Hartford Insurance Loses Appeal of Loss of Consortium Claim It Labeled a ‘Ploy’

Hartford Insurance Group has lost an appeal of a $1.45 million injury settlement between an injured employee and third parties where 60% was for loss of consortium for the wife of the injured worker.

Hartford maintained that the consortium allocation was a “ploy” by the plaintiffs and the defendants to insulate a large portion of the settlement from subrogation by the employer and its workers’ compensation insurer under Pennsylvania rules.

The plaintiff, John Gleason, was employed as an MRI Field Service Technician by Medical Imaging Group, which had Hartford as its workers’ compensation insurer. On May 29, 2015, while Gleason was performing maintenance on an MRI machine at a hospital, a fire and explosion occurred in the main distribution panel. Gleason’s hair, skin and clothing caught fire and he suffered severe burns, scarring, disfigurement and temporary blindness

Gleason and his wife, Elaine Gleason, filed two actions against various defendants including a construction firm and an electrical contractor in 2016 and 2017, alleging negligence and loss of consortium. The Gleasons reached a proposed settlement agreement with the defendants and they filed a petition seeking the trial court’s approval of its terms. All defendants joined in support of the Gleasons’ petition without taking a position on the allocation between the spouses.

A Philadelphia trial court approved the settlement, with $580,000 to the injured worker and $870,000 to his wife for her loss of consortium claim.

Hartford objected to the allocation and appealed, complaining that the trial court was “an abbreviated process” that “was insufficient to protect its rights as subrogee.” It further claimed that the trial court did not consider the Hartford’s claim that the consortium allocation was not supported by sufficient evidence.

A three-judge panel of the Superior Court of Pennsylvania has now rejected Hartford’s appeal.

The state’s Supreme Court has held that “because a loss of consortium claim is derivative in nature and arises from the impact of the spouse’s physical injuries upon 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 happened in this case presents the potential for abuse “due to the lack of participation by the employer 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 of consortium.”

Citing this background, the Superior Court of Pennsylvania rejected Hartford’s appeal and upheld the lower court and the settlement with the 60% consortium allocation.

The Superior Court found that the insurer was not denied due process in the trial court because it had the opportunity to participate as a party when the settlement was approved and did not at any point object in the trial court concerning the manner in which the court conducted its hearing. The court noted that the insurer also has the option of seeking recourse in the court of common pleas if it believes the settlement is unreasonably apportioned.

The appeals court also upheld the trial court in its conclusion that there was sufficient evidence to support the allocation. The trial court found that the evidence “demonstrated Mr. Gleason’s substantial recovery” from his physical and mental injuries, while Mrs. Gleason’s “emotional and mental health [had] deteriorated” as she attempted to cope “with the sudden and prolonged loss of her husband’s companionship and disruption to her family life.”

The court concluded that “considering both the lingering psychic harm to Mrs. Gleason and Mr. Gleason’s positive recovery, the evidence amply supports the conclusion that the allocation of 60% of the total settlement to the loss of consortium claim in this third-party action is reasonable.”

The appeals court also backed the trial court’s conclusion that there was no support for the insurer’s claim that the allocation was “an attempt to thwart its subrogation rights” as there was no evidence offered “from which it can be inferred that the Gleasons entered the settlement with a bad motive.”

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