While many folks know what happens when an Employer violates Pennsylvania law and fails to carry PA workers’ compensation insurance (this is governed by the Uninsured Employers’ Guaranty Fund [UEGF]), few know what happens when a PA workers’ compensation insurance carrier goes bankrupt or ceases to exist. This is where the Security Fund (Fund) steps in and pays the appropriate compensation.
Much like the UEGF, it is well settled that the Fund is not an “insurance company,” and therefore immune from penalties for a violation of the Act. The Fund also cannot be assessed counsel fees for maintaining an unreasonable contest. But, the Fund, like the UEGF, is responsible for paying for wage loss and medical treatment related to a work injury, and for the reimbursement of reasonable costs of litigation incurred by the injured worker in procuring such benefits.
On this blog, we discussed the landmark Lorino case, where the Supreme Court of Pennsylvania held that a Workers’ Compensation Judge (WCJ) can order a payment to an injured worker’s attorney of a counsel fee, even in there was a reasonable contest, and that such a fee is considered a litigation cost.
Pennsylvania Workers' Compensation Lawyer Blog

