Wickert: Court Rejects Attempt to Limit Carrier's Reimbursement to 'Like Damages'

Thursday, May 26, 2022 | 0

Trial lawyers in Virginia have been trying for decades to convince the state’s courts to rule that a workers’ compensation carrier is not subrogated to non-economic damages awarded or recovered in a third-party tort action. On March 29, the latest such effort was turned away by the Virginia Court of Appeals.

Gary L. Wickert

In Stowers v. Georgia Pacific LLC, Corey Stowers was injured at an industrial plant in Glady while working for Georgia Pacific. He received workers’ compensation benefits from Georgia Pacific’s carrier, Old Republic Insurance Co. of North America. Stowers filed suit against the manufacturer of the defective product that caused his injuries, and the employer filed a petition of lien in the third-party action.

Stowers settled his third-party case on the eve of trial for $550,000. The carrier was reimbursed its lien of $241,215.83, but a dispute arose over the amount of Old Republic’s future credit, and the Virginia Workers' Compensation Commission ordered a future credit in the amount of the $550,000 settlement less the lien reimbursement, or $308,784.17. It approved Old Republic making no additional medical or indemnity payments until the credit was exhausted.

Stowers filed a request for review with the commission. It affirmed that the future credit was accurately calculated: “[t]he gross recovery of $550,000 less the [employer’s] statutory lien at the time of the settlement, $241,215.83, equals the awarded credit of $308,784.17.” Stowers appealed to the Virginia Court of Appeals.

His main point on appeal was that the commission erred in interpreting § 65.2-309 in a way that “noncompensable damage recoveries” from the third-party settlement (including pain and suffering) were subject to the employer’s statutory right of subrogation. Stowers argued that under § 65.2-309, “noncompensable damage recoveries” (such as pain and suffering and other non-economic injuries) from his third-party settlement are not subject to the employer’s statutory right to subrogation.

Because damages for pain and suffering and legal inconvenience are not covered by workers’ compensation benefits, Stowers argued that such damages should be subtracted from the total amount of his third-party recovery to determine the base amount of the recovery subject to the employer’s reimbursement rights. He claimed that the word “injury” in the statute meant “compensable injury,” and pain and suffering, as well as mental anguish, are not compensable under the Workers’ Compensation Act.

What Stowers was forgetting, however, was the fact that the very idea that an employer should be automatically liable for an employee’s injuries that it was not responsible for causing goes contrary to the entire American civil justice system. Nonetheless, it was part of the grand bargain struck shortly after the turn of the last century when the notion of workers’ compensation liability was first starting to take hold.

Gary Wickert is a partner with the Matthiesen, Wickert & Lehrer law firm in Hartford, Wisconsin. This blog post is reprinted with permission.