Morad Eghbal v. Boston Coach Corporation

COURT OF APPEALS OF VIRGINIA
Present: Judges Willis, Fitzpatrick and Annunziata
Argued by Teleconference
MORAD EGHBAL
OPINION BY
v. Record No. 1128-96-4 JUDGE JERE M. H. WILLIS, JR.
DECEMBER 17, 1996
BOSTON COACH CORPORATION
and
PACIFIC EMPLOYERS INSURANCE COMPANY
FROM THE VIRGINIA WORKERS' COMPENSATION COMMISSION
Rebecca Arch (Kathleen G. Walsh; Ashcraft &
Gerel, on brief), for appellant.
No brief or argument for appellees.
Pursuant to Code § 65.2-313, the Workers' Compensation
Commission awarded Boston Coach Corporation (Boston Coach) an
offset of $57,239.82 against continuing and future liability to
Morad Eghbal under the Worker's Compensation Act. On appeal, Mr.
Eghbal contends that the commission erred (1) in denying him the
right to file a written statement in support of his request for
review of the commission's award, and (2) in calculating the
amount of the offset due Boston Coach from the third-party
recovery. We modify and affirm the award of the commission.
Mr. Eghbal was injured in a job-related accident for which
Boston Coach accepted workers' compensation liability. The
commission entered an appropriate award. Thereafter, Mr. Eghbal
recovered $95,000 from the third-party who caused the accident.
In doing so, he incurred attorney's fees and expenses totaling
$35,398.73, equaling 37.26 percent of the total third-party
recovery. Prior to the third-party recovery, Boston Coach had
paid Mr. Eghbal $37,760.18 in benefits. From the third-party
recovery, it was reimbursed that amount, less 37.26 percent for
recovery costs, pursuant to Code §§ 65.2-309 and 65.2-310.
By letter of January 18, 1996, counsel for Mr. Eghbal
informed the commission of the amount and distribution of the
third-party recovery and requested that Mr. Eghbal's award be
modified to reflect Boston Coach's right of offset and to require
Boston Coach to pay 37.26 percent of future payments. On
February 7, 1996, the commission entered an award, which provided
in pertinent part:
Pursuant to § 65.2-313, Code of Virginia, the
employer/carrier is entitled to a credit in the amount
of $57,239.82 against its liability for additional
compensation payments and medical expenses, after which
its responsibility to make such payments shall resume.
The claimant remains entitled to a reimbursement of
attorney fees and expenses at the rate of 37 percent of
any additional compensation entitlements as they are
incurred.
Mr. Eghbal requested full commission review of the
February 7, 1996 award, "tak[ing] exception to Deputy paragraph 2
of the Award in which the employer/carrier is entitled to a
$57,239.82 credit against its liability for additional
compensation payments and medical expenses." By opinion dated
April 2, 1996, the full commission affirmed the February 7, 1996
award. On April 10, 1996, Mr. Eghbal moved the commission to
vacate its April 2, 1996 opinion on the ground that he had been
denied the opportunity to file a written statement of position.
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By letter dated April 16, 1996, the commission refused to vacate
the April 2, 1996 opinion.
I.
Mr. Eghbal first contends that the commission erred in
denying him the opportunity to submit a written statement in
support of his request for review. He cites Rule 3 of the Rules
of the Commission, relating to Post-hearing Procedures, which
provides in pertinent part:
3.2 Written Statements. The Commission will advise
the parties of the schedule for filing brief written
statements supporting their respective positions. The
statements shall address all errors assigned, with
particular reference to those portions of the record
which support a party's position.
The commission held that Rule 3.2 applies "to reviews of
opinions and decisions made by deputy commissioners," as
distinguished from award adjustments based upon changes in
condition. Noting that the decision on review came from the
Claims Department, the commission held that in such cases its
rules provide for review on the record, without further evidence,
without argument, and without written statements of position.
Rule 1.6 of the Rules of the Commission, relating to changes
in condition, provides for review on the record, without further
evidence and without oral argument. Rule 1.6 requires that the
letter requesting review "should specify each determination of
fact and law to which exception is taken." Mr. Eghbal's request
for review appeared to meet that requirement.
[T]his Court [has] recognized that the [Workers'
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Compensation Commission], having the right to make and
enforce its rules, should also have the opportunity to
construe its own rules. Consequently, our review is
limited to a determination whether the commission's
interpretation of its own rule was reasonable.
Classic Floors, Inc. v. Guy, 9 Va. App. 90, 93, 383 S.E.2d 761,
763 (1989) (citations omitted).
A "change in condition" is defined as "a change in physical
condition of the employee as well as any change in the conditions
under which compensation was awarded, suspended, or terminated
which would affect the right to, amount of, or duration of
compensation." Code § 65.2-101. Mr. Eghbal's third-party
recovery created a change in the conditions under which he was
awarded compensation. It affected his right to compensation and
the amount and duration of his compensation. Thus, his
third-party recovery created a change in condition and the
commission properly applied its Rule 1.6.
II.
Code § 65.2-313 provides, in pertinent part:
[I]f a recovery is effected, the employer shall pay to
the employee a percentage of each further entitlement
as it is submitted equal to the ratio the total
attorney's fees and costs bear to the total third-party
recovery until such time as the accrued post-recovery
entitlement equals that sum which is the difference
between the gross recovery and the employer's
compensation lien.
Mr. Eghbal argues that the terms "total third-party
recovery" and "gross recovery," employing different wording, must
have different meanings. He argues that "total third-party
recovery" means the total amount received from the third-party
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wrongdoer, in this case $95,000, and that "gross recovery" means
the amount of money that he actually received from the
third-party recovery, after satisfaction of Boston Coach's lien
and payment of his share of recovery expenses. He argues that
this figure equals $32,179.16. He appears to argue that from
this figure should be deducted the amount of Boston Coach's lien,
to produce the net amount available to Boston Coach as offset.
We find this calculation unpersuasive.
Mr. Eghbal offers no authority for his definition of "gross
recovery." We think that his definition is plainly erroneous.
It describes "net recovery," rather than "gross recovery."
"[T]otal . . . recovery" and "gross recovery," in their common
usage, are synonymous. Each term defines the total amount
recovered, before offsets and expenses. Thus defined, "total
. . . recovery" and "gross recovery" are the same and, in this
case, equal $95,000. This interpretation of Code § 65.2-313 is
consistent with the plain purpose of the statutory scheme
providing the employer an offset for a third-party recovery.
By accepting Mr. Eghbal's workers' compensation claim,
Boston Coach became subrogated to Mr. Eghbal's rights against the
third-party wrongdoer to the extent of compensation benefits
paid. See Code § 65.2-309. Upon realization of the third-party
recovery, Boston Coach was entitled to reimbursement for benefits
that it had paid, less its proportionate share of recovery costs.
See Code §§ 65.2-310 and 65.2-311. Boston Coach was entitled to
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the suspension of its liability for the payment of further
benefits until the third-party recovery was exhausted. However,
it remained liable to Eghbal for the recovery costs of each
increment of offset, as it accrued. See Code § 65.2-313. The
commission's award accomplished this. From the total or gross
third-party recovery of $95,000 was subtracted $37,760.18, the
employer's lien for previously-paid benefits 1 . The difference,
which the commission correctly calculated at $57,239.82, is the
offset against future compensation liability to which Boston
Coach is entitled.
As each increment of Mr. Eghbal's future entitlement
accrues, Boston Coach will be entitled to an offset. However, as
each increment accrues, Boston Coach will reimburse Mr. Eghbal
for the recovery costs attributable to that increment. Thus, at
any given time, Boston Coach will have received its full
entitlement from the third-party recovery and Mr. Eghbal will
have been reimbursed for the recovery costs attributable to the
benefit received by Boston Coach. The proceeds of the
third-party recovery will remain in Mr. Eghbal's hands, as his
property, until such time as they are charged to Boston Coach's
offset. To the extent that those proceeds remain Mr. Eghbal's
property, he has been charged with their recovery costs.
1
When Boston Coach was reimbursed $37,760.18 for benefits that
it had previously paid, 37.26 percent of that amount, representing
recovery costs, was deducted from the reimbursement. Mr. Eghbal
was thereby reimbursed his costs relating to that segment of the
recovery.
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However, as each increment of offset accrues to the benefit of
Boston Coach, Boston Coach will reimburse Mr. Eghbal the recovery
costs attributable to that increment.
The commission correctly structured Boston Coach's right of
indemnity and its obligation to reimburse recovery costs to Mr.
Eghbal. However, it erred in requiring reimbursement of 37
percent "of any additional compensation entitlements as they are
incurred." The figure should be 37.26 percent. This error is
small, but over the possible course of offset, it could accrue
into a significant sum. The error involves future calculations
and payments and is easily rectified. The commission should
modify its award accordingly.
The award of the commission, as modified, is affirmed.
Affirmed.
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