Associated Hospital Service of Philadelphia v. Pustilnik

Alan Pustilnik (defendant) was injured when he was struck by a SEPTA subway car in Philadelphia, Pennsylvania. Medical bills for Pustilnik’s treatment totaled $30,200.87. Pustilnik was given a credit of $18,960.18 under his subscription agreement with Associated Hospital Service of Philadelphia (Blue Cross) (plaintiff). Shortly after the accident, Pustilnik sued SEPTA. Blue Cross notified Pustilnik and his attorney that it had a subrogation interest in any recovery Pustilnik obtained from SEPTA. Pustilnik’s suit against SEPTA went to trial but settled for $235,000 before a jury verdict was rendered. During the trial, Pustilnik claimed the $18,960.18 as part of his special damages for medical bills. Blue Cross notified SEPTA and the court of its subrogation claim. The trial court judge placed $30,000 of the settlement funds in escrow after Blue Cross and Pustilnik failed to agree on the amount of Blue Cross’s interest. Blue Cross sued Pustilnik to obtain a decision about its entitlement to the escrow funds. The trial court held that, although Blue Cross was entitled to subrogation for the amounts it had paid toward Pustilnik’s medical bills, Blue Cross had not demonstrated its entitlement to $18,960.18. The court found that Blue Cross could not demonstrate that it had expended more than $16,721.64. Therefore, Blue Cross could not recover more than that amount. The court then decreased the $16,721.64 to account for the fact that Pustilnik had settled his claim for less than its full value and Pustilnik’s attorney’s fees. The court entered judgment in favor of Blue Cross for $4,889.49. Blue Cross and Pustilnik filed exceptions to the court’s decision, which the court dismissed. Pustilnik and Blue Cross each cross-appealed.