Overhead Door Co. etc. v. Daniel Lee Lewis ( 1996 )

COURT OF APPEALS OF VIRGINIA
Present: Judges Baker, Bray and Overton
Argued at Norfolk, Virginia
OVERHEAD DOOR COMPANY OF NORFOLK
and
HARTFORD FIRE INSURANCE COMPANY OPINION BY
JUDGE JOSEPH E. BAKER
v. Record No. 1524-95-1 APRIL 9, 1996
DANIEL LEE LEWIS
FROM THE VIRGINIA WORKERS' COMPENSATION COMMISSION
Matthew J. Ide (Mary Louise Kramer; Cecil H.
Creasey, Jr.; Sands, Anderson, Marks &
Miller, on briefs), for appellants.
William L. Perkins, III (Price, Perkins &
Larkin, on brief), for appellee.
In this appeal from a decision of the Workers' Compensation
Commission (commission), the dominant question presented by
Overhead Door Company of Norfolk and Hartford Fire Insurance
Company (jointly referred to herein as employer) is that assuming
the attorney employed by Daniel Lee Lewis (claimant) negligently
caused claimant's third-party action to be dismissed with
prejudice to employer's subrogation rights, does that result
constitute a bar to claimant's right to compensation benefits for
injuries claimant received in the same accident.
On February 6, 1990, claimant sustained injuries in an
automobile accident near Kill Devil Hills, North Carolina. The
injuries arose in the course of and within the scope of
claimant's employment. Claimant filed a claim for workers'
compensation benefits.
On December 12, 1990, the commission awarded claimant wage
compensation benefits in the amount of $223.52 per week.
Following the entry of that award, claimant employed an attorney
(Riggins) to pursue a common law personal injury action against
Michael L. Kenney and his employer, Carpet Transport,
Incorporated (third parties), who claimant alleged caused the
accident. In a timely fashion, Riggins filed suit against the
third parties in Dare County, North Carolina. Employer was aware
that this suit had been filed against the third parties and
advised Riggins orally and in writing that they relied upon
Riggins to protect their right of subrogation.
Because Riggins failed to comply with North Carolina's Rules
of Civil Procedure, claimant's suit was dismissed with prejudice
by the North Carolina court before it could be heard on its
merits. Employer asserts that Riggins' failure to comply with
procedure impaired its right to recover against the third
parties, and that because claimant had employed Riggins, an
agency was created whereby Riggins' omission constituted an
omission of claimant. Therefore, employer contends that as a
matter of law, claimant impaired its right of subrogation against
the third parties.
Based upon that premise, employer filed an application for
hearing with the commission, asking that claimant's benefits be
terminated. Employer's application was summarily dismissed by a
claims examiner, and the full commission, upon review, upheld the
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examiner's rejection of employer's application.
Upon the facts presented in this appeal, for the reasons
stated herein, we affirm the decision of the commission.
Employer relies upon the provisions of Code §§ 65.2-309 and
65.2-812 and several cases decided under those sections. Without
those statutory provisions, neither employer nor its insurance
company would have any right of action against a third party or
the right to share in the proceeds of any recovery claimant might
obtain. Therefore, if employer has any right of subrogation, it
must be expressed in the Code. See Noblin v. Randolph Corp., 180
Va. 345, 358, 23 S.E.2d 209, 214 (1942).
In relevant part, Code § 65.2-309(A) provides:
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.
Code § 65.2-812 merely gives these rights to the insurance
carrier that pays or is liable to pay the workers' compensation
claim. Nothing in those statutes prohibits one who claims
compensation benefits from pursuing his or her common law right
to sue the third party who caused the injury.
In the exercise of its right to pursue a third-party claim,
the employee must not prejudice the employer's right of
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subrogation given by Code §§ 65.2-309 and 65.2-812. The penalty
for impairing the employer's right may be loss of the employee's
right to compensation benefits. But, where impairment is
claimed, to successfully be relieved of its liability to pay
compensation benefits, the burden is upon the employer to show
that the employee prejudiced the employer's right. In the
absence of Code §§ 65.2-309 and 65.2-812, the employer would have
no common law right to be subrogated to any extent in the
employee's claim against a third party. The employer's rights
are limited to those given by the Virginia Workers' Compensation
Act (Act). If the agency principles espoused by employer here
are not expressed in the Act, they are not relevant to the issue
we must decide.
We have reviewed the Act and find no statute that authorizes
the commission to terminate an employee's benefits when the
omissions of his or her attorney in the course of a third-party
action resulted in the loss of an employer's subrogation rights.
Mere proof of unauthorized acts or omissions on the part of an
attorney relied upon by both the employee and the employer to
protect their respective rights cannot be charged against either
and will not support the employer's request to be relieved of
paying further compensation benefits.
It is apparent that both employer and claimant equally
elected to rely upon Riggins to protect their interests, and
individually, neither did any act to impair the rights of the
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other. Because employer has not demonstrated that the Act
requires that the acts or omissions of claimant's third-party
attorney will be deemed acts or omissions of claimant, and
because employer clearly relied upon claimant's attorney to
protect its subrogation rights, we hold that employer is not
entitled to the relief requested in its application for a
hearing.
Accordingly, the decision of the commission is affirmed.
Affirmed.
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