Bush v. Richardson

Decision Date21 March 1997
Docket NumberNo. 23702,23702
Citation199 W.Va. 374,484 S.E.2d 490
CourtWest Virginia Supreme Court
PartiesRoberta Banks BUSH, Plaintiff Below, Appellant, v. Andrew N. RICHARDSON, Commissioner, West Virginia Bureau of Employment Programs, Division of Workers' Compensation, Defendant Below, Appellee.

Syllabus by the Court

1. "A circuit court's entry of a declaratory judgment is reviewed de novo." Syl. pt. 3, Cox v. Amick, 195 W.Va. 608, 466 S.E.2d 459 (1995).

2. " 'The doctrine of subrogation is that one who has the right to pay, and does pay, a debt which ought to have been paid by another is entitled to exercise all the remedies which the creditor possessed against that other.' Syl. Pt. 1, Bassett v. Streight, 78 W.Va. 262, 88 S.E. 848 (1916)." Syl. pt. 4, Ray v. Donohew, 177 W.Va. 441, 352 S.E.2d 729 (1986).

3. "The right of subrogation depends upon the facts and circumstances of each particular case. Huggins v. Fitzpatrick, 102 W.Va. 224, 228, 135 S.E. 19, 20 (1926)." Syl. pt. 3, Ray v. Donohew, 177 W.Va. 441, 352 S.E.2d 729 (1986).

4. By the enactment of W. Va.Code, 23-2A-1 [1990], which provides that the Commissioner of Workers' Compensation "shall be allowed subrogation" when a workers' compensation claimant collects moneys from a third-party tortfeasor, the legislature expressly modified the usual, ordinary meaning of subrogation as it is used in that Code section by making the made-whole rule inapplicable. Therefore, the following provisions set forth by the legislature in W. Va.Code, 23-2A-1(b) [1990] shall be followed: "[T]he commissioner or a self-insured employer shall be allowed subrogation with regard to medical benefits paid as of the date of the recovery: Provided, That under no circumstances shall any moneys received by the commissioner or self-insured employer as subrogation to medical benefits expended on behalf of the injured or deceased worker exceed fifty percent of the amount received from the third party as a result of the claim made by the injured worker, his or her dependents or personal representative, after payment of attorney's fees and costs, if such exist." (emphasis added).

George E. Lantz, Lantz & Tebay, Parkersburg, for Appellant.

Darrell V. McGraw, Jr., Attorney General, Garrett M. Jacobs, Assistant Attorney General, Employment Programs Litigation Unit, Charleston, Laura Ellen Buchko, Legal Counsel, Workers Compensation Division, Charleston, for Appellee.

Thomas P. Maroney, J. Robert Weaver, Thomas P. Maroney, L.C., Charleston, for Amicus Curiae The West Virginia Labor Federation, AFL-CIO.

Barry Hill, Gompers, McCarthy, Hill & McClure, Weirton, Chairman of Amicus Curiae The West Virginia Trial Lawyers Association, Amicus Curiae Committee.

McHUGH, Justice:

The appellant, Roberta Banks Bush, appeals the January 9, 1996 order of the Circuit Court of Wood County which held in a declaratory judgment action that the appellant need not be fully compensated for her injuries (made whole) by the moneys received from a third-party tortfeasor before the appellee, Andrew N. Richardson, the Commissioner of the West Virginia Bureau of Employment Programs, Division of Workers' Compensation (hereinafter the "Commissioner"), may enforce a statutory subrogation lien pursuant to W. Va.Code, 23-2A-1 [1990] upon such moneys. For reasons explained below, we affirm the January 9, 1996 order of the circuit court.

I

On February 13, 1995, the appellant was involved in a car accident while within the scope of her employment when an automobile driven by Paul J. Chambers (hereinafter "Chambers") struck her vehicle head on. The appellant suffered serious injuries and, thus, subsequently filed a workers' compensation claim as well as a claim against Chambers.

The Commissioner states that as of December 5, 1996, 1 Workers' Compensation had paid the appellant $142,565.39 in medical benefits as well as $9,774.44 in temporary total disability benefits.

In the action brought against Chambers, the responsible third party, the appellant sought damages for permanent and other injuries; past and future medical expenses; loss of earnings to date and future loss of earning capacity; and past and future pain, suffering, disability and loss of enjoyment of life. At the time of the accident Chambers had in effect an automobile liability insurance policy with Allstate Insurance Company (hereinafter "Allstate") which provided maximum coverage limits for a single person claim in the amount of $100,000.00. The appellant had no underinsured insurance coverage which would have been applicable to her claim arising out of this accident. The appellant maintained in the trial court below that the maximum amount she could recover in her action against Chambers was $100,000.00, the policy limits of Chamber's Allstate policy, which would not fully compensate her for her injuries.

Pursuant to W. Va.Code, 23-2A-1 [1990], the Commissioner notified the appellant that he had a statutory lien against any moneys recovered by her from Chambers and/or Allstate. The appellant disagreed with the Commissioner and, thus, filed a declaratory judgment action in which she maintained that because the maximum amount of money that she could recover from Chambers and/or Allstate would not fully compensate her for her claim arising out of the accident, the Commissioner was not legally entitled to recover any part of the moneys received by her from Chambers and/or Allstate. The appellant asserted that until she was made whole by Chambers and/or Allstate for her damages arising out of the car accident, the Commissioner was not entitled to subrogation.

The trial court below stated that it "appears to be undisputed that the [appellant] was not at fault in [the] accident." Additionally, the trial court noted that the appellant had "reached a settlement with the person who was at fault in the automobile accident [Chambers] and will receive the policy limits of that person's liability insurance ($100,000)." For purposes of its order, the trial court assumed that the appellant would not be made whole by the available insurance proceeds and decided not to address whether the responsible third party (Chambers) was judgment proof. Based on the above facts, the trial court concluded in its January 9, 1996 order that the Commissioner was entitled to subrogation pursuant to W. Va.Code, 23-2A-1 [1990] regardless of whether the appellant was made whole by the moneys available to her. It is this conclusion that the appellant appeals.

II Standard of Review

We are mindful that "[a] circuit court's entry of a declaratory judgment is reviewed de novo." Syl. pt. 3, Cox v. Amick, 195 W.Va. 608, 466 S.E.2d 459 (1995). See also syl. pt. 1, Randolph County Board of Educ. v. Adams, 196 W.Va. 9, 467 S.E.2d 150 (1995). However, any determinations of fact made by the circuit court are reviewed pursuant to the clearly erroneous standard. Cox, 195 W.Va. at 612, 466 S.E.2d at 463.

Subrogation and the made-whole rule

The sole issue before us is whether the equitable made-whole rule applies in a subrogation claim made by the Commissioner pursuant to W. Va.Code, 23-2A-1 [1990]. At the outset, we note that workers' compensation "is entirely a statutory creature[.]" National Fruit Product Co., Inc. v. Baltimore and Ohio Railroad Co., 174 W.Va. 759, 765, 329 S.E.2d 125, 132 (1985) (footnote omitted). Thus, whether the Commissioner is accorded the right to subrogation, and if so, what form it will take are matters properly left for the legislature to determine. Id. See also Jones v. Laird Foundation, Inc., 156 W.Va. 479, 490, 195 S.E.2d 821, 828 (1973) (Sprouse, J., concurring). In 1990 the legislature enacted W. Va.Code, 23-2A-1, which gave the Commissioner the right to subrogation when a workers' compensation claimant recovers moneys from a third-party tortfeasor. 2 The question in this appeal is whether the legislature intended for the traditional equitable principles of subrogation to apply in a subrogation claim made by the Commissioner pursuant to that Code section.

The appellant maintains that the following language found in subsection (b) of W. Va.Code, 23-2A-1 [1990] has not altered the equitable principles which are applicable in a subrogation claim:

(b) Notwithstanding the provisions of subsection (a) of this section, if an injured worker, his or her dependents or his or her personal representative makes a claim against said third party and recovers any sum thereby, the commissioner or a self-insured employer shall be allowed subrogation with regard to medical benefits paid as of the date of the recovery: Provided, That under no circumstances shall any moneys received by the commissioner or self-insured employer as subrogation to medical benefits expended on behalf of the injured or deceased worker exceed fifty percent of the amount received from the third party as a result of the claim made by the injured worker, his or her dependents or personal representative, after payment of attorney's fees and costs, if such exist. 3

(emphasis and footnote added).

As this Court explained in syl. pt. 4 of Ray v. Donohew, 177 W.Va. 441, 352 S.E.2d 729 (1986),

'[t]he doctrine of subrogation is that one who has the right to pay, and does pay, a debt which ought to have been paid by another is entitled to exercise all the remedies which the creditor possessed against that other.' Syl. Pt. 1, Bassett v. Streight, 78 W.Va. 262, 88 S.E. 848 (1916).

See also Porter v. McPherson, 198 W.Va. 158, 162, 479 S.E.2d 668, 672 (1996). The

doctrine of subrogation originated from equity rather than out of statute or common law and is related closely to the equitable principles of "restitution" and "unjust enrichment." Porter, 198 W.Va. at 162 n. 8, 479 S.E.2d at 672 n. 8 (citing 83 C.J.S. Subrogation § 2 (1953)). The purpose of subrogation is "to compel the ultimate payment of a debt by one who, in justice, equity, and good conscience,...

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