WMATA v. Reid

• Decision Date: 02 October 1995
• Docket Number: No. 93-CV-1695.,93-CV-1695.
• Citation: WMATA v. Reid, 666 A.2d 41 (D.C. 1995)
• Parties: WASHINGTON METROPOLITAN AREA TRANSIT AUTHORITY, Appellant, v. Wendell A. REID and Ronald G. Williams, Appellees.
• Court: D.C. Court of Appeals

666 A.2d 41

WASHINGTON METROPOLITAN AREA TRANSIT AUTHORITY, Appellant, v. Wendell A. REID and Ronald G. Williams, Appellees.

No. 93-CV-1695.

District of Columbia Court of Appeals.

Argued January 12, 1995.

Decided October 2, 1995.

Gina M. Householder, Baltimore, MD, with whom Michael D. Dobbs, Gaithersburg, MD, was on the brief, for appellant.

Christopher V. Tisi, Washington, DC, for appellee Williams.

Bruce F. Robertson, Washington, DC, filed a brief for appellee Reid.

Before WAGNER, Chief Judge, and STEADMAN and KING, Associate Judges.

STEADMAN, Associate Judge:

Appellee Ronald Williams, a bus driver for the Washington Metropolitan Area Transit Authority ("WMATA"), was injured when his bus was hit by a car driven by appellee Wendell Reid. WMATA voluntarily paid Williams workers' compensation act benefits. On the last day before the statute of limitations would run, Williams filed suit against Reid, seeking damages for negligence. WMATA intervened in the action for the express purpose of protecting its workers' compensation lien.

In this appeal, WMATA asserts that the trial court abused its discretion in granting Williams's motion to dismiss the suit. Specifically, WMATA argues that because it had paid workers' compensation benefits to Williams, Williams should be not permitted to dismiss his claim after WMATA had intervened in the lawsuit. Alternatively, WMATA argues that the trial court should have substituted WMATA as plaintiff and assigned Williams's claim to WMATA, allowing it to proceed to trial on the claim. We affirm.

I.

Ronald G. Williams was injured in an accident involving a vehicle driven by Wendell A. Reid that occurred on January 6, 1989, while Williams was driving a bus for WMATA. Subsequently, WMATA voluntarily paid workers' compensation benefits to Williams totaling $11,699.66. WMATA did not have this payment of benefits reduced to an official "award" or "order" of compensation by the District of Columbia Department of Employment Services ("DOES").

On January 6, 1992, the last day before the statute of limitations would run, Williams filed suit against Reid to collect damages resulting from Reid's alleged negligence. After discovery was completed and mediation was concluded, WMATA moved to intervene in the suit on August 13, 1993. WMATA stated in its motion to intervene that it had "a statutory lien on the proceeds of any judgment which may be rendered in favor of the Plaintiff" and that "the purpose of this Motion to Intervene is to protect WMATA's statutory workers' compensation lien." Neither party objected to the motion to intervene, and the trial court granted the motion on September 20, 1993.

Shortly before the scheduled pretrial conference, Williams "reassessed the risks and benefits of proceeding to trial." As a result, at the pretrial conference held on October 6, 1993, he indicated that he wished to dismiss outright his claim against Reid. Not surprisingly, Reid (who had not filed any counterclaims against Williams) agreed to this dismissal. WMATA did not, however, and the trial court ordered Williams to file a motion to dismiss and ordered the parties to present memoranda on the issue.

On October 14, 1993, Williams filed his motion to dismiss his claim against Reid. WMATA opposed this motion, and asked the trial court either to require Williams to proceed with his claim or to compel Williams to assign his claims to WMATA.

WMATA also sought a voluntary assignment from Williams. The parties apparently originally agreed to such an assignment, but then differences arose regarding the terms of the assignment.¹ Because these differences were not resolved, Williams did not assign his claims to WMATA.

The trial court dismissed the action against Reid pursuant to Super.Ct.Civ.R. 41(a)(2), and refused to substitute WMATA as a plaintiff for Williams. The trial court first noted that WMATA had "stated no independent cause of action against Reid." The court then found that WMATA had shown no basis for a compelled assignment. Although the statute provides for an assignment when the employee has been awarded compensation pursuant to an "award in a compensation order," see D.C.Code § 36-335(b), no such award had been issued in this case. Finally, the trial court found that WMATA would not be "unfairly prejudiced" by the dismissal. Specifically, the court noted that WMATA had failed to avail itself of any of the procedures for directly asserting its own claims, an indication "that it was not interested in pursuing an independent claim." WMATA noted this appeal.

II.

Before turning to the merits of WMATA's appeal, we briefly review the statutory scheme at issue here. Under the Workers' Compensation Act ("WCA"), an employee is generally barred from bringing a tort action against his or her employer to recover damages for injuries suffered on the job. See D.C.Code § 36-304 (1993 Repl.). However, this statutory scheme reflects a quid pro quo between employees and employers; it does not preclude all suits against third parties. See Meiggs v. Associated Builders, Inc., 545 A.2d 631, 637 (D.C.1988), cert. denied, 490 U.S. 1116, 109 S.Ct. 3178, 104 L.Ed.2d 1040 (1989). An employee's ability to bring actions against a third party tortfeasor is governed by D.C.Code § 36-335 (1993 Repl.). Under this provision, an injured employee "need not elect whether to receive such compensation under the WCA or to recover damages against such third person." Id. § 36-335(a). If, however, the employee accepts compensation "under an award in a compensation order filed with the Mayor,"² the employee's acceptance "shall operate as an assignment to the employer of all rights of the person entitled to compensation to recover damages against such third person unless such person shall commence an action against such third person within 6 months after such award." Id. § 36-335(b). If the employer receives such a statutory assignment pursuant to a formal award, the employer "may either institute proceedings for the recovery of such damages or may compromise with such third person either without or after instituting such proceeding." Id. § 36-335(d).³

If an employer institutes and succeeds on a suit against the third party, section 335(e) governs the distribution of the proceeds from the suit. The employer is entitled to retain the expenses and a reasonable attorney's fee for the proceedings, id. § 36-335(e)(1)(A); the cost of all benefits the employer furnished to the employee under section 36-307,⁴ id. § 36-335(e)(1)(B); "all amounts paid as compensation," id. § 36-335(e)(1)(C); and "the present value of all amounts thereafter payable as compensation," id. § 36-335(e)(1)(C); Any excess amount is to be divided between the employer and the employee, one-fifth to the employer and fourfifths to the employee. Id. § 36-335(e)(2).

If the employee "institutes proceedings" within the six-month period, as described in subsection (b), the employer remains liable for "the excess of the amount which the Mayor determines is payable on account of such injury or death over the amount recovered against such third person." Id. § 36-335(f). Finally, the statute provides that:

If compromise with such third person is made by the person entitled to compensation or such representative of an amount less than the compensation to which such person or representative would be entitled under this chapter, the employer shall be liable for compensation as determined in subsection (f) of this section, only if the written approval of such compromise is obtained from the employer and his insurance carrier by the person entitled to compensation or such representative at the time of or prior to such compromise in a form and manner prescribed by the Mayor.

Id. § 36-335(g). Thus, the employer is protected against the possibility that an employee will, during the six-month period, compromise the claim against the third party to the prejudice of the employer's right to recover the amounts paid out in workers' compensation benefits.

The statute is silent with respect to any lien that the employer may have against any recovery obtained by the employee against a third party.⁵ However, it is well settled that an employer who has paid workers' compensation benefits has an equitable lien against any such recovery to the extent of such benefits. We very recently restated the relevant doctrine in Williams, supra note 5, in which Lumbermen's Mutual Casualty Company ("Lumbermen's") was the workers' compensation insurer for the employer:

In order to avoid double recovery by an employee, we have recognized an equitable lien in these circumstances. See Travelers Ins. Co. v. Haden, 418 A.2d 1078 (D.C. 1980). In Travelers, "on a theory of equitable lien," a workers' compensation carrier sought reimbursement from an employee of a corporation for whom, as its insurer, it had paid workers' compensation benefits. Id. at 1080. We recognized that "Travelers retained a right to reimbursement out of the settlement proceeds ... and that if the employee ultimately succeeds in recovering from the third party, Travelers is protected by a lien on the proceeds." Id. at 1082.

Williams, 664 A.2d at 344-45. In Williams, the employee settled with the third party for $200,000, purportedly covering only noneconomic injuries and damage. Id., 664 A.2d at 343. Nonetheless, "for the same policy reasons underlying our imposition of an equitable lien in Travelers, we conclude that Lumbermen's claim amounts to an equitable lien on Williams' settlement from the third party." Id., 664 A.2d at 344-45.

We further explicated the nature of this equitable lien in discussing the obligation of the insurer to participate on a prior appeal:

At the time of the judgment against the employee in the first trial, Lumbermen's interest was inchoate.... It held only an equitable lien on any recovery by the employee, not a statutory right to recover from the tortfeasor.... Lumbermen's lien on the

...