Hartford Insurance Loses Appeal on Loss of Consortium Claim Labeled a “Ploy”
Hartford Insurance Group has lost an appeal over a $1.45 million damage settlement between an injured worker and third parties, 60% of which was for loss of consortium for the injured worker’s wife.
The consortium allocation, according to Hartford, was a “ploy” by the plaintiffs and defendants to shield a major amount of the settlement from subrogation by the employer and its workers’ compensation insurance under Pennsylvania law.
John Gleason, the plaintiff, worked as an MRI Field Service Technician for Medical Imaging Group, which had Hartford as its workers’ compensation insurer. A fire and explosion happened in the main distribution panel on May 29, 2015, when Gleason was doing maintenance on an MRI equipment at a hospital. Gleason endured serious burns, scars, deformity, and temporary blindness as his hair, skin, and clothing caught fire.
In 2016 and 2017, Gleason and his wife, Elaine Gleason, filed two lawsuits against several defendants, including a building business and an electrical contractor, alleging negligence and loss of consortium. The Gleasons struck a tentative settlement deal with the defendants and filed a petition with the trial court to have its terms approved. Without taking a stance on the allocation between the spouses, all defendants participated in favor of the Gleasons’ petition.
The settlement was authorized by a Philadelphia trial court, with the wounded worker receiving $580,000 and his wife receiving $870,000 for her loss of consortium claim.
Hartford filed an appeal after objecting to the allocation, claiming that the trial court was “an truncated procedure” that “was insufficient to defend its rights as subrogee.” It further alleged that the trial court ignored Hartford’s contention that the consortium allocation was not supported by adequate evidence.
Hartford’s appeal has now been rejected by a three-judge panel of the Pennsylvania Superior Court.
According to the state Supreme Court, “because a loss of consortium claim is derivative in nature and arises from the impact of the spouse’s physical injuries on the marriage rather than from the injuries themselves, there is no identity or equatability of funds and, thus, an employer has no subrogation interest in a spouse’s recovery for loss of consortium.”
The Supreme Court has also recognized that the structuring of loss of consortium settlements between a claimant and a third party tortfeasor, as occurred in this case, has the potential for abuse “due to the employer’s lack of participation in the proceeding,” because a “claimant would have the opportunity to shield his recovery from the employer’s subrogation interest by fraudulently attributing an unwarranted amount of the damages to the spouse’s claim for loss.”
In light of this, the Superior Court of Pennsylvania dismissed Hartford’s appeal and upheld the lower court’s decision and the settlement with the 60% consortium allocation.
The Superior Court determined that the insurer was not denied due process in the trial court since it had the option to participate as a party when the settlement was accepted and did not object to the way in which the court conducted its hearing at any stage throughout the trial. The court also stated that if the insurer feels the settlement is unfairly allocated, it may seek relief in the court of common pleas.
The appeals court also agreed with the trial court that there was sufficient evidence to sustain the allocation. The trial court determined that the evidence was inadmissible.
Mrs. Gleason’s “emotional and mental health [had] worsened” as she tried to cope “with the abrupt and lengthy loss of her husband’s companionship and disturbance to her family life,” while Mr. Gleason’s “considerable recovery” from his physical and mental ailments.
“Considering both Mrs. Gleason’s continuing emotional suffering and Mr. Gleason’s excellent recovery, the evidence amply supports the judgment that the allocation of 60% of the total settlement to the loss of consortium claim in this third-party case is appropriate,” the court ruled.
The appeals court also agreed with the trial court that there was no evidence to support the insurer’s claim that the allocation was “an attempt to thwart its subrogation rights,” because there was no evidence “from which it can be inferred that the Gleasons entered the settlement with a bad motive.”