Workers Compensation Awards
Pennsylvania law does recognize workers’ compensation awards as marital property subject distribution in a divorce action. In order for the award to be classified as marital, the underlying injury creating the eligibility for workers’ compensation must have occurred during the marriage. Pennsylvania generally utilizes the timing of the receipt of assets for identifying marital property. The court still has the discretion to consider the purpose of the award and other equitable considerations when determining what percentage should go to each spouse in distributing the marital estate.
Drake v. Drake, 725 A.2d 717 (1999), is one of the cases that explains Pennsylvania’s stance on workers’ compensation awards. In the opinion, the court rejects the analytic approach which only allows an award to be marital if it’s intended to replace lost wages during the marriage. It disagreed with the other approach which is to classify an award as separate property if it is intended to replace future lost earnings extending beyond the end of the marriage. In Drake, Husband had sustained an injury in 1985. By 1989 he had entered an agreement with his employer to receive a lump sum commutation award. The parties did not separate until 1993. The court held that surely the right to receive the award had accrued during the marriage and was accordingly, marital property subject to equitable distribution.