Subrogation Rights in Pennsylvania Workers’ Compensation Cases – Attorney Richard Estacio Explains

Navigating the world of workers’ compensation (WC) and personal injury law can feel like walking through a maze. Just when you think you have a handle on your medical bills and lost wages, a new term pops up: subrogation. It sounds complicated, and frankly, the legal mechanics behind it are. However, understanding subrogation is crucial for anyone involved in a Pennsylvania workers’ compensation case, as it directly impacts how much money you might keep from a settlement.

Attorney Richard A. Estacio, Sr. of Kitay Law Offices recently explored this complex topic in his recently published feature article for the January 2026 edition of The Pennsylvania Bar Association Quarterly, titled “Enforcing Health Care Subrogation Liens in Personal Injury Cases and Workers’ Compensation Cases in Pennsylvania.” Drawing from his deep experience in both claimant and defense workers’ compensation matters, Attorney Estacio breaks down exactly how these rights work and why they matter to injured workers across the Commonwealth.

This guide provides a general overview of subrogation rights in Pennsylvania based on Attorney Estacio’s insights, helping you understand what happens when insurance companies seek reimbursement from your settlement. For a more detailed breakdown, please see Attorney Estacio’s article.

Understanding Subrogation

At its core, subrogation is a legal principle that prevents an injured person from “double-dipping”—essentially getting paid twice for the same expense. It gives an entity that paid for your expenses (like a health insurance company or a workers’ comp carrier) the right to be reimbursed if you later recover money from the person or company that caused your injury.

For example, imagine you are injured in a car accident while driving for work. Your workers’ compensation insurance might pay your medical bills immediately following the accident. If you later sue the other driver and win a settlement, the workers’ comp insurer has a “subrogation right” to claim a portion of that settlement to pay themselves back for the medical bills they covered.

Attorney Estacio notes that while this concept feels modern, its roots run deep. The legal basis for subrogation traces back centuries, even appearing in early forms in the Magna Carta of 1215. Today, subrogation doesn’t just happen by accident; it arises through three main avenues:

1. Statute: Laws written by legislatures that explicitly grant subrogation rights.
2. Agreement: Contracts (like your health insurance policy) where you agree to reimburse the insurer.
3. Common Law: Long-standing legal principles developed by courts over time based on fairness and equity.

In Pennsylvania workers’ compensation cases, subrogation is primarily driven by statute, meaning the law specifically mandates it.

Subrogation under the Pennsylvania Workers’ Compensation Act

In Pennsylvania, the rule for workers’ comp subrogation is strict and clear. It is governed by Section 319 of the Pennsylvania Workers’ Compensation Act.

This section of the Act establishes that employers (and their insurance carriers) have an automatic right to subrogation. Specifically, if a third party—someone other than your employer—caused your injury, and you receive a settlement or award from them, your employer is entitled to be paid back for the workers’ compensation benefits they provided.

Attorney Estacio highlights that the language in Section 319 is mandatory. It states that the employer “shall be subrogated” to the employee’s right against the third party. This means:

• Automatic Right: The employer doesn’t just have the option to seek repayment; the law essentially treats them as having paid the debt on behalf of the third party.
• No Exceptions: The statute is written in a way that admits virtually no exceptions. If you recover money from a negligent third party, the workers’ comp carrier gets their share off the top to cover what they paid you in benefits.
• Future Credits: If your third-party settlement is large enough, any excess money (after the employer is repaid) is treated as an advance on future workers’ comp payments. This essentially gives the employer a “credit,” meaning they may not have to pay future benefits until that credit is exhausted.

This provision ensures that the ultimate financial responsibility falls on the party who actually caused the injury, rather than the employer.

ERISA and Healthcare Subrogation Claims

While the Pennsylvania Workers’ Compensation Act governs benefits paid by your employer, things get more complicated when private health insurance pays for treatment related to your injury. This often brings a federal law into play: the Employee Retirement Income Security Act of 1974 (ERISA).

ERISA is a federal law that sets minimum standards for most voluntarily established retirement and health plans in private industry. Attorney Estacio explains that when a health plan falls under ERISA, it can supersede (or “preempt”) state laws. This is critical because state laws might offer more protection to injured workers, but if an ERISA plan is involved, those state protections might not apply.

How ERISA Plans Recover Payments

Under ERISA, health plans can file lawsuits to recover medical expenses they paid on your behalf. However, they are limited to seeking “appropriate equitable relief.” Attorney Estacio points to several landmark Supreme Court cases, such as Great-West Life & Annuity Ins. Co. v. Knudson and Sereboff v. Mid Atlantic Medical Services, Inc., which defined what this relief looks like.

Key takeaways regarding ERISA liens include:

• Specific Funds: To enforce a lien, the plan usually must identify a specific fund of money (like your settlement check) that is in your possession or control.
• Tracing Assets: If you spend the settlement money on non-traceable items (like food or travel) before the plan asserts its rights, the plan might lose its ability to recover those funds. This was a central issue in the Montanile case, where the Supreme Court ruled that a plan could not attach a lien to general assets if the specific settlement funds were already dissipated.
• Equitable Defenses: In some cases, defenses like the “common fund doctrine” (which requires the insurer to help pay for the attorney’s fees used to secure the settlement) may apply, but this depends heavily on the specific language in the insurance plan document.

Because ERISA preemption can override favorable state laws, identifying whether a lien is an ERISA lien—and what type of ERISA lien it is—is a vital task for your attorney.

Timely Assertion of Subrogation Liens

One of the most practical insights Attorney Estacio shares is the importance of timing. A valid subrogation lien can be lost entirely if the insurer falls asleep at the wheel.

In Pennsylvania, specifically regarding health care subrogation liens in workers’ compensation cases, the insurer must establish their right to subrogation during the workers’ compensation proceedings. Attorney Estacio discusses the Independence Blue Cross v. WCAB (Frankford Hosp.) case, where a health insurer submitted its subrogation claim 14 months after the case had settled. The court ruled that the insurer had waived its lien because it failed to assert it on time.

For a lien to be enforceable:

1. Right Established at Hearing: The right to subrogation must be agreed upon by the parties or established at the time of the hearing before the Workers’ Compensation Judge.
2. Proof of Lien: Insurers must provide competent evidence, such as a Consolidated Statement of Benefits (CSB), to prove the existence and amount of the lien.
3. No “Wait and See”: Insurers cannot wait until after a case is fully resolved to try and claim their share. If they are not proactive, they may forfeit their right to repayment.

This “use it or lose it” approach encourages efficiency and finality in legal proceedings, ensuring that injured workers aren’t hit with surprise bills long after their cases have closed.

Navigating the Maze

Subrogation is a dense, highly technical area of law that sits at the intersection of state workers’ compensation statutes, federal regulations, and centuries of common law. As Attorney Richard Estacio illustrates in his analysis, the difference between keeping your settlement and losing a significant portion of it often comes down to the specific type of lien involved and whether the insurer followed the strict procedural rules to enforce it.

Whether you are dealing with a mandatory lien under Section 319 of the Workers’ Compensation Act or a complex federal ERISA claim, the stakes are high. Ignoring a subrogation letter or failing to account for a lien during settlement negotiations can have disastrous financial consequences.

If you have been injured at work and are facing pressure from insurance companies regarding liens or reimbursement, you do not have to navigate this alone. The experienced team at Kitay Law Offices understands the nuances of these laws and is ready to fight to protect your compensation.

Call Kitay Law Offices at 888-KITAYLAW or contact us online today to schedule your free consultation. Let us handle the complex legal details so you can focus on your recovery.