             IN THE COMMONWEALTH COURT OF PENNSYLVANIA

City of Philadelphia,                           :
                   Appellant                    :
                                                :
                 v.                             : No. 94 C.D. 2017
                                                : Argued: October 19, 2017
Frank Zampogna                                  :


BEFORE:          HONORABLE MARY HANNAH LEAVITT, President Judge
                 HONORABLE ROBERT SIMPSON, Judge
                 HONORABLE BONNIE BRIGANCE LEADBETTER, Senior Judge

OPINION
BY PRESIDENT JUDGE LEAVITT                                       FILED: December 27, 2017

                 The City of Philadelphia (City) appeals an order of the Court of
Common Pleas of Philadelphia County, First Judicial District (trial court) granting
declaratory judgment in favor of a City employee, Frank Zampogna. The trial court
held that Section 1720 of the Motor Vehicle Financial Responsibility Law, 75 Pa.
C.S. §1720, prohibited the City from subrogating its payment of Heart and Lung
Act1 benefits to Zampogna from his third-party tort recovery. For the reasons that
follow, we affirm the order of the trial court.
                 The facts of this case are not in dispute. On November 1, 2007,
Zampogna, a City police officer, was a passenger in a police cruiser participating in
a roadblock at the intersection of 22nd Street and Lehigh Avenue in Philadelphia. A
private vehicle went through the police roadblock and collided with the cruiser
occupied by Zampogna. As a result, Zampogna suffered serious injuries and was
unable to work as a police officer for several years. The City, which is self-insured
for workers’ compensation, issued a Notice of Compensation Payable (NCP)


1
    Act of June 28, 1935, P.L. 477, as amended, 53 P.S. §§637-638.
accepting liability for the injury. The NCP also stated that the City was paying
Zampogna Heart and Lung Act benefits in lieu of workers’ compensation benefits.
Reproduced Record at 46a (R.R. __). From November 2, 2007, to September 27,
2011, the City paid Zampogna a total of $286,447.77 in Heart and Lung benefits.2
              On November 3, 2009, Zampogna filed a tort action against the driver
of the vehicle involved in the accident.            The City petitioned to intervene in
Zampogna’s tort action to protect the subrogation lien it intended to assert against
any recovery. The third-party tort action settled in 2014 for $245,000, which was
placed in escrow while the parties litigated the City’s entitlement to its asserted lien.
On April 9, 2015, the City initiated a declaratory judgment action to establish its
right to recover the Heart and Lung Act benefits it paid to Zampogna from his
settlement.
              A trial was conducted on August 1, 2016, after which the trial court
granted judgment in favor of Zampogna. It held that Section 1720 of the Motor
Vehicle Financial Responsibility Law prohibited the City’s subrogation against
Zampogna’s tort recovery. The City appealed the judgment.
              We begin with a review of the three statutes governing a public
employer’s subrogation against an employee’s third-party recovery for his work
injury caused by a motor vehicle accident. The three statutes are: the Workers’
Compensation Act,3 the Heart and Lung Act, and the Motor Vehicle Financial
Responsibility Law.4



2
  That total consisted of $236,050.43 in salary continuation and $50,397.34 in medical benefits.
Joint Stipulation of Facts, ¶7.
3
  Act of June 2, 1915, P.L. 736, as amended, 77 P.S. §§1-1041.4, 2501-2708.
4
  75 Pa. C.S. §§1701-1799.7.
                                               2
            The Workers’ Compensation Act compensates employees who are
injured at work for their medical bills and lost wages. Where a work injury prevents
an employee from performing his pre-injury job, he is entitled to total disability
benefits in the amount of two-thirds of his pre-injury wages. Section 306(a) of the
Workers’ Compensation Act, 77 P.S. §511. Both public and private employers are
subject to the requirements of the Workers’ Compensation Act.
            The statute commonly referred to as the “Heart and Lung Act” applies
only to public employers. It requires the payment of full salary to police officers
and other public safety employees who are temporarily unable to perform their job
because of a work injury. Section 1 of the Heart and Lung Act, 53 P.S. §637. This
more favorable wage loss benefit assures “those undertaking dangerous employment
in certain institutions that they will continue to receive full income when they are
injured while performing their duties [and] by offering such assurance, the
Commonwealth can attract employees to and keep them in the essential and
dangerous jobs.” McWreath v. Department of Public Welfare, 26 A.3d 1251, 1255
(Pa. Cmwlth. 2011). Police officers and public safety employees are also entitled to
benefits under the Workers’ Compensation Act.          However, “any workmen’s
compensation, received or collected” by a public employee collecting Heart and
Lung benefits “shall be turned over to the [public employer] and paid into the
treasury thereof[.]” Section 1(a) of the Heart and Lung Act, 53 P.S. §637(a). Self-
insured public employers that pay Heart and Lung benefits do not make workers’
compensation payments because they would simply be returned to the employer.
Wisniewski v. Workmen’s Compensation Appeal Board (City of Pittsburgh), 621
A.2d 1111, 1113 (Pa. Cmwlth. 1993). Nevertheless, self-insured public employers
issue a notice of compensation payable to employees receiving Heart and Lung


                                         3
benefits. Stermel v. Workers’ Compensation Appeal Board (City of Philadelphia),
103 A.3d 876, 878 (Pa. Cmwlth. 2014).
               Where a work injury is caused by a third party, Section 319 of the
Workers’ Compensation Act5 states that “the employer shall be subrogated to the
right of the employee … against [a] third party to the extent of compensation
payable” under the Act. 77 P.S. §671. The Heart and Lung Act does not contain a
similar provision, but it has long been understood that the common law authorizes
public employers to subrogate their Heart and Lung payments from the employee’s
third party tort recovery. See, e.g., Topelski v. Universal South Side Autos, Inc., 180
A.2d 414, 420 (Pa. 1962). The public policy for subrogation has been explained as
follows:

               First, it prevents double recovery for the same injury by the
               claimant. Second, it prevents the employer from having to make
               compensation payments which resulted from the negligence of a
               third party. Finally, it prevents a third party from escaping
               liability for his negligence.


5
 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).
                                                4
Murphy v. Workers’ Compensation Appeal Board (City of Philadelphia), 871 A.2d
312, 317 (Pa. Cmwlth. 2005).
             The 1984 enactment of the Motor Vehicle Financial Responsibility
Law upended this paradigm on subrogation, at least with respect to work injuries
arising from motor vehicle accidents. Section 1720 of the Law expressly abolished
an employer’s ability to subrogate workers’ compensation payments. Section 1720,
as enacted in 1984, stated as follows:

             In 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, benefits available under Section 1711
             (relating to required benefits), 1712 (relating to availability of
             benefits) or 1715 (relating to availability of adequate limits) or
             benefits in lieu thereof paid or payable under Section 1719
             (relating to coordination of benefits).

Act of February 12, 1984, P.L. 53, No. 12, §3 (emphasis added).
             As noted, the goal of subrogation is to prevent double recovery for a
single loss. The Motor Vehicle Financial Responsibility Law is also designed to
prevent double recovery by those involved in work-related motor vehicle accidents.
Section 1722 of the Motor Vehicle Financial Responsibility Law prohibits a plaintiff
from including benefits, such as workers’ compensation, in his claim for damages
from the third party tortfeasor. Section 1722 states:

             In any action for damages against a tortfeasor, or in any
             uninsured or underinsured motorist proceeding, arising out of the
             maintenance or use of a motor vehicle, a person who is eligible
             to receive benefits under the coverages set forth in this
             subchapter, or workers’ compensation, or any program, group
             contract or other arrangement for payment of benefits as defined
             in section 1719 (relating to coordination of benefits) shall be
             precluded from recovering the amount of benefits paid or
             payable under this subchapter, or workers’ compensation, or any
                                          5
             program, group contract or other arrangement for payment of
             benefits as defined in section 1719.

75 Pa. C.S. §1722 (emphasis added). By precluding an employee injured in a work-
related motor vehicle accident from pleading workers’ compensation or Heart and
Lung benefits as an item of damages in his tort action, the employee must look solely
to the employer to be made whole. Thus, the tort victim cannot recover twice.
             In short, Section 1720 and 1722 work in tandem to shift the cost of
work-related motor vehicle accidents from the motor vehicle insurer to the workers’
compensation insurer. The object was to reduce the cost of motor vehicle insurance
by making the workers’ compensation carrier the primary insurer for injuries arising
from work-related motor vehicle accidents.
             However, in 1993, the legislature revisited this paradigm with the Act
of July 2, 1993, P.L. 190, No. 44 (Act 44), which amended the Workers’
Compensation Act and the Motor Vehicle Financial Responsibility Law. Section
25(b) of Act 44 reinstated an employer’s right of subrogation for workers’
compensation benefits paid to a claimant whose work injury resulted from a motor
vehicle accident. Section 25(b) states:

             The provisions of 75 Pa. C.S. §§1720 and 1722 are repealed
             insofar as they relate to workers’ compensation payments or
             other benefits under the Workers’ Compensation Act.

Act of July 2, 1993, P.L. 190, No. 44, §25(b). Accordingly, under Act 44, a plaintiff
injured in a work-related motor vehicle accident may include workers’ compensation
payments as an item of damages sought against the tortfeasor, and his employer may
subrogate the amount of workers’ compensation from that tort recovery. This shifted
the cost for work-related motor vehicle accidents from the workers’ compensation
carrier back to the motor vehicle insurer, as was the case prior to 1984.

                                          6
             Notably, Act 44 reinstated a public employer’s right to subrogate
workers’ compensation benefits from third-party tort recoveries by repealing the
contrary language in Sections 1720 and 1722 of the Motor Vehicle Financial
Responsibility Law. However, Act 44 did not revise the language of Sections 1720
and 1722, which continue to read as though there is no right to subrogation of
workers’ compensation benefits against a tort recovery arising from a work-related
motor vehicle accident.
            Act 44 expressly addressed workers’ compensation benefits, not Heart
and Lung benefits. Act 44 is silent on Heart and Lung payments and the public
employer’s ability to subrogate. This silence led to litigation on whether a public
employer may subrogate Heart and Lung Act benefits from third-party tort
recoveries. We review the three leading cases ad seriatim.
            In Fulmer v. Pennsylvania State Police, 647 A.2d 616 (Pa. Cmwlth.
1994), a Pennsylvania State Police trooper sustained serious injuries in a motor
vehicle accident while on duty. During his temporary incapacitation, the trooper
received $22,442.63 in Heart and Lung Act benefits from his employer. In 1989,
prior to the enactment of Act 44, the trooper instituted a personal injury action
against the driver of the other vehicle in the accident and recovered a settlement.
The State Police sought to subrogate the amount it paid the trooper in Heart and
Lung benefits from the trooper’s tort settlement. In response, the trooper filed a
declaratory judgment action requesting this Court to rule that Section 1720 of the
Motor Vehicle Financial Responsibility Law precluded the State Police from seeking
reimbursement of its payments made under the Heart and Lung Act.
            Notably, in 1990, the legislature amended the 1984 version of Section
1720 to read as follows:


                                        7
             In 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, benefits available under Section 1711
             (relating to required benefits), 1712 (relating to availability of
             benefits) or 1715 (relating to availability of adequate limits) or
             benefits paid or payable by a program, group contract or other
             arrangement whether primary or excess under section 1719
             (relating to coordination of benefits).

75 Pa. C.S. §1720 (amended by the Act of February 7, 1990, P.L. 11, No. 6, §9
(emphasis added). The amendment removed the language “or benefits in lieu
thereof,” i.e., a tort recovery, and replaced it with “or benefits paid or payable by a
program, group contract or other arrangement whether primary or excess ….” Id.
Because the trooper initiated his tort action in 1989, we used the 1984 version of
Section 1720 to decide whether the employer’s Heart and Lung Act payments were
subrogable. We held that these benefits could not be subrogated, reasoning as
follows:

             After reviewing the language of Section 1720 of the [Motor
             Vehicle Financial Responsibility Law] and its related sections,
             and taking into account the history and purpose of the [Motor
             Vehicle Financial Responsibility Law], we believe that Heart
             and Lung Act benefits fall within the “benefits in lieu thereof paid
             or payable” language of this section. Benefits received under
             the Heart and Lung Act effectively replace workmen’s
             compensation benefits for those employees covered by its
             provisions. These benefits provided petitioner with a full rate of
             salary during his temporary incapacity and required him to turn
             over all workmen’s compensation benefits he received to the
             [State Police]. On its face, the contested language of Section
             1720 attempts to include all those potential benefits which may
             have been too numerous to mention.

Fulmer, 647 A.2d at 619 (emphasis added).



                                          8
              We further stated that this result was required under either the 1984 or
the 1990 version of Section 1720. We explained as follows:

              [W]e agree that the language of the pre-amendment version of
              Section 1720 should control in this case, [however] we do not
              view this factor as determinative of the outcome, believing this
              change of language to be more of a clarification than an
              alteration. Therefore, any result we may reach should apply to
              both versions of the statute.

Id. at 618 (emphasis added).6 This Court specifically noted that the “inclusive nature
of the words ‘or other arrangement’ does seem to support [the] contention” that the
anti-subrogation mandate in Section 1720 applied to Heart and Lung benefits. Id.
              Our Supreme Court next addressed the effect of Act 44 on the
subrogation of Heart and Lung Act benefits in Oliver v. City of Pittsburgh, 11 A.3d
960 (Pa. 2011).7 In Oliver, a police officer received $848 in Heart and Lung Act
benefits as a result of a work-related motor vehicle accident. The officer recovered
against the tortfeasor, and her employer asserted a subrogation claim against her

6
  We further noted as follows:
       This Court is aware that in an act promulgating major revisions to The Pennsylvania
       Workmen’s Compensation Act, Act of June 2, 1915, P.L. 736, as amended, 77 P.S.
       §1–1031, the legislature repealed 75 Pa.C.S. §1720 insofar as it relates to worker’s
       compensation payments. Section 25(b) of the Act of July 2, 1993, P.L. 190, No. 44.
       (hereinafter referred to as Act 44). Legislation affecting substantive law will not be
       applied retroactively unless expressly declared in the act. Universal Cyclops Steel
       Corp. v. Krawczynski, [] 305 A.2d 757 ([Pa. Cmwlth.] 1973). The question of
       whether an employer is entitled to subrogation is not one of procedure but of
       substantive law. Bell v. Kloppers Co., Inc., [] 392 A.2d 1380 ([Pa.] 1978). Thus,
       Act 44 has no impact on this case. In addition, we express no opinion on the effect
       of Section 25(b) of Act 44 on the Heart and Lung Act in a case arising after the
       effective date of Act 44.
Fulmer, 647 A.2d at 618 n.3.
7
  The Supreme Court granted review because of facially conflicting pronouncements of law in
Brown v. Rosenberger, 723 A.2d 745, 747 (Pa. Cmwlth. 1999), and City of Pittsburgh v. Workers’
Compensation Appeal Board (Williams), 810 A.2d 760, 762 n.5 (Pa. Cmwlth. 2002).
                                              9
recovery. The employer argued that Section 25(b) of Act 44 restored subrogation
not only for workers’ compensation benefits but also for Heart and Lung benefits.
               In response, the officer commenced a declaratory judgment action,
asserting that Act 44 had no effect on Heart and Lung Act benefits, and the trial court
granted judgment in the officer’s favor. This Court reversed, holding that Act 44
reinstated the employer’s right to subrogate its payment of Heart and Lung benefits
against the employee’s third-party recovery. Oliver v. City of Pittsburgh, 977 A.2d
1232 (Pa. Cmwlth. 2009). We reasoned that there was “no reasonable basis” for
treating the payment of Heart and Lung benefits differently from the payment of
workers’ compensation. Id. at 1239.
               Our Supreme Court reversed. It held that Section 25(b) of Act 44
restored an employer’s right of subrogation only “insofar as [it] relate[d] to workers’
compensation payments or other benefits under the Workers’ Compensation Act.”
Oliver, 11 A.3d at 966. Section 25(b) did not mention the Heart and Lung Act and,
therefore, it did not “impact any anti-subrogation mandates pertaining to [Heart and
Lung Act] benefits.”          Id.    Because the statutory language was plain and
unambiguous, it was error for this Court to resort to principles of statutory
construction that are to be employed only where a statute is ambiguous. The
Supreme Court held that Act 44 did not affect the anti-subrogation mandate of
Section 1720 with respect to Heart and Lung Act benefits; thus, they are beyond the
reach of subrogation by a public employer. Id.8



8
  The City also argued that the 1990 amendment to the Motor Vehicle Financial Responsibility
Law restored an employer’s right to subrogation concerning benefits under the Heart and Lung
Act. However, because the City raised this issue for the first time on appeal to the Supreme Court,
the Court held that it was not properly preserved, and declined to address it. Oliver, 11 A.3d at
964-65. This is the argument the City presents today.
                                               10
             The most recent ruling on this issue was in Stermel, 103 A.3d 876. In
that case, a police officer’s vehicle was rear ended by an intoxicated driver and the
officer sustained an injury that caused him to miss 21 weeks of work. The employer,
the City of Philadelphia, issued a NCP acknowledging the work injury and stating
that it would pay Heart and Lung benefits in lieu of workers’ compensation. The
officer pursued a third-party tort claim against the driver and the tavern that served
him alcohol; the claim settled for $100,000. The City filed a petition to review
compensation benefit offset, seeking subrogation against the officer’s third party
recovery for the amount it paid in Heart and Lung benefits. The matter was assigned
to a workers’ compensation judge, who concluded that the employer could subrogate
the Heart and Lung benefits it paid the officer. On appeal, the Board reversed,
relying on the Supreme Court’s recent decision in Oliver, 11 A.3d 960. After a
rehearing, the Board reversed itself. The Board distinguished Oliver and found it
not dispositive.
             In distinguishing Oliver, the Board reasoned that in Oliver there was no
evidence that the claimant had received workers’ compensation benefits. Further,
the case was initiated in a court of common pleas, not in a workers’ compensation
proceeding. Finally, Oliver did not address the interplay between the Motor Vehicle
Financial Responsibility Law, Heart and Lung Act, and Workers’ Compensation
Act.
             The Board decided that two-thirds of the Heart and Lung benefits paid
by the City actually represented workers’ compensation benefits, which can be
subrogated under Act 44. The Board noted that had the City purchased a workers’
compensation policy, the carrier would have returned all workers’ compensation



                                         11
payments to the City. It made no sense to the Board that the City could not recover
these payments simply because it was self-insured.
               On appeal, we reversed the Board, explaining that:

               the Motor Vehicle Financial Responsibility Law [] prohibits a
               plaintiff from including as an element of damages payments
               received in the form of workers’ compensation or other “benefits
               paid or payable by a program ... or other arrangement.” 75
               Pa.C.S. §1720. This language “benefits paid or payable by a
               program” has been construed to include the program by which
               Heart and Lung benefits are paid. Fulmer, 647 A.2d at 618–19.

Stermel, 103 A.3d at 885 (emphasis added). We rejected the Board’s attempt to
distinguish Oliver on the stated grounds that the public employer had not issued a
NCP. We explained that an employer’s issuance of a NCP “does not transform Heart
and Lung Benefits into workers’ compensation; they are separate.” Id. at 883. We
further explained that “[f]or its own reasons, the General Assembly has decided to
treat Heart and Lung benefits differently, at least with respect to subrogation from a
claimant’s tort recovery arising from a motor vehicle accident.” Id. at 883-84.
               With this summary of the relevant statutes and case law precedent, we
turn to the instant appeal.9 The City asserts the 1990 amendment to Section 1720 of
the Motor Vehicle Financial Responsibility Law reinstated a public employer’s right
to subrogate its payment of Heart and Lung benefits. It maintains that although
Fulmer, Oliver and Stermel presumed that Heart and Lung Act benefits cannot be
subrogated under Section 1720 of the Motor Vehicle Financial Responsibility Law,
those cases did not specifically analyze the language of the 1990 amendment to


9
  An appellate court’s standard of review in a declaratory judgment action determines whether the
trial court committed a clear abuse of discretion or an error of law. Prillo v. Vanco, 74 A.3d 366,
368 n.5 (Pa. Cmwlth. 2013). In a case where the issues are questions of law, the standard of review
is de novo. The scope of review is plenary. Id.
                                               12
Section 1720. Accordingly, this case presents an issue of first impression. The City
distinguishes Fulmer, Oliver, and Stermel as follows.
             In Fulmer, this Court stated that the 1990 amendment to Section 1720
was “more of a clarification than an alteration,” which continues to prohibit the
subrogation of Heart and Lung benefits. Fulmer, 647 A.2d at 618. Because Fulmer
was decided under the 1984 version, the City contends that this language is obiter
dictum with respect to the 1990 version of Section 1720. See Valley Township v.
City of Coatesville, 894 A.2d 885, 889 (Pa. Cmwlth. 2006) (court opinion not
essential to the decision is dicta and has no precedential value). Moreover, the City
notes that this Court’s offhand comment in Fulmer was not accompanied by any
statutory analysis. Thus, Fulmer stands only for the proposition that the 1984
version of Section 1720 prohibited employer subrogation of Heart and Lung
benefits.
             With respect to Oliver, the City argues that it has no bearing on its
statutory construction argument because the Supreme Court considered only the
effect of Act 44 on Section 1720. Oliver, 11 A.3d at 966. By contrast, here, the City
focuses exclusively on the 1990 amendment to Section 1720 and whether it included
Heart and Lung benefits within the anti-subrogation mandate. Notably, the court in
Oliver declined to address this very argument because it had not been preserved. Id.
at 964-65.
             With respect to Stermel, the City asserts that as in Fulmer, the precise
meaning of the 1990 amendment to Section 1720 was not addressed. Stermel simply
observed that this “Court has interpreted both versions of Section 1720 to designate
Heart and Lung benefits as a type of benefit not eligible for subrogation where the
injury arises from a motor vehicle accident.” Stermel, 103 A.3d at 879 (citing


                                         13
Fulmer, 647 A.2d at 618-19)). The City notes that this observation is based upon
the dicta in Fulmer and argues that “repetition does not elevate obiter dicta to the
level of binding precedent.” Commonwealth v. Singley, 868 A.2d 403, 409 (Pa.
2005).
            Zampogna acknowledges that Fulmer’s discussion of the 1990 version
of Section 1720 constitutes dicta. However, he contends that the dicta in Fulmer
was confirmed in Stermel and, thus, became binding precedent. Zampogna also
directs our attention to Housing and Redevelopment Insurance Exchange v.
Michaels, 2012 WL 1985926 (Lackawanna Co. C.P., No. 11 CV 6121, filed May
25, 2012), which held that the 1990 amendatory language “program, group contract
or other arrangement” in Section 1720 was intended to expand, not constrict, the
applicability of the anti-subrogation mandate as it existed in 1984.
             Zampogna explains that in Oliver, the Supreme Court considered
whether Act 44’s restoration of the employer’s subrogation rights with respect to
workers’ compensation benefits extended to Heart and Lung Act payments. This
consideration would make little sense if the Supreme Court believed that the 1990
amendment to Section 1720 of the Motor Vehicle Financial Responsibility Law had
already restored the employer’s right of subrogation for Heart and Lung Act benefits,
while continuing the anti-subrogation mandate for workers’ compensation.
Likewise, in Stermel, this Court stated that:

             Section 25(b) of Act 44 changed the Section 1720 paradigm only
             for workers’ compensation benefits, not Heart and Lung benefits.
             This means Claimant continued to be ‘precluded’ from
             recovering the amount of benefits paid under the Heart and Lung
             Act from the responsible tortfeasors. There can be no
             subrogation out of an award that does not include these benefits.



                                          14
Stermel, 103 A.3d at 885 (internal quotations omitted) (emphasis added). By using
the word “continued,” Stermel affirmed that prior to Act 44, a claimant could not
recover, and an employer could not subrogate, benefits paid pursuant to the Heart
and Lung Act.
              Oliver limited its holding to Act 44. The City is correct that case law
precedent has not squarely considered the meaning of the 1990 amendment of
Section 1720. We do so now.
              Section 1720 of the Motor Vehicle Financial Responsibility Law states
as follows:

              In 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, benefits available under Section 1711
              (relating to required benefits), 1712 (relating to availability of
              benefits) or 1715 (relating to availability of adequate limits) or
              benefits paid or payable by a program, group contract or other
              arrangement whether primary or excess under section 1719
              (relating to coordination of benefits).

75 Pa. C.S. §1720 (emphasis added). The final phrase “benefits paid or payable by
a program, group contract or other arrangement whether primary or excess” replaced
the 1984 language that read “benefits in lieu thereof paid or payable.” The City
offers several reasons to support its contention that the removal of the “in lieu
thereof” language from the 1984 version of Section 1720 restored its right to
subrogate Heart and Lung benefits from a tort award arising from a work-related
motor vehicle accident.
              First, the City notes that Section 1720 refers to Sections 1711, 1712,
1715 and 1719 of the Motor Vehicle Financial Responsibility Law. None of these
provisions of the Motor Vehicle Financial Responsibility Law mention the Heart and

                                          15
Lung Act or any other mandatory statutory compensation scheme. Therefore, the
anti-subrogation mandate applies only to benefits paid under private insurance
policies.
            Second, Fulmer, Oliver and Stermel focused on the words “benefits
paid or payable by a program, group contract or other arrangement,” which is
incomplete. The City notes that the final sentence of Section 1720 states “benefits
paid or payable by a program, group contract or other arrangement whether primary
or excess under Section 1719 (relating to coordination of benefits).” Neither Fulmer
nor Stermel considered the text of Section 1719, which states as follows:

            (a) General rule.--Except for workers’ compensation, a policy of
            insurance issued or delivered pursuant to this subchapter shall be
            primary. Any program, group contract or other arrangement for
            payment of benefits such as described in section 1711 (relating to
            required benefits) 1712(1) and (2) (relating to availability of
            benefits) or 1715 (relating to availability of adequate limits) shall
            be construed to contain a provision that all benefits provided
            therein shall be in excess of and not in duplication of any valid
            and collectible first party benefits provided in section 1711, 1712
            or 1715 or workers’ compensation.
            (b) Definition.--As used in this section the term “program, group
            contract or other arrangement” includes, but is not limited to,
            benefits payable by a hospital plan corporation or a professional
            health service corporation subject to 40 Pa. C.S. Ch. 61 (relating
            to hospital plan corporations) or 63 (relating to professional
            health services plan corporations).

75 Pa. C.S. §1719 (emphasis added).
            The City argues that the Section 1719(b) definition of “program,
group contract or other arrangement” cannot be read to include Heart and Lung Act
benefits, which bear no similarity to Blue Cross/Blue Shield coverage. Under the
doctrine ejusdem generis, the phrase “includes, but is not limited to” in Section


                                         16
1720 requires that a “program, group contract or other arrangement” must be
similar to a health insurance policy issued by Blue Cross and Blue Shield. S.A. by
H.O. v. Pittsburgh Public School District, 160 A.3d 940, 946 (Pa. Cmwlth. 2017).
Accordingly, the City argues that Heart and Lung benefits fall outside the “included
but not limited” list of “programs.” The City offers an interesting argument, but it
has flaws.
             First, the language “program, group contract or other arrangement”
in Section 1720 has been understood to encompass Heart and Lung Act benefits in
all the above-discussed precedent.
             Second, the definition of “program, group contract or other
arrangement” that appears in Section 1719(b) is limited to “this section,” i.e.,
Section 1719. 75 Pa. C.S. §1719(b). Notably, Section 1722 uses the phrase “set
forth in this subchapter.” 75 Pa. C.S. §1722. Had the legislature intended the
definition in Section 1719(b) to apply to Section 1720, it could have used the phrase
“in this subchapter” as opposed to “in this section.” Therefore, even if we accepted
the City’s construction of Section 1719(b) to exclude a statutory benefit program
such as Heart and Lung benefits, it is not dispositive. The definition is limited to
use in the application of Section 1719.
             Third, the City’s emphasis on Section 1719 misses the mark. Section
1720 prohibits subrogation for workers’ compensation payments and payments of
first party coverages provided under Sections 1711, 1712 and 1715 of the Motor
Vehicle Financial Responsibility Law. Section 1719 does not provide a type of
first party coverage. It simply establishes the priority of payments where there
exists more than one source of payment for the type of first party coverages
provided in a policy of motor vehicle insurance. The language “whether primary


                                          17
or excess under Section 1719” makes the priority directive in Section 1719
irrelevant.10
                Stated otherwise, Section 1719 has no effect on the scope or meaning
of the catch-all phrase “benefits paid or payable by a program, group contract or
other arrangement whether primary or excess” set forth in Section 1720. 75 Pa.
C.S. §1720. We agree that the purpose of the new phraseology set forth in the 1990
amendment was intended to expand the scope of the anti-subrogation mandate as
it existed in 1984. Housing and Redevelopment Insurance Exchange, 2012 WL
1985926 at *9.
                Fulmer explained that the “catch-all phrase ‘or benefits paid or
payable by a program, group contract or other arrangement’ extends the
applicability of [Section 1720] to the Heart and Lung Act.” Fulmer, 647 A.2d at
618. This was obiter dictum, but it correctly construes Section 1720. We so hold.
The legislature excluded workers’ compensation from the anti-subrogation
mandate in Section 1720, but it did not exclude Heart and Lung benefits from this
mandate. Accordingly, we reject the City’s argument that the 1990 amendment to
Section 1720 reinstated a public employer’s right to subrogate Heart and Lung Act
benefits from an employee’s tort award arising from a motor vehicle accident.
                Alternatively, the City argues that Section 319 of the Workers’
Compensation Act authorizes it to subrogate two-thirds of the Heart and Lung Act
benefits it paid to Zampogna. Section 319 of the Workers’ Compensation Act

10
   Section 1719, like the rest of the Motor Vehicle Financial Responsibility Law, has not been
amended to reflect Act 44’s reinstatement of subrogation rights for workers’ compensation
benefits. Section 1719 still reads as it did in 1984. Section 1719 establishes a priority scheme that
generally makes a policy of motor vehicle insurance primary to other sources of benefits. The
introductory language of Section 1719 excludes workers’ compensation from this priority scheme.
However, Act 44’s express repeal of Sections 1720 and 1722 makes this reference to workers’
compensation in Section 1719 meaningless.
                                                18
permits an employer to subrogate against a third party to the “extent of the
compensation payable under this article.” 77 P.S. §671. The City argues that the
word “payable” allows it to subrogate two-thirds of the total amount of Heart and
Lung Act benefits, which could be construed as Zampogna’s workers’
compensation benefits.
              The City maintains that the NCP it issued to Zampogna on November
26, 2007, made workers’ compensation benefits “payable” to Zampogna. Because
the City is self-insured, it did not go through the process of issuing a workers’
compensation payment and then have it returned. Wisniewski, 621 A.2d at 1113.
Instead, it issued Heart and Lung Act benefits in the amount of Zampogna’s full
salary. However, two-thirds of the Heart and Lung benefits it paid, which is the
amount Zampogna could have received under the Workers’ Compensation Act,
were “payable” to him as workers’ compensation benefits.
              The argument that the issuance of a NCP transforms Heart and Lung
Act benefits into workers’ compensation benefits was addressed in Stermel. We
rejected it, stating:

              Employer paid Heart and Lung benefits during the entire time
              that Claimant was temporarily disabled by his work injury.
              Employer’s NCP states that “Claimant received salary
              continuation [under the Heart and Lung Act] in lieu of PA
              Workers’ compensation for period of lost time.” This does not,
              as Employer contends, make Claimant’s situation different from
              the claimant in Oliver, who “only received Heart and Lung
              Benefits.” The NCP, which was issued unilaterally by Employer,
              does not transform Heart and Lung benefits into workers’
              compensation; they are separate. For its own reasons, the
              General Assembly has decided to treat Heart and Lung benefits
              differently, at least with respect to subrogation from a claimant’s
              tort recovery arising from a motor vehicle accident.

Stermel, 103 A.3d at 883 (internal quotations omitted).
                                          19
             We again reject the City’s contention. The General Assembly, “for its
own reasons,” has chosen to treat Heart and Lung Act benefits differently than
workers’ compensation benefits. Id. Here, the City paid Heart and Lung Act
benefits to Zampogna for the entirety of his disability. We decline to consider those
payments as anything other than what they are: Heart and Lung Act benefits,
subrogation of which is prohibited by Section 1720 of the Motor Vehicle Financial
Responsibility Law.
             In sum, we find that both of the City’s arguments fail. The 1990
amendment to Section 1720 of the Motor Vehicle Financial Responsibility Law did
not restore a public employer’s right to subrogate Heart and Lung Act benefits.
Those benefits remain subject to the anti-subrogation mandate of Section 1720. It
follows, then, that the City may not subrogate a portion of Heart and Lung Act
benefits under the artifice that those benefits are payable as workers’ compensation
benefits. Likewise, the plaintiff may not include the receipt of Heart and Lung Act
benefits as an item of damages in its tort against a third party with liability for a
work-related motor vehicle accident.
             For these reasons, we affirm the trial court’s order granting declaratory
judgment in favor of Zampogna.

                                   _____________________________________
                                   MARY HANNAH LEAVITT, President Judge




                                         20
         IN THE COMMONWEALTH COURT OF PENNSYLVANIA

City of Philadelphia,                 :
                   Appellant          :
                                      :
            v.                        : No. 94 C.D. 2017
                                      :
Frank Zampogna                        :


                                  ORDER

            AND NOW, this 27th day of December, 2017, the order of the Court of
Common Pleas of Philadelphia County dated August 1, 2016 in the above-captioned
matter is AFFIRMED.
                                 _____________________________________
                                 MARY HANNAH LEAVITT, President Judge
          IN THE COMMONWEALTH COURT OF PENNSYLVANIA


City of Philadelphia,                      :
                   Appellant               :
                                           :
             v.                            :   No. 94 C.D. 2017
                                           :   Argued: October 19, 2017
Frank Zampogna                             :



BEFORE:      HONORABLE MARY HANNAH LEAVITT, President Judge
             HONORABLE ROBERT SIMPSON, Judge
             HONORABLE BONNIE BRIGANCE LEADBETTER, Senior Judge


CONCURRING OPINION BY
SENIOR JUDGE LEADBETTER                                FILED: December 27, 2017


      Because I believe that Stermel v. Workers’ Compensation Appeal Board (City
of Philadelphia), 103 A.3d 876, 878 (Pa. Cmwlth. 2014) was wrongly decided, I
must concur in the result only. I believe the City should be able to pursue subrogation
for two-thirds of its Heart and Lung payments, the amounts attributable to Workers’
Compensation pursuant to its Notice of Compensation Payable, and not be penalized
in this regard simply because it is self-insured.



                                        _____________________________________
                                        BONNIE BRIGANCE LEADBETTER,
                                        Senior Judge
