Back from the Dead: The Agreement for Compensation

In the recently decided case of Kweh v. US Airways et al., 2017 Pa.Super. Unpub. LEXIS 4009 (Pa.Super. Oct. 27, 2017), the Pennsylvania Superior Court served an important reminder. The workers’ compensation system remains the exclusive remedy for workers injured on the job.

While that general principle is uncontested, ambiguity can arise in circumstances where it is not clear that the employee suffered an injury during the course and scope of employment. One such situation presented itself in Kweh.

The claimant was a baggage handler for US Airways at the Philadelphia International Airport. On a day when he was not scheduled to work, Kweh returned to his place of employment to retrieve a personal laptop computer that he had left in his work locker. The path he chose to reach his locker had both pedestrian and baggage doors. He entered through the pedestrian doors, retrieved his laptop, and returned to find a trash receptacle blocking the pedestrian doorway. Kweh decided that he would leave the airport through the baggage doors, which were overhead “high speed roll up” doors operated by sensors. Kweh testified that he had used the baggage doors as a pedestrian on other occasions and had witnessed other US Airways employees do the same. When he attempted to exit, the baggage doors closed and struck him on the head. He was taken to a hospital and missed three weeks of work.

Kweh applied for and received workers’ compensation benefits from US Airways by the execution of an Agreement for Compensation. Shortly thereafter, Kweh filed suit against several entities related to the incident, the majority of which were dismissed, with the exception of US Airways, Rytec and American Overhead. The trial court granted summary judgment in favor of all three defendants.

With respect to US Airways, the trial court recognized the exclusivity of the remedy provided by the Pennsylvania Workers’ Compensation Act, noting that the Act requires the injury to occur during the course and scope of employment. In support of that contention, US Airways presented the Agreement for Compensation entered into by the parties. Typically after a worker suffers an injury that the employer agrees is compensable, the employer will issue a Notice of Compensation Payable, or Notice of Temporary Compensation Payable, indicating the injury that was accepted and the compensation rate provided. In either case, it is a unilateral action on the part of the employer. Conversely, an Agreement for Compensation is a mutually agreed upon contract that requires execution by the employer and worker. Kweh had applied for and received workers’ compensation benefits by the execution of an Agreement for Compensation.

In arriving at the decision to grant summary judgment in favor of US Airways, the trial court looked toward a logically analogous case in Black v. Labor Ready, Inc., 995 A.2d 875 (Pa.Super. 2010), in which a worker was sent by a temp agency to a factory where he was injured. The worker filed a claim against the factory seeking workers’ compensation benefits. The factory successfully defended the claim by asserting that the temp agency was the worker’s employer. The worker then filed a civil suit against the factory, which then attempted to claim Workers’ Compensation Act immunity as the worker’s employer. The court prohibited the factory from doing so by applying judicial estoppel. The court reasoned that the factory could not claim to be an employer after successfully denying the same in the earlier workers’ compensation proceedings.

In Kweh, the trial court applied the logic of Black, holding that Kweh could not deny being injured in the course and scope of his employment. He successfully took the opposite stance to obtain workers’ compensation benefits.

The Superior Court concurred in the analysis of the trial court and affirmed the ruling. In doing so, it noted that one purpose of the Workers’ Compensation Act is to protect employees by establishing quick and certain compensation for work-related injuries and resultant loss of earnings without wasting time and expense on litigation. The takeaway for employers and insurers is that the best interests of the insured are not always served by issuing a Notice of Temporary Compensation Payable or Notice of Compensation Payable. While these are far and away the most frequently used mechanisms for accepting a workers’ compensation claim, they are not always the most effective option for employers.

Prior to issuing either document, it is important to analyze potential legal issues that could present themselves if litigation later unfolds. If it is not clear that the injury was work-related, as was the case in Kweh, an employer that fears the risk of civil litigation would be prudent to consider presenting the worker with an Agreement for Compensation. Through the execution of the Agreement, both parties mutually agree that the worker suffered a compensable injury during the course and scope of his employment. Should the parties enter into such an agreement, a trial court is far more likely to dismiss a subsequently filed civil suit for violating the exclusive remedy provided by the Workers’ Compensation Act than would be the case if a worker had received workers’ compensation benefits as a result of unilateral action taken by the employer. The holding in Kweh serves as a reminder to employers and insurers that the Agreement for Compensation, often looked at as a relic of the past, can sometimes provide greater protection than the frequently issued Notice of Compensation Payable.

*Alex is an associate working in our Pittsburgh, Pennsylvania office. He can be reached at 412.803.1148 or abpossino@mdwcg.com.

_{Defense Digest, Vol. 24, No. 2, June 2018. Defense Digest is prepared by Marshall Dennehey Warner Coleman & Goggin to provide information on recent legal developments of interest to our readers. This publication is not intended to provide legal advice for a specific situation or to create an attorney-client relationship. ATTORNEY ADVERTISING pursuant to New York RPC 7.1. © 2018 Marshall Dennehey Warner Coleman & Goggin. All Rights Reserved. This article may not be reprinted without the express written permission of our firm. For reprints, contact tamontemuro@mdwcg.com.}