ANALYSIS OF DECEMBER 8, 2022 SUPREME COURT OPINION
(Posted December 8, 2022) It’s Thursday, and The Robes don’t disappoint. The Supreme Court of Virginia hands down a single published opinion this morning. It’s a declaratory-judgment action between two insurance companies, fighting over the subrogation rights of a Workers’ Comp insurer against the insurer of a tortfeasor.
Okay, I’ll admit that this one isn’t going to generate a banner headline in tomorrow morning’s newspapers. It barely generates a banner headline here at VANA. But let’s plunge in and see what The Robes hath wrought.
Today’s appeal is styled Hartford Underwriters Insurance Company v. Allstate Insurance Company. Hartford is the Comp carrier and Allstate insures the tortfeasor. The dispute arose after a motorist crashed her car into a storefront, injuring an employee inside. The employee obtained Comp benefits and retained the right to sue the driver.
Except the Comp benefits greatly exceeded the available liability-insurance coverage. The liability carrier decided to tender its policy limits of $50,000. The injured employee wanted to accept the tender and pursue her own UIM coverage, but learned that doing so might funnel all of the proceeds directly to the Comp insurer, as subrogee. She understandably decided not to accept the tender.
What do you do when someone won’t do what you want him or her to do? You haul ‘em into court; that’s what. The liability carrier filed an interpleader action asking the circuit court to figure out who was entitled to what. The employee insisted that, by law, she was at least entitled to the amount of the attorney’s fee for pursuing a successful claim against the tortfeasor’s insurance.
Today’s opinion lists a fee of $16,667, or the classic contingent fee of one-third of the gross recovery, plus a bit over $200 in costs advanced. If I’m reading this opinion correctly, that means that the insurers sent some very capable lawyers – I’ve seen the listing of counsel, and these folks are very capable – to Richmond to argue over roughly $17,000.
Not that I mind! I like it when appellate lawyers get paid. Nevertheless, that relatively small sum is the playing field in this case.
The issue in circuit court was whether the Comp carrier could use intercompany arbitration to resolve the competing claims and distribute the money. That court ruled that the Comp carrier got only about $33,000 out of the $50K. The Comp carrier appealed and got a writ.
Today the justices affirm, holding that the employee did indeed retain the right to sue the tortfeasor, and that the Comp carrier was entitled to a lien on any recovery. The opinion goes on to cite a 2017 amendment to a subrogation statute. That amendment, the court holds today, effectively overruled a key holding of a 2016 Court of Appeals decision in this field. Now, arbitration can only determine “the amount and validity of the employer’s lien.” The previous version of the statute had allowed the Comp carrier to satisfy its lien through arbitration. That remedy isn’t available anymore.
As a practical matter, satisfaction of a Comp lien now must await “an additional event, a settlement or verdict in a claim” by the tort victim or its subrogee carrier. Until such an event, the Comp lien remains inchoate.
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In addition to the published opinion in Hartford Underwriters, the Supreme Court decides three appeals by unpublished orders:
- In Sasson v. Shenhar, the reprise of a dispute first decided by the Supreme Court 14 years ago, the court issues a right-for-a-different-reason ruling, holding that a DJ action is the wrong procedural vehicle to challenge an old contempt order.
- Handberg v. The Morgan Center is, in a sense, another repeat appearance. It’s a sequel to Handberg v. Goldberg from three years ago. Today the justices affirm a mootness dismissal in a case involving convoluted facts over two corporations. The Supreme Court affirms the learned trial judge’s holding that the case is moot.
- Finally, in Anderson v. Bowen, the justices reverse a distribution order for numerous guns in a decedent’s estate.
The Supreme Court has now decided five of the 14 appeals argued in the November session, just five weeks ago. A part of me is rooting for the court to again clear its argument docket before convening for the January session on January 10, though the holidays make that somewhat unlikely. But I won’t rule it out! The Robes have become very good at surprising me on little things like this.