toward compensation resulting from the tort recovery.

                   Without question, [S]ection 306(f) lists payment of
             medical expenses associated with the compensable injury as a
             form of compensation. Because [S]ection 319 provides that the
             employer shall be subrogated ‘to the right of the employe … to
             the extent of compensation payable under this article by the
             employer’, payments of such medical expenses by the employer
             are compensation payments subject to subrogation rights
             against a claimant’s recovery from a third party, and subject to
             a credit toward future compensation, where that recovery
             exceeds compensation paid at the time of the recovery.

Dasconio, 559 A.2d at 103 (footnote omitted, emphasis added).


             Nevertheless, Claimant suggests that this Court should reevaluate its
decisions in Deak and Dasconio, arguing that those cases do not address the last
sentence of the first paragraph of Section 319, which refers to “instalments” (as
spelled in the statute) of compensation. Claimant argues medical expenses are
generally not paid in “instalments.” Focusing on the term “installments,” (as
usually spelled elsewhere) Claimant contends Section 319 only encompasses
indemnity payments an employer makes, and, thus, Employer and Selective are not

                                         16
entitled to a subrogation credit for future medical expenses arising from Claimant’s
work injury.


               Deak, however, was not the first time a Pennsylvania appellate court
considered whether medical expenses constituted “compensation” under Section
319. In Haley to Use of Martin v. Matthews, 158 A. 645, 646-47 (Pa. Super.
1932), our Superior Court, which, at the time had jurisdiction over workers’
compensation appeals, explained (with emphasis added):

                      The Legislature evidently intended that where a third
               person is responsible for an injury to the employee, the
               employer, who has been subrogated to the employee’s right, is
               substituted, not to a portion of, but to all, his rights, until he is
               reimbursed for whatever sums he was required to pay the
               employee under the [Act]. There appears to be no sound reason
               why an employer should be obliged to pay medical and hospital
               expenses, when he is in no way responsible for the injury, and
               the wrongdoer escape liability therefor. The wrongdoer would
               thus profit at the expense of the employer. In an action at law,
               the wrongdoer would undoubtedly be liable for medical and
               hospital expenses--they are proper elements of damages. …

                      While no decisions have been quoted, and we have been
               unable to find any, that are directly in point, there are cases
               which throw some light on this controversy. For example,
               Smith v. Yellow Cab Co., [135 A. 858, 860 (Pa. 1927)], which
               was an appeal from this court, wherein an employer instituted
               an action in the name of the employee against the wrongdoer.
               The Supreme Court allowed the employer to recover from the
               wrongdoer in the sum of $109.60--the sum paid by him under
               the provisions of the [Act]. The record does not disclose how
               this sum was made up, but the appellant, in his paper book,
               stated that the statement of claim showed that it covered
               hospital and medical expenses. In the course of the opinion,
               Mr. Justice Simpson said: ‘A cursory consideration of that
               section [(319)] establishes (1) that the employer is not given a
               right of subrogation only, but is ‘subrogated’ to the extent of


                                            17
              the compensation paid; (2) from the language used, it is fairly
              to be inferred that the employer may bring suit against the
              wrongdoer and may retain, out of the recovery, the amount of
              compensation actually paid by him; and (3) nothing is said from
              which it can be inferred that a settlement with the employee
              will bar the claim of the employer to recover the amount thus
              paid. These conclusions control the present case.’ In Wilson v.
              Pittsburgh B. & I. Works, 85 Pa. Super. Ct. 537 [(1925)],
              although the question before us was not an issue, it clearly
              appears from the opinion that the right of subrogation claimed
              and allowed to the extent of $1,267 included medical and
              hospital bills. In Scalise v. F. M. Venzie, Inc., [152 A. 90, 92
              [(Pa. 1930)], Mr. Justice Kephart, in referring to [Smith], said
              that what was decided there was ‘that section 319 subrogates
              the employer to whatever … sum he pays the employee or his
              dependents on account of any injury for which a third person is
              responsible.’


              In Haley, the Superior Court did not address the precise argument
Claimant makes here involving the use of the term “instalments.” To that end,
Claimant correctly notes that the exact argument he presents here has not yet been
addressed, whether the legislature’s use of the word “instalments” in the last
sentence of Section 319 of the Act means that the subrogation provision only
provides for such credit for indemnity benefits. Nevertheless, we conclude that the
interpretation of the workers’ compensation authorities here is correct.


              Claimant refers to our Supreme Court’s Opinion Announcing the
Judgment of the Court (OAJC) in Giant Eagle9 as support for his assertion that we
should interpret Section 319’s use of the word “installments” to mean that


       9
         In Giant Eagle, Inc. v. Workers’ Compensation Appeal Board (Givner), 39 A.3d 287
(Pa. 2012), two Justices agreed with the OAJC, three Justices dissented, and the seventh Justice
wrote a concurring opinion.



                                              18
employers are entitled to a right of subrogation for indemnity benefits only and not
for medical expenses. Of course, this interpretation conflicts with the rationale set
forth above, that an employer, innocent of negligence, is entitled to a subrogation
credit up to the full amount of a claimant’s recovery. Nevertheless, we examine
the Supreme Court’s holding in Giant Eagle in light of Claimant’s argument.


             In Giant Eagle, the Court addressed the issue of whether the word
“compensation,” as used in Section 314(a) of the Act, encompassed medical
expenses as well as indemnity benefits. Section 314(a) imposes a duty on a
claimant to submit to a medical examination when requested by an employer. If a
claimant fails or refuses to submit to such a request, Section 314(a) provides,
among other things, such action “shall deprive him of the right to compensation …
during the continuance of such refusal or neglect[.]” Id. The employer in Giant
Eagle posed the question of whether a WCJ who issued an order suspending a
claimant’s indemnity benefits erred in also failing to suspend the claimant’s
medical benefits, which the employer argued also constituted “compensation”
under Section 314(a).


             The OAJC noted that the legislature used the term “compensation” in
various sections of the Act.      In some instances, the term encompasses both
indemnity and medical benefits, and in other instances the term excludes medical
expenses as “compensation.”        The OAJC determined Section 314(a) lacked
specific clues as to the extent of the meaning of “compensation”; thus, it was
ambiguous. To answer the question before it, the OAJC examined other provisions
of Article III of the Act as well as statutory construction principles.



                                          19
             Here, Claimant argues, Section 308 of the Act, one of the provisions
to which the OAJC looked for guidance in Giant Eagle, is an example of an
instance in which the term “compensation” does not encompass medical expenses.
Section 308 provides: “Except as hereinafter provided, all compensation payable
under this article shall be payable in periodical installments, as the wages of the
employe were payable before the injury.”             The OAJC reasoned that because
Section 306(f.1) of the Act provides that medical expenses are to be paid “as and
when needed,” rather than in installments, the term “compensation” as used in
Section 308 applied only to indemnity benefits. Giant Eagle, 39 A.3d at 293.


             The OAJC in Giant Eagle observed that, as to Section 314(a) of the
Act, the term “compensation” “need not always include medical expenses,” id. at
298, and a WCJ has discretion as to whether to suspend payments for medical
expenses as well as indemnity benefits when a claimant does not submit to an
examination. Although Claimant is correct that the OAJC in Giant Eagle
specifically referenced the limitations on the term “compensation,” such as in its
analysis of Section 308 of the Act, we cannot conclude that the OAJC’s analysis
regarding Section 314(a) of the Act applies to Section 319. All of the opinions in
Giant Eagle—the OAJC, the dissenting opinion and the concurring opinion—
essentially indicate that, when the legislature uses the term “compensation”
ambiguously in a provision of the Act, courts must engage in a case-by-case
analysis in order to ascertain legislative intent.


             Therefore, in this case, we believe the rationale underscoring the
legislature’s objective in enacting Section 319 of the Act extends to medical



                                           20
expenses as well as indemnity benefits. In either situation, an employer should be
entitled to subrogation because it is presumably an innocent actor. Even if we
assume Section 319 of the Act is ambiguous in light of the use of the term
“instalments,” we reach the same conclusion based on the objectives sought to be
attained through Section 319 of the Act. See Section 1921(c) of the Statutory
Construction Act of 1972, 1 Pa. C.S. §1921(c).


            In addition, the legislature’s use of the word “instalments” can
reasonably be explained and harmonized with the fact that future medical
expenses, which generally may occur periodically over time, are typically not costs
payable in a lump sum. Rather, it is more likely that an employer or insurer will
have to make discrete payments on an ongoing basis.


            Moreover, contrary to Claimant’s assertions, we do not believe
Employer’s entitlement to a credit for subsequent, additional medical expenses
violates Section 306(f.1) of the Act by relieving Employer of liability for such
expenses and rendering Claimant liable for costs related to care.          Instead,
Employer is simply entitled to subrogation for these expenses from the balance of
Claimant’s third-party recovery, a right expressly agreed upon in the third-party
settlement agreement. R.R. at 64a.


            In short, we discern no merit in Claimant’s position that Section 319
of the Act does not encompass medical expenses as well as indemnity benefits.
Thus, we discern no error in the WCJ and Board’s interpretations of Section 319 as
encompassing both medical expenses and indemnity benefits.



                                        21
                             B. Alternative Arguments
             In the alternative, Claimant asserts the workers’ compensation
authorities erred in determining Employer was entitled to a credit to be applied to
future medical expenses where the record established: (1) the parties entered into a
binding agreement in which it was agreed no credit would be applied to future
medical bills; (2) Employer waived or released its Section 319 rights; and, (3)
Employer should be estopped from asserting a claim for credit as to future medical
expenses.


                           1. Alleged Binding Agreement
                                   a. Contentions
             Claimant first asserts the parties entered into a binding agreement in
which it was agreed that no credit would be applied to future medical expenses.
To that end, Claimant argues the letters of March 8, 1999 and May 26, 1999,
written by Claimant’s counsel to Bell of Selective, are part of the record. See R.R.
at 51a, 63a. Claimant points out that the March 8, 1999 letter enclosed the third-
party settlement agreement, calculating the lien Claimant paid to Employer, which
is the subject of this litigation. R.R. at 64a. The May 26, 1999 letter enclosed the
payment in full satisfaction of the lien. R.R. at 63a.


             Claimant maintains it is clear the third-party settlement agreement
was submitted to Employer’s representative, Bell, along with the March 8, 1999
letter, for purposes of calculating reimbursement for the workers’ compensation
lien existing as of that date. The letter specifically states: “By being able to resolve
the lien in this manner, I would ask that [Selective] remain responsible for payment
of future medical expenses incurred by [Claimant].” Id.


                                          22
             Claimant asserts it is also clear that the calculations made regarding
the lien in the third-party settlement agreement were later adhered to in that along
with the May 26, 1999 letter, Claimant’s counsel submitted payment in full
satisfaction of the lien to Bell and stated: “Please be advised that it is [Claimant’s]
position that no credit can be applied to future medical bills.        Instead, under
Section 319 such credit only applies to ‘future installments of compensation.’
Future medical expenses does [sic] not constitute ‘installments of compensation.’”
R.R. at 63a. Thus, Claimant contends the March 8, 1999 letter can be viewed as an
“offer letter” and the May 26, 1999 letter as a finalized binding contract containing
the definitive terms of the parties’ agreement. See Pulse Techs., Inc. v. Notaro, 67
A.3d 778 (Pa. 2013).


             Claimant further argues Selective’s acceptance of the $81,627.87
payment combined with its conduct of paying medical bills for the ensuing 13
years after the third-party settlement agreement support his position that Selective
agreed to Claimant’s proposal as set forth in the two letters.


                                     b. Analysis
             Claimant cites our Supreme Court’s decision in Pulse Technologies in
support of his argument that the initial letter from his counsel to Bell constituted an
offer letter and the second letter from his counsel to Bell resulted in a binding
contract. Pulse Technologies, however, is distinguishable. The issue in Pulse
Technologies was whether a restrictive covenant to which a prospective employee
was required to agree was part of the contractual bargain in the hiring process. In
Pulse Technologies, the employer sought an injunction to prevent the employee
from accepting work with a competitor, and the employee argued the restrictive

                                          23
covenant was not part of the employment contract he signed. The initial question
before the Court was whether a letter describing the terms of an employment offer,
including requirements to sign an agreement for employment and an employment
contract containing a restrictive covenant, constituted a binding contract. In the
context of the employment contract, which the employee signed, the restrictive
covenant was deemed an ancillary aspect of the employment agreement.
Therefore, it was valid and enforceable. However, the Court concluded the offer
letter was only evidence of negotiations and did not itself constitute a contract.


             Here, Employer points out that the third-party settlement agreement
arose five years after the parties agreed to commute Claimant’s indemnity benefits
into a lump sum payment. Thus, at the time the parties signed the third-party
settlement agreement, Employer and Selective no longer had an obligation to pay
such benefits.     Rather, the third-party settlement agreement reflected an
understanding that Employer and Selective would be entitled to a subrogation
credit, a right that would be meaningless unless the parties intended for Employer
and Selective to obtain some credit against future medical expenses. We agree
with Employer’s position.


             Accepting Claimant’s contention that Employer and Selective
intended to be bound to pay future medical expenses without any credit for the
subrogation lien would directly conflict with the terms of the third-party settlement
agreement. R.R. at 64a. As noted above, subrogation has two components: a
payment to reimburse for past workers’ compensation payments and a credit
toward future payments. Fortwangler. If we were to accept Claimant’s position,



                                          24
both the policy underlying an employer’s right to subrogation and the notion of
credit for past and future payments for costs arising for a work injury would be
rendered meaningless here.


            Moreover, Claimant’s argument is belied by the fact that through the
third-party settlement agreement, the parties agreed that the $189,416.27 balance
of Claimant’s third-party recovery “shall constitute [a] fund for credit against
future workers’ compensation payable, subject to reimbursement to [C]laimant of
expenses of recovery at the rate of 37% on credit used.” R.R. at 64a. Thus, under
the terms of the agreement, Employer would be liable to Claimant for 37% of
future medical expenses up to the balance of recovery. F.F. No. 3. Claimant’s
arguments to the contrary would render this contract language illusory.


            Further, we reject Claimant’s characterization of the letters, as they do
not clearly evidence any agreement terms, let alone consideration. Also, while the
letters appear to suggest that Claimant viewed the payment of approximately
$81,000 as a resolution of the entire subrogation lien, the language of the March 8,
1999 letter (in which Claimant’s counsel noted “the lien of [Selective] can be
satisfied in full with payment of $81,627.87”) reflects nothing more than what the
parties agreed to in the third-party settlement agreement. R.R. at 51a. This is
generally accomplished in a subrogation settlement lump sum payment for past
workers’ compensation indemnity benefits where no future indemnity benefits are
at issue.




                                        25
             In addition, the final paragraph of the March 8, 1999 letter states: “By
being able to resolve the lien in this manner, I would ask that [Selective] remain
responsible for payment of future medical expenses incurred by [Claimant].” Id.
(emphasis added). This statement indicates, at most, a request, and not a condition
for payment of the lump sum amount. We view the language as reflecting payment
of an agreed amount, representing the liquidated subrogation lien for past
indemnity and medical expenses Selective already paid. The language Claimant
relies on to support his claim that Selective agreed not to seek a subrogation credit
against future medical expenses simply reflects the status quo. Indeed, there was
no question that Selective would remain liable for future medical expenses related
to Claimant’s work injury.     This is all set forth in the third-party settlement
agreement. R.R. at 64a. And, as indicated above, the agreement itself makes clear
that not only would Selective be responsible for such expenses, but also that
Claimant’s third-party recovery would remain subject to the subrogation lien. Id.


                     2. Alleged Waiver of Section 319 Rights
                                 a. Contentions
             Claimant next contends where, as here, it is shown that an employer
agreed to release its rights to a claim for credit against future medical expenses,
Section 319 of the Act does not apply. Claimant argues this Court previously held
that an employer can agree to release or waive its right to a credit against future
compensation. See Bayush v. Workmen’s Comp. Appeal Bd. (Conemaugh Twp.),
534 A.2d 853 (Pa. Cmwlth. 1987).


             In Bayush, Claimant asserts, the issue was whether the employer
waived or relinquished its rights to a credit against future compensation.          In


                                         26
Bayush, like here, Claimant argues, there was an exchange of letters, documents
and checks. Claimant maintains that in Bayush, unlike here, the issue of releasing
the claim for future credit was never communicated between the parties. This
finding (that there was no communication) was the determinative factor that this
Court considered in holding the employer did not agree to waive or release its
Section 319 rights. However, Claimant contends, application of Bayush compels a
different result here as it is clear that Selective’s acceptance of the check
constituted a waiver or release of Employer’s Section 319 rights as to a future
credit.     Stated   differently,   Claimant   contends,   there   was    appropriate
communication between the parties here establishing a wavier or release by
Employer.


                                     b. Analysis
             For the reasons set forth above, we reject Claimant’s argument that
Employer waived its right to a future subrogation credit. Claimant again relies on
the letters his counsel sent to Selective to support his claim that Selective’s
actions—accepting the check and not disavowing the language contained in the
letters—resulted in a knowing and binding waiver of its rights.


             While an employer may waive such rights, the record must show the
waiver was clear and supported by consideration.           Fortwangler.    Here, the
supposed waiver is not clear, and it is not supported by consideration.           As
explained above, there was no clear waiver of Employer’s rights; rather, there was
a request from Claimant’s counsel addressed to a person without authority to agree
to the request. In addition, an authorized agent of Selective did not directly



                                         27
respond to counsel’s request, and Selective’s subsequent actions were ambiguous.
Claimant’s arguments to the contrary are not supported by the findings made by
the WCJ.       Further, Claimant’s reimbursement to Selective of the lump sum
representing past compensation paid does not constitute consideration, as that
payment was one to which Employer was already entitled.


               While Claimant attempts to distinguish Bayush, in which this Court
determined the record supported a finding that the employer did not agree to
relinquish its rights under Section 319, our review of the WCJ’s findings here
reveal that the proffered distinction is not a valid one. To that end, the WCJ
credited Bell’s uncontradicted testimony that she received the lien reimbursement
check and Claimant’s counsel’s May 26, 1999 letter, that she lacked authority to
agree to the interpretation of the future installments of compensation as outlined in
Claimant’s counsel’s May 26, 1999 letter, and that she did not respond to the May
26, 1999 letter. F.F. Nos. 6(d)-(f), 7; R.R. at 17a-18a; 20a-22a.10 Based on these
findings, the Board properly recognized that “[t]he testimony accepted by the WCJ



       10
           As the ultimate fact-finder in workers’ compensation cases, the WCJ “has exclusive
province over questions of credibility and evidentiary weight ….” A & J Builders, Inc. v.
Workers’ Comp. Appeal Bd. (Verdi), 78 A.3d 1233, 1238 (Pa. Cmwlth. 2013). The WCJ may
accept or reject the testimony of any witness in whole or in part. Id.
        Moreover, “[i]t is irrelevant whether the record contains evidence to support findings
other than those made by the WCJ; the critical inquiry is whether there is evidence to support the
findings actually made.” Furnari v. Workers’ Comp. Appeal Bd. (Temple Inland), 90 A.3d 53,
60 (Pa. Cmwlth. 2014) (citation omitted). We examine the entire record to see if it contains
evidence a reasonable person might find sufficient to support the WCJ’s findings. Id. If the
record contains such evidence, the findings must be upheld, even though the record may contain
conflicting evidence. Id. Additionally, we must view the evidence in the light most favorable to
the prevailing party and give it the benefit of all inferences reasonably deduced from the
evidence. Id.



                                               28
undermines Claimant’s contention that [Employer] chose to waive its right to
further subrogation.” Bd. Op. at 9.


             In Bayush, this Court reiterated our Supreme Court’s holding that
“[t]he same elements are necessary to show the existence of an ‘accord and
satisfaction’ as to show the existence of any contract.”        Id. at 858 (quoting
Brunswick Corp. v. Levin, 276 A.2d 532, 534 (Pa. 1971)). A “meeting of the
minds” must be shown. Id. (quoting Suits To Use v. Aetna Casualty & Surety Co.,
161 A. 592 (Pa. Super. 1932)). Here, as discussed above, no meeting of the minds
was shown. Indeed, as the Board explained, “Given the absence of a specific
agreement and [Bell’s] credible testimony, we cannot agree that Claimant proved
the existence of a binding contract preventing relief.” Bd. Op. at 8.


                                 3. Equitable Estoppel
                                     a. Contentions
             As a final issue, Claimant contends Employer should be equitably
estopped from asserting a claim for credit. As indicated above, Claimant argues
Employer sat silent for 13 years and complied with the agreement it entered into
with Claimant. Thus, Claimant asserts, if Employer is permitted to modify the
third-party settlement agreement, hardship and prejudice to Claimant can be
presumed given the nature and severity of his injury and the costs associated with
treatment for his work injury.


                                      b. Analysis
             Claimant does not provide a sufficiently developed argument on this
point for this Court to address this issue; therefore, it is waived. City of Phila. v.


                                          29
Berman, 863 A.2d 156 (Pa. Cmwlth. 2004) (failure to develop issue in argument
section of brief constitutes waiver). Further, Claimant points to no record evidence
that would support his claim that he will suffer prejudice or hardship.


             Moreover, the two essential elements of equitable estoppel are an
inducement, and a justifiable reliance on the inducement. Bayush. The party
asserting the estoppel bears the burden of proving it by clear and convincing
evidence. Id. As the Board aptly recognized, “[b]y virtue of his acceptance of
[Bell’s] testimony, the WCJ determined that the parties had never agreed to release
[Employer’s] right to future credit.    Thus, there is no admission upon which
Claimant can rely.” Bd. Op. at 9. As a result, even if we were to address the
merits of Claimant’s equitable estoppel argument, the record does not support it.


             More importantly, in Thompson v. Workers’ Compensation Appeal
Board (USF&G Company), 781 A.2d 1146 (Pa. 2001), our Supreme Court
analyzed an employer’s right to subrogation in light of equitable principles. The
Court concluded an employer’s right to subrogation is generally absolute, unless
the employer engages in deliberate, bad faith conduct. It stated: “The statute is
clear and unambiguous. It is written in mandatory terms and, by its terms, admits
of no express exceptions, equitable or otherwise. Furthermore, it does more than
confer a ‘right’ of subrogation upon the employer; rather, subrogation is
automatic.” Id. at 1151. The Court further explained:

             [T]his Court cannot ignore the fact that the subrogation right at
             issue here does not derive from common law judicial authority
             but, rather, is expressly granted by the [Act]. When the General
             Assembly adopted subrogation as a statutory matter in the
             workers’ compensation context, it provided for no equitable


                                         30
            exceptions that would eliminate the employer’s subrogation
            right. Rather, the General Assembly determined that the
            employer was entitled to subrogation whenever an employee’s
            injuries, for which the employer paid compensation, were
            caused by a third party and the employee received a recovery
            for the compensable injuries from that third party.

                   It is not difficult to see why the General Assembly might
            reach such a conclusion. The [Act] balances competing
            interests. The Act obliges subscribing employers to provide
            compensation to injured employees, regardless of fault, either
            through insurance or self-insurance. In exchange, employers
            are vested with two important rights: the exclusivity of the
            remedy of workers[’] compensation and the concomitant
            immunity from suit by an injured employee; and the absolute
            right of subrogation respecting recovery from third-party
            tortfeasors who bear responsibility for the employee’s
            compensable injuries. This leads to the conclusion that an
            employer who complies with its responsibilities under the [Act]
            should not be deprived of one of the corresponding statutory
            benefits based upon a court’s ad hoc evaluation of other
            perceived ‘equities.’ Had the General Assembly intended to
            introduce such uncertainty into an otherwise balanced and
            certain scheme of relative responsibility, it could have done so
            expressly or by use of less certain language. The General
            Assembly already having weighed the equities, it would be
            inappropriate for this Court to approve of ad hoc equitable
            exceptions to subrogation.

Id. at 1153 (emphasis added); see also Superior Lawn Care v. Workers’ Comp.
Appeal Bd. (Hoffer), 878 A.2d 936 (Pa. Cmwlth. 2005) (reversing Board order that
determined an employer’s right to subrogation was barred by doctrine of laches
based on the employer’s eight-year delay in asserting its rights in the absence of
deliberate, bad faith conduct by the employer).


            However, the Court noted, “there may be circumstances where an
employer undertakes in deliberate bad faith to subvert a third party suit brought by


                                        31
its employee” and that such circumstances “may require a different calculus.” Id.
at 1154. The Supreme Court stated nothing in its opinion should be “construed as
suggesting that subrogation would be appropriate in the face of deliberate, bad
faith conduct on the part of the employer.” Id.


              Here, Claimant makes no assertion that Employer or Selective
engaged in any deliberate, bad faith conduct. Further, the WCJ made no such
findings. As such, even if Claimant fully developed his equity arguments,11 it is
unclear how they could compel the result he seeks in light of our Supreme Court’s
pronouncements in Thompson.


                                       IV. Conclusion
              For all the foregoing reasons, we affirm the Board’s order that
affirmed the WCJ’s decision granting Employer’s petition to modify the third-
party settlement agreement.




                                            ROBERT SIMPSON, Judge




       11
          In a footnote, Claimant asserts: “For all the reasons set forth in this Brief, Claimant
also submits that the equitable defense of laches is applicable here while at the same time
acknowledging the cases of Thompson v. [Workers’ Comp. Appeal Bd. (USF&G Co.)], 781
A.2d 1146 (Pa. 2001); Superior Lawn Care [v. Workers’ Comp. Appeal Bd. (Hoffer), 878 A.2d
936 (Pa. Cmwlth. 2005)].” Pet’r’s Br. at 18 n.16. As with his equitable estoppel claim, Claimant
does not develop this argument; thus, it is waived. City of Phila. v. Berman, 863 A.2d 156 (Pa.
Cmwlth. 2004). Further, as Claimant appears to concede, even if properly preserved, this claim
would fail based on the Supreme Court’s decision in Thompson, discussed at length above.



                                               32
       IN THE COMMONWEALTH COURT OF PENNSYLVANIA

Craig M. Whitmoyer,                  :
                      Petitioner     :
                                     :
           v.                        :   No. 614 C.D. 2015
                                     :
Workers' Compensation Appeal         :
Board (Mountain Country Meats),      :
                       Respondent    :


                                   ORDER

           AND NOW, this 1st day of December, 2016, the order of the
Workers’ Compensation Appeal Board is AFFIRMED.




                                    ROBERT SIMPSON, Judge
                 IN THE COMMONWEALTH COURT OF PENNSYLVANIA


Craig M. Whitmoyer,                              :
                Petitioner                       :
                                                 :
                 v.                              : No. 614 C.D. 2015
                                                 : Argued: September 14, 2016
Workers’ Compensation Appeal                     :
Board (Mountain Country Meats),                  :
                 Respondent                      :


BEFORE:          HONORABLE MARY HANNAH LEAVITT, President Judge
                 HONORABLE ROBERT SIMPSON, Judge
                 HONORABLE P. KEVIN BROBSON, Judge
                 HONORABLE PATRICIA A. McCULLOUGH, Judge
                 HONORABLE ANNE E. COVEY, Judge
                 HONORABLE JULIA K. HEARTHWAY, Judge
                 HONORABLE JOSEPH M. COSGROVE, Judge

DISSENTING OPINION
BY PRESIDENT JUDGE LEAVITT                                     FILED: December 1, 2016

                 The thorough and well-written opinion of the majority construes
“compensation” in Section 319 of the Workers’ Compensation Act (Act)1 to mean
both medical and disability compensation whenever it appears in Section 319.
However, the majority’s construction gives no effect to the word “instalment” and,
thus, I respectfully dissent.
                 On January 2, 1993, Craig Whitmoyer (Claimant) lost part of his right
arm in an accident while working for Mountain Country Meats (Employer),
entitling him, inter alia, to a specific loss benefit of 370 weeks of compensation.
In December 1994, the parties commuted Claimant’s specific loss benefits for a
lump-sum payment of approximately $70,000, which left Employer responsible

1
    Act of June 2, 1915, P.L. 736, as amended, 77 P.S. §671.
only for medical expenses. Claimant subsequently received a tort claim recovery
for his work injury in the amount of $300,000 from Hollymatic Corporation and
Dantro Associates, Inc.
             On May 26, 1999, Claimant’s counsel remitted a check in the amount
of $81,627.87 to satisfy Employer’s net subrogation lien along with a letter that
stated, in relevant part, as follows:

             Enclosed please find our check in the amount of $81,627.[87],
             representing full payment of the workers’ compensation lien in
             this matter.

             Please be advised that it is the claimant’s position that no credit
             can be applied to future medical bills. Instead, under Section
             319 such credit only applies to “future installments of
             compensation.” Future medical expenses does not constitute
             “installments of compensation.”

Reproduced Record at 63a (R.R. __) (emphasis added). Because Claimant was no
longer entitled to disability benefits and had commuted his specific loss benefits,
Claimant believed that he was entitled to retain the entire remaining balance of the
third-party recovery. Employer did not respond to Claimant’s letter.
             For the next 13 years, Employer paid Claimant’s medical expenses,
primarily for repair and replacement of his prosthetics. At no point during this
period did Employer assert a right of reimbursement from the balance of
Claimant’s third-party recovery for these medical expenses.          Then, in 2012,
Employer filed the instant modification petition. Claimant responded that the
modification should be denied for two reasons: Employer was not entitled to any
credit against future medical expenses under Section 319 of the Act and,



                                        MHL-2
alternatively, Employer had waived its right to subrogate its payment of future
medical expenses.
              Section 319 of the Act provides that an employer who pays workers’
compensation is subrogated to the right of the claimant against a third-party
tortfeasor who caused the injury. Section 319 states, in relevant part, as follows:

              Where the compensable injury is caused in whole or in part by
              the act or omission of a third party, the employer shall be
              subrogated to the right of the employe, his personal
              representative, his estate or his dependents, against such third
              party to the extent of the compensation payable under this
              article by the employer; reasonable attorney’s fees and other
              proper disbursements incurred in obtaining a recovery or in
              effecting a compromise settlement shall be prorated between
              the employer and employe, his personal representative, his
              estate or his dependents. The employer shall pay that
              proportion of the attorney’s fees and other proper
              disbursements that the amount of compensation paid or payable
              at the time of recovery or settlement bears to the total recovery
              or settlement. Any recovery against such third person in excess
              of the compensation theretofore paid by the employer shall be
              paid forthwith to the employe, his personal representative, his
              estate or his dependents, and shall be treated as an advance
              payment by the employer on account of any future instalments
              of compensation.

77 P.S. §671 (emphasis added).
              The instant case turns on the meaning of the phrase “future
instalments of compensation” found in Section 319.2 Claimant acknowledges that
Employer’s accrued lien, i.e., “the amount of compensation paid or payable at the
time of recovery” set forth in Section 319, includes both disability benefits and

2
  The phrase “future instalments of compensation” was present in the original 1915 version of
the Act.
                                          MHL-3
medical expenses.     77 P.S. §671 (emphasis added).       As such, Employer was
entitled to be reimbursed for specific loss benefits and medical benefits it had paid
up to the time of the third-party recovery. Claimant Brief at 10. However,
Claimant argues that the “future instalments of compensation” refers only to future
disability benefits and not future medical expenses.
             In support, Claimant directs our attention to Giant Eagle, Inc. v.
Workers’ Compensation Appeal Board (Givner), 39 A.3d 287, 298 (Pa. 2012),
wherein our Supreme Court explained that the term “compensation,” which
appears in various contexts throughout the Act, “need not always include medical
expenses.” Claimant urges that we cannot ignore the word “instalments” which, he
argues, can refer only to disability benefits. They are paid in weekly installments.
By contrast, medical expenses are paid sporadically.
             In further support, Claimant points to other provisions in the Act that
link “instalment” to disability compensation. For example, Section 308 of the Act
states, in relevant part, that “compensation payable under this article shall be
payable in periodical installments, as the wages of the employe were payable
before the injury.”    77 P.S. §601 (emphasis added).         By contrast, Section
306(f.1)(1)(i) of the Act states that the “employer shall provide payment [for
medical services] as and when needed.” 77 P.S. §531(1)(i) (emphasis added). In
short, the phrase “instalments of compensation” in Section 319 denotes regular
payments made to replace wages. Medical compensation payments are sporadic
and made “as and when needed.”
             Limiting “future instalments of compensation” to disability is logical
because it is an amount that can be easily computed for purposes of settlement.


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Further, payments of disability benefits are made directly to a claimant.       By
contrast, medical benefits are remitted to a provider, not to the claimant, and in
varying amounts after the employer adjusts the provider’s invoice in accordance
with the medical cost containment guidelines.         It creates a “bookkeeping
nightmare” to keep track of the rate at which a claimant’s balance of recovery is
being depleted for medical expenses. Claimant Brief at 14.
            The Act makes the employer responsible for all medical expenses
related to the work injury, and a provider cannot hold the claimant responsible for
any medical costs. Section 306(f.1)(7) of the Act, 77 P.S. §531(7). Giving the
employer the right to recover medical expenses, after the accrued subrogation lien
is resolved, effectively makes the claimant liable for future treatment of his work
injury. This shift of responsibility from the employer to the claimant turns the
statutory scheme on its head.
            This is a case of first impression. Our courts have never interpreted
the specific phrase “future instalments of compensation.” The word “installment”
is defined as “one of the parts into which a debt is divided when payment is made
at intervals.” MERRIAM-WEBSTER’S COLLEGIATE DICTIONARY 605 (10th ed. 2001).
Payment of disability benefits are “made at intervals,” and medical expenses are
not. With respect to “compensation” in Section 319, the legislature used different
terminology. Section 319 refers to “compensation paid or payable at the time of
recovery or settlement” and then to “future instalments of compensation.”
(emphasis added). Instead of “payments,” which would be symmetrical with “paid
or payable,” the legislature chose a different word, “instalments.” I believe the




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choice was deliberate and intended to limit “compensation” to disability, which is
paid at regular intervals.
              In the alternative, Claimant argues that Employer waived its Section
319 rights. In support, Claimant relies on Bayush v. Workmen’s Compensation
Appeal Board (Conemaugh Township), 534 A.2d 853 (Pa. Cmwlth. 1987), which
established that an employer can waive its right to a credit for future compensation.
In Bayush, we held that the employer had not done so because the insurance
adjuster credibly testified that the issue had not been discussed. Claimant argues
that unlike Bayush, the issue of responsibility for future medical expenses was
discussed at the time of settlement. For the next 13 years, Employer acted in
accordance with Claimant’s view that the “future compensation” reference in the
settlement agreement (LIBC-380) did not encompass medical expenses. R.R. 64a.
Nor did Employer require the balance of the recovery be placed in escrow so that it
could be drawn upon “as and when needed” to pay Claimant’s medical expenses.
The course of Employer’s conduct expresses an implicit waiver of its right to claim
a credit against Claimant’s recovery.3
              In Section 319, the legislature used the phrase “compensation paid or
payable at the time of recovery” to effect the proration of the settlement at the time
the “compromise settlement” is entered into by the claimant and the employer.
The amount “in excess” thereof is an advance on “future instalments of
compensation.” The legislature did not say “future payments of compensation,”


3
  Any statutory right can be waived. I disagree that waiver of a statutory entitlement requires
consideration to be effective. Fortwangler v. Workers’ Compensation Appeal Board (Quest
Diagnostics), 113 A.3d 28 (Pa. Cmwlth. 2015), is distinguishable because it did not deal with the
precise issue here, which is the meaning of “instalments.”
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which is how the majority construes the phraseology. I believe the legislature’s
choice of the phrase “instalments of compensation” was deliberate, and it was
intended to limit an employer’s future credits to disability compensation only.
             For these reasons, I would reverse the Board’s modification.


                                   ______________________________________
                                   MARY HANNAH LEAVITT, President Judge



Judges McCullough and Cosgrove join in this dissenting opinion.




                                      MHL-7
          IN THE COMMONWEALTH COURT OF PENNSYLVANIA


Craig M. Whitmoyer,                      :
                Petitioner               :
                                         :
             v.                          :
                                         :
Workers’ Compensation Appeal             :
Board (Mountain Country Meats),          :     No. 614 C.D. 2015
                 Respondent              :     Argued: September 14, 2016


BEFORE:      HONORABLE MARY HANNAH LEAVITT, President Judge
             HONORABLE ROBERT SIMPSON, Judge
             HONORABLE P. KEVIN BROBSON, Judge
             HONORABLE PATRICIA A. McCULLOUGH, Judge
             HONORABLE ANNE E. COVEY, Judge
             HONORABLE JULIA K. HEARTHWAY, Judge
             HONORABLE JOSEPH M. COSGROVE, Judge


DISSENTING OPINION
BY JUDGE COSGROVE                              FILED: December 1, 2016

             I agree with the President Judge's dissenting opinion and write
separately to emphasize two points:
             As this case hinges on interpretation of the phrase "future installments
of compensation," the Majority opinion defies the basic, common understanding of
just what an "installment" is, namely: "one of the parts into which a debt is divided
when payment is made at intervals."          Merriam-Webster. http://www.merriam-
webster.com/ (last visited November 21, 2016). Clearly, a certain regularity is
attached to the concept of "interval," something which may clearly apply to the
term "future disability benefits," but is not so easily attached to "medical
expenses," as they usually arise (as in this case) with no certainty. The Majority,
however, conflates these two discrete concepts.
            I am further disturbed by the failure of the Majority to find waiver,
given the Employer's more than decade long acquiescence in what Claimant
understood as the intended resolution of the subrogation lien question. Claimant's
counsel outlined this understanding in a clear and concise letter which Employer
not only failed to challenge but instead, consistent with that understanding, paid
Claimant's medical bills as they arose over the course of thirteen years. This can
only be considered waiver, but Employer's challenge now to this longstanding
arrangement mocks the certainty which the resolution of the subrogation lien
intended.
             For these reasons, I must dissent.




                                      ___________________________
                                      JOSEPH M. COSGROVE, Judge




President Judge Leavitt and Judge McCullough join this dissent.




                                     JMC - 2
