Travelers Ins. Co. v. Carpenter

• Decision Date: 13 December 2002
• Docket Number: Docket No. 01-9474.
• Citation: 313 F.3d 97
• Parties: The TRAVELERS INSURANCE COMPANY, Plaintiff-Appellant, v. Susan J. CARPENTER, Defendant-Appellee.
• Court: U.S. Court of Appeals — Second Circuit

313 F.3d 97

The TRAVELERS INSURANCE COMPANY, Plaintiff-Appellant, v. Susan J. CARPENTER, Defendant-Appellee.

Docket No. 01-9474.

United States Court of Appeals, Second Circuit.

Argued: October 2, 2002.

Decided: December 13, 2002.

Andrew W. Goodger, Kiel Ellis & Boxer, Springfield, VT (Andrew C. Boxer, on the brief), for the appellant.

Steven P. Robinson, Diamond & Robinson, P.C., Montpelier, VT, for the appellee.

Before: MINER, SOTOMAYOR, and KATZMANN, Circuit Judges.

SOTOMAYOR, Circuit Judge.

Plaintiff-appellant Travelers Insurance Company ("Travelers"), a Connecticut corporation, appeals from a judgment of the United States District Court for the District of Vermont (Murtha, C.J.) denying Travelers' motion for summary judgment against defendant-appellee Susan J. Carpenter, a Vermont citizen, and dismissing without prejudice Travelers' declaratory judgment complaint on abstention grounds in deference to parallel, pending state-court litigation.

Carpenter was in a car crash in February 1999 and suffered an injury for which she received workers' compensation benefits from Travelers. In April 2000, after Carpenter received a $150,000 settlement under the Underinsured Motorist provision of her personal automobile liability policy ("UIM provision"), Travelers filed this action in the District Court of Vermont under Vt. Stat. Ann. tit. 21, § 624(e) (2001), seeking to have the workers' compensation benefits it had paid reimbursed from the UIM settlement funds paid to Carpenter, and to have future payments offset against the remainder. At issue is whether the July 1, 1999 amendment to § 624(e) or the pre-amendment text provides the controlling law for Travelers' reimbursement right, and, if the post-amendment text controls, how its prohibition on an employee receiving "double recovery" affects the rights of the parties to the UIM settlement proceeds. Because these issues present questions of law for which no controlling precedent or plain-meaning statutory analysis provides adequate answers, we certify the following questions to the Supreme Court of Vermont:

1. Under the circumstances of this case, in which a worker was injured in February 1999 and settled under her privately purchased liability insurance policy in April 2000, was the § 624(e) reimbursement right of a workers' compensation carrier "acquired [or] accrued" under § 214(b)(2) before or after the July 1, 1999 amendment to § 624(e)?

2. If the § 624(e) reimbursement right accrued before July 1, 1999, is the amendment to § 624(e) a "clarifying" amendment that should be applied retroactively?

3. If the post-amendment text controls, under the circumstances of this case in which an injured worker received both workers' compensation benefits and a recovery under the UIM provision of a privately purchased insurance policy, how is the prohibition on "double recovery" in § 624(e) defined and, if relevant, when and how are an injured worker's "total" damages determined?

BACKGROUND

I. Facts

On February 26, 1999, Susan Carpenter sustained injuries in a single car accident; Kimberly Webb, a co-worker, was driving the car at the time of the accident, and the accident was within the scope of Carpenter's employment for Bell Atlantic Yellow Pages ("Bell Atlantic"). As Bell Atlantic's workers' compensation carrier, Travelers received, accepted, and paid Carpenter's claim for workers' compensation benefits, including temporary total disability and medical expenses.

In addition to a claim against her co-worker's liability carrier that resulted in a $25,000 settlement payment, Carpenter made a claim under the UIM provision in her personal automobile liability policy (coincidentally also purchased from Travelers) and received a $150,000 settlement on or about April 13, 2000. Carpenter also brought a tort action in state court against Webb, to which Travelers is now the real party-in-interest. This state court action is still pending and, according to the district court, "will result in a determination of the total damages the defendant has suffered as a result of the accident."¹

II. The July 1999 Amendment to § 624(e)

In Vt. Stat. Ann. tit. 21, § 624(e) (2001), Vermont law provides a workers' compensation insurer with a right to reimbursement of workers' compensation benefits paid to an injured worker if the worker subsequently receives certain types of recoveries that also compensate for the injury. The question here is what those rights are when the subsequent recovery flows from a UIM provision in an insurance policy privately purchased by the injured worker and when the Vermont legislature amended the relevant text of § 624(e) on July 1, 1999, over four months after the date of Carpenter's injury but over nine months before Carpenter received the proceeds of her UIM settlement.

Prior to its amendment, § 624(e) provided that:

In an action to enforce the liability of a third party, the injured employee may recover any amount which the employee or the employee's personal representative would be entitled to recover in a civil action. Any recovery against the third party for damages resulting from personal injuries or death only, after deducting expenses of recovery, shall first reimburse the employer or its workers' compensation insurance carrier for any amounts paid or payable ... to date of recovery, and the balance shall forthwith be paid to the employee... and shall be treated as an advance payment by the employer on account of any future payments of compensation benefits.

Section 624(e) (emphasis added). Interpreting this pre-amendment text, the Vermont Supreme Court held in Travelers Cos. v. Liberty Mutual Insurance Co., 164 Vt. 368, 372-73, 670 A.2d 827, 829 (1995), that proceeds from a UIM provision recovery, even when the injured employee paid for the policy, were to be considered a recovery from a "third party" for the purposes of § 624(e). Travelers Cos., 164 Vt. at 374, 670 A.2d at 830 ("UIM coverage is unlike other privately purchased insurance, and allowing a workers' compensation insurer to treat a[] UIM award as a recovery from the tortfeasor is a rational way to achieve the Legislature's policy goals.").

The July 1999 amendment to § 624(e) appended the following sentence:

Reimbursement required under this subsection, except to prevent double recovery, shall not reduce the employee's recovery of any benefit or payment provided by a plan or policy that was privately purchased by the injured employee, including uninsured-under insured motorist coverage, or any other first party insurance payments or benefits.

Section 624(e). While this amendment addresses a workers' compensation carrier's right to reimbursement from an injured employee's recovery under a privately purchased policy, no Vermont court to date has addressed the effect of the amendment or the meaning of its prohibition on "double recovery."

III. Proceedings in the District Court

On December 15, 2000, Travelers brought this action asking the court to declare that Travelers was entitled to the value of Carpenter's UIM settlement, less costs of recovery under § 624(e). To effectuate this declaration, Travelers requested the court to direct Carpenter to reimburse Travelers for workers' compensation benefits paid prior to Carpenter's UIM settlement² and to permit Travelers to withhold future benefit payments in an amount appropriate to internalize the remaining value of the settlement.³

In its unpublished Ruling On Cross Motions For Summary Judgment dated October 17, 2001, the district court addressed the issue of which version of § 624(e) applied: it presumed the applicable law to be fixed on the February 1999 date of the accident, yet found the statute as amended on July 1999 to provide the controlling law as of February 1999. Relying on Montgomery v. Brinver Corp., 142 Vt. 461, 465, 457 A.2d 644, 646 (1983), for the proposition that a Vermont court should credit "the latest expression of legislative will" whenever existing law is in conflict, the district court read two Vermont Supreme Court cases — St. Paul Fire & Marine Insurance Co. v. Surdam, 156 Vt. 585, 595 A.2d 264 (1991) and Brunet v. Liberty Mutual Insurance Group, 165 Vt. 315, 682 A.2d 487 (1996) — to make "seemingly conflicting pronouncements" on the pre-amendment meaning of § 624(e) and thus to require retroactive application of the § 624(e) amendment as "a clarification, rather than a change, in existing law." Because the district court found that "whether the 1999 amendment actually constitutes a `new' law is unclear," the fact that the accident occurred before the amendment became effective was immaterial; the amendment was the Vermont legislature's pronouncement of what the law had been prior to the amendment.

Having decided that the text of § 624(e) as amended controlled Travelers' claims, the district court proceeded to interpret the text of the July 1999 amendment. It found that "the effect of [the amendment] language was to make clear that an insurer, such as Travelers, has a right to recover workers' compensation benefits paid to an employee only to the extent that those benefits constitute a `double recovery'"; noted that "double recovery" could only be determined "in light of [Carpenter's] total award of damages"; and thus interpreted the amendment not to grant Travelers any right to reimbursement until after Carpenter had effectively been made whole and had received compensation for her "total" damages. This interpretation of § 624(e) required deferring any calculation of Travelers' reimbursement until after Carpenter's total compensation from other sources became clear: "the issue of whether Ms. Carpenter has received a double recovery must await a determination of the amount and type of benefits she is awarded in her [pending state court] suit against Ms. Webb."

Finally, in a separate Ruling and Order dated November 20, 2002, the district court dismissed without prejudice Travelers' claim as ...