Williams v. Capital Hospice and Companion Property & Cas. Ins. Co.

• Decision Date: 29 March 2016
• Docket Number: Record No. 0947–15–4.
• Citation: 783 S.E.2d 67,66 Va.App. 161
• Court: Virginia Court of Appeals
• Parties: Naa Lamiley WILLIAMS v. CAPITAL HOSPICE AND COMPANION PROPERTY & CASUALTY INSURANCE COMPANY.

66 Va.App. 161

783 S.E.2d 67

Naa Lamiley WILLIAMS

v.CAPITAL HOSPICE AND COMPANION PROPERTY & CASUALTY INSURANCE COMPANY.

Record No. 0947–15–4.

Court of Appeals of Virginia, Fredericksburg.

March 29, 2016.

Jeremy Flachs, Alexandria (Justin Lerche ; Law Offices of Jeremy Flachs, on brief), for appellant.

Catherine A. Karczmarczyk (Ramesh Murthy ; Abingdon, Penn, Stuart & Eskridge, on brief), for appellees.

Amicus Curiae: Virginia Trial Lawyers Association (Craig B. Davis ; Stephen T. Harper ; Richmond, Reinhardt Harper Davis, PLC, on brief), for appellant.

Present: HUMPHREYS, McCULLOUGH^* , JJ. and HALEY, Senior Judge.

HUMPHREYS, Judge.

Naa Williams ("Williams") appeals the decision of the Virginia Workers' Compensation Commission (the "Commission") denying her $1,437.31, the pro rata reduction of her employer's ("Capital Hospice") workers' compensation insurance carrier's ("Companion") lien recovered from the negligent third party, Victoria Fire and Casualty/Nationwide ("Victoria").

Specifically, Williams claims the Commission erred in interpreting Code §§ 65.2–309, 65.2–311, and 65.2–313.

I. BACKGROUND

Williams was involved in an automobile accident on October 13, 2011 and sustained injuries to her neck and back. On October 27, 2011, Williams retained counsel. That same day, counsel for Williams sent a letter to Victoria, the insurance carrier for the negligent third party involved in the accident, informing Victoria of its representation of Williams. Victoria acknowledged receipt of the letter that same day. Williams's counsel did not send a letter of representation to her employer's workers' compensation carrier, Companion. Williams, without the assistance of counsel, filed a claim for workers' compensation benefits on November 11, 2011. On August 10, 2012, counsel for Williams filed a second claim for benefits.

On March 23, 2012, Companion, the workers' compensation insurance carrier for Capital Hospice (Williams's employer), initiated arbitration proceedings with Victoria, the insurance carrier for the third party, seeking recovery of its workers' compensation lien of $4,060.19. The lien represented the payments Companion had made to or on behalf of Williams pursuant to the Virginia Workers' Compensation Act ("the Act"). Victoria made a request that the arbitration proceedings be deferred to "allow more time for a settlement of the pending personal injury" action, which was denied. On August 13, 2012, the arbitrator issued a decision ordering Victoria to pay $4,060.19, the full lien amount, to Companion.

On March 6, 2014, counsel for Williams filed a letter claim with the Commission alleging she was entitled to an additional $1,353.40 to be paid by Companion, representing the pro rata share of attorney's fees and expenses from the $4,060.19 recovered by Companion from Victoria through arbitration. On April 9, 2014, Williams settled her personal injury claim against the negligent third party/Victoria for $10,000 prior to trial.

Deputy Commissioner Tabb conducted an evidentiary hearing on July 7, 2014. In a written opinion, Deputy Commissioner Tabb found that Williams was entitled to a payment of $1,437.31 because "it is required that reasonable attorney's fees and expenses shall be apportioned pro rata between the [employer and employee], regardless of the attorney's degree of involvement in the companion case." He explained that the attorney's fees ($3,333) and costs ($210.20) for Williams totaled $3,543.20, which was 35.4% of the $10,000 third-party recovery. Therefore, the deputy commissioner concluded that Williams's counsel "was entitled to the reduced compensation lien or $1,437.31 ($4,060.19 x .354), and the employer shall owe 35.4 percent of each future entitlement, if any."

Companion requested a review of the deputy commissioner's opinion by the Commission. On May 21, 2015, the Commission issued its opinion, which reversed the deputy commissioner. The Commission found that Companion was permitted under the Act to resolve its subrogation lien with the negligent third party without first obtaining approval of the Commission and claimant pursuant to Code § 65.2–309(A) and (C). Additionally, the Commission noted that the employer has a statutory right to recover its lien and explained, "[w]e can glean nothing from the statutory language which evidences the legislature's intention to grant the claimant a right superior to that of the employer's, to recover money owed [to] the employer." Further, the Commission held that Code §§ 65.2–309, 65.2–311, and 65.2–313 did not require that Williams receive $1,437.31 from Companion's recovery of its workers' compensation lien. Finally, the Commission found no merit to Williams's argument that Companion's recovery of its lien prejudiced her ability to secure a favorable settlement in her tort action against the third party.

II. ANALYSIS

In her appeal, Williams asserts that the Commission erred in interpreting Code §§ 65.2–309, 65.2–311, and 65.2–313. "An issue of statutory interpretation is a pure question of law which we review de novo."

Ford Motor Co. v. Gordon, 281 Va. 543, 549, 708 S.E.2d 846, 850 (2011). With regard to issues of statutory construction,

[a]lthough "the practical construction given to a statute by public officials charged with its enforcement is entitled to great weight by the courts and in doubtful cases will be regarded as decisive," Southern Spring Bed Co. v. State Corp. Comm'n, 205 Va. 272, 275, 136 S.E.2d 900, 902 (1964), "when an issue involves a pure question of statutory interpretation, that issue does not invoke the agency's specialized competence but is a question of law to be decided by the courts." Alliance to Save the Mattaponi v. Commonwealth, 270 Va. 423, 442, 621 S.E.2d 78, 88 (2005).

Commonwealth v. Barker, 275 Va. 529, 536, 659 S.E.2d 502, 505 (2008).

A. The Application of Code § 65.2–309(C)

Williams's first assignment of error claims the Commission erred in holding that Companion could resolve its subrogation lien with the third party without first obtaining approval of the Commission and the claimant pursuant to Code § 65.2–309(C).

Code § 65.2–309(C) provides:

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.

In determining that Companion was not required to obtain approval from the Commission and Williams before arbitrating its claim with Victoria, the Commission interpreted Code § 65.2–309(C) "as contemplating the exercise of the employer's right of subrogation by prosecuting the tort case against the negligent third party," and therefore concluded that Code § 65.2–309(C) does not apply to "an action by an employer against the third party solely to recover its lien." We agree with the Commission regarding the legislative purpose behind Code § 65.2–309(C), when, as here, the recovery of such a lien has no impact upon a claimant's tort case against the negligent third party. In this case, the arbitration Companion initiated against Victoria was for the sole purpose of seeking reimbursement for its lien and did not in any way implicate the rights of Williams. Further, contrary to her bare assertions, Williams enjoys no interest in Companion's workers' compensation lien.

Code § 65.2–309(A) provides:

A claim against an employer under this title for injury, occupational disease, or death benefits shall create a lien on behalf of the employer against any verdict or settlement arising from any right to recover damages which the injured employee, his personal representative or other person may have against any other party for such injury, occupational disease, or death, and such employer also 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.

Thus, pursuant to Code § 65.2–309(A), the employer/insurer is subrogated to an employee's rights against a third party responsible for the injuries giving rise to the payment of compensation. "The purpose of the statute is to reimburse an employer who is compelled to pay compensation as a result of the negligence of a third party and to prevent an employee from obtaining a double recovery of funds." Tomlin v. Vance Int'l, 22 Va.App. 448, 452, 470 S.E.2d 599, 601 (1996). "The only restriction that Code § 65.2–309 imposes on the employer's lien rights is set forth in Code § 65.2–309(C), which takes effect when those lien rights are asserted in a compromise settlement arising from an action that the employer has initiated against a third party." Liberty Mut. Ins. Co. v. Fisher, 263 Va. 78, 85, 557 S.E.2d 209, 212 (2002).

Code § 65.2–310 protects the employer when the employee sues a third party:

In any action by an employee, his personal representative or other person against any person other than the employer, the court shall, after reasonable notice to the parties and the employer, 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....

In short, " Code § 65.2–310 operates to protect an employer's lien in an action brought by an employee or her personal representative against a third party."

Liberty Mut., 263 Va. at 84, 557 S.E.2d at 212. Notably, "[t]he language of Code § 65.2–310 does not limit the lien rights created by Code § 65.2–309 when a compromise...