Liberty Mut. Ins. Co. v. Fisher

• Decision Date: 11 January 2002
• Docket Number: Record No. 010350.
• Citation: 557 S.E.2d 209,263 Va. 78
• Parties: LIBERTY MUTUAL INSURANCE COMPANY, et al. v. Dawn M. FISHER and John M. Garlock, Co-Administrators of the Estate of Mary K. Pilkerton, Deceased.
• Court: Virginia Supreme Court

557 S.E.2d 209

263 Va. 78

LIBERTY MUTUAL INSURANCE COMPANY, et al. v. Dawn M. FISHER and John M. Garlock, Co-Administrators of the Estate of Mary K. Pilkerton, Deceased.

Record No. 010350.

Supreme Court of Virginia.

January 11, 2002.

R. Ferrell Newman (Thompson, Smithers, Newman, Wade & Childress, on briefs), Richmond, for appellants.

Randall T. Perdue, Staunton, (Thomas E. Albro; Patricia D. McGraw, Charlottesville; Timberlake, Smith, Thomas & Moses, Staunton; Tremblay & Smith, Charlottesville, on brief), for appellees. Present: All the Justices.

Opinion by Justice BARBARA MILANO KEENAN.

In this appeal, we consider whether the trial court erred in barring an employer from recovering under a workers' compensation lien, as part of the settlement of a third-party wrongful death action, benefits paid to persons who did not participate in the settlement of that wrongful death action.

In November 1993, the decedent, Mary K. Pilkerton, was employed as a receptionist by Windham Home for Adults (Windham), a nursing home facility. Elizabeth A. Bishop, an elderly resident of Windham, tripped and fell as she walked across railroad tracks adjoining Windham's property. After being informed that Bishop needed assistance, the decedent went to help Bishop, who was lying on the railroad tracks. While the decedent was attempting to rescue Bishop, a train struck and killed both of them.

The decedent was survived by three children, Dawn M. Fisher, Carolyn K. Canipe, and Kristie L. Pilkerton. At the time of the decedent's death, Kristie L. Pilkerton was the decedent's minor dependent. The decedent had another dependent, Ashley N. Pilkerton, the daughter of Dawn M. Fisher, who was six years old at the time of the decedent's death. The decedent had legal custody of Ashley and provided all her monetary support.

The decedent's beneficiaries filed a claim with the Workers' Compensation Commission requesting an award for various benefits as a result of the decedent's accidental death. Windham and its insurance carrier, Liberty Mutual Insurance Co. (Liberty), stipulated that the decedent died from injuries arising out of and in the course of her employment with Windham.

In May 1995, the Commission entered an award on behalf of Kristie L. Pilkerton and Ashley N. Pilkerton for the payment of weekly benefits in the amount of $379.70, to be shared equally between them until Kristie's eighteenth birthday in December 1994. After Kristie's eighteenth birthday, the award provided that Ashley would receive the full amount of $379.70 for a maximum period of 400 weeks or until certain statutory exclusion criteria were met. The Commission also awarded payment of the decedent's funeral expenses in the amount of $1,818.92. The other two daughters of the decedent, Dawn M. Fisher and Carolyn K. Canipe, were not eligible for benefits under the Commission's award.

In February 1997, Dawn M. Fisher and John M. Garlock, the decedent's brother, (collectively, the Administrators), qualified as co-administrators of the decedent's estate and filed a wrongful death action in the trial court against CSX Transportation, Inc. (CSX) and National Railroad Passenger Corporation (Amtrak). In November 1999, the Administrators filed a Petition for Approval of Settlement and Determination of Lien in which they asked the trial court to approve a $210,500 settlement and to determine the amount of the employer's lien for workers' compensation benefits that the employer had paid.

Liberty and Windham (collectively, Liberty) filed petitions seeking to intervene in the wrongful death action based on Code §§ 65.2-309 and -310. Code § 65.2-309 provides, in relevant part:

A. A claim against an employer under this title for injury or death benefits shall operate as an assignment to the employer of any right to recover damages which the injured employee, his personal representative or other person may have against any other party for such injury or death, and such employer shall be subrogated to any such right and may enforce, in his own name or in the name of the injured employee or his personal representative, the legal liability of such other party. The amount of compensation paid by the employer or the amount of compensation to which the injured employee or his dependents are entitled shall not be admissible as evidence in any action brought to recover damages.

....

C. No compromise settlement shall be made by the employer in the exercise of such right of subrogation without the approval of the Commission and the injured employee or the personal representative or dependents of the deceased employee being first obtained.

Code § 65.2-310 states:

In any action by an employee, his personal representative or other person against any person other than the employer, the court shall, on petition or motion of the employer at any time prior to verdict, ascertain the amount of compensation paid and expenses for medical, surgical and hospital attention and supplies, and funeral expenses incurred by the employer under the provisions of this title and deduct therefrom a proportionate share of such amounts as are paid by the plaintiff for reasonable expenses and attorney's fees as provided in § 65.2-311; and, in event of judgment against such person other than the employer, the court shall in its order require that the judgment debtor pay such compensation and expenses of the employer, less said share of expenses and attorney's fees, so ascertained by the court out of the amount of the judgment, so far as sufficient, and the balance, if any, to the judgment creditor.

Liberty asked the trial court to determine the total amount of compensation benefits and recoverable expenses incurred by Liberty and, after deducting reasonable attorney's fees for the Administrators' attorney, to order CSX and Amtrak to pay to Liberty all compensation benefits and expenses previously incurred by Liberty on the decedent's behalf. In its petition, Liberty stated that it had paid a total of $123,484.32, including $1,818.13 in funeral expenses and $121,666.19 in indemnity benefits, to the decedent's dependents.

In June 2000, the trial court held a hearing on the Administrators' settlement petition. On the date of the hearing, Fisher, as the mother and legal guardian of Ashley N. Pilkerton, and Garlock, as Ashley's trustee, filed a waiver renouncing Ashley's right to receive any proceeds from the wrongful death settlement. On June 28, 2000, the trial court approved the settlement petition and entered a final order disbursing the settlement proceeds.

The trial court's disbursal of the settlement proceeds included $10,538.50 "to Liberty Mutual for reimbursement of its lien for worker[s] compensation payments made to Kristie Lynn Pilkerton," and $1,818.13 to Liberty for its payment of the decedent's funeral expenses. However, the court denied payment to Liberty for compensation benefits in the amount of $111,824.66 paid to Ashley N. Pilkerton, because Ashley had renounced her right to receive funds from the wrongful death settlement.

The trial court relied in its ruling on the decision in ACB Trucking, Inc. v. Griffin, 5 Va.App. 542, 365 S.E.2d 334 (1988), an appeal from the Workers' Compensation Commission that addressed benefits recoverable under the Workers' Compensation Act by an injured worker's dependents. There, the Court of Appeals stated:

When an estate's beneficiaries have received a third party recovery, the carrier's right to subrogation operates in relation to each beneficiary in an individual manner. The carrier may assert its right to subrogation on behalf of each individual only to the extent that individual has recovered money in the third party settlement . . When a beneficiary has received less under the settlement than he is entitled to receive under the Workers' Compensation Act, the employer may assert its subrogation rights up to the amount of money received by the beneficiary in the settlement.

Id. at 548, 365 S.E.2d at 338.

Liberty filed a Petition for Reconsideration, which the trial court denied. Liberty appeals from the trial court's judgment.

Liberty argues that the trial court erred in barring Liberty from recovering under its statutory lien the amount of compensation paid to a beneficiary who did not receive payment in the wrongful death settlement. Liberty contends that the employer's lien created by Code § 65.2-309 attaches regardless of the identity of a plaintiff or the plaintiff's status as a participant in the settlement of a third-party action. Liberty also asserts that Code §§ 65.2-309 and -310 do not provide a trial court any discretion to ...