IN THE SUPERIOR COURT OF THE STATE OF DELAWARE IN AND FOR NEW CASTLE COUNTY

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1 IN THE SUPERIOR COURT OF THE STATE OF DELAWARE IN AND FOR NEW CASTLE COUNTY KENNETH A. MILLER, JR., and SANGAY MILLER, his wife, and BELL ATLANTIC-DELAWARE, INC., Plaintiffs, v. C.A. No. 97C JEB PATRELL Y. PURCELL, GARNELL R. PURCELL, JR., PATRICIA H. PURCELL, and PATRICIA H. PURCELL, M.D., P.A., A PROFESSIONAL CORPORATION of the STATE OF DELAWARE Defendants. Submitted: August 30, 2001 Decided: November 15, 2001 Bell Atlantic-Delaware, Inc. s Motion to Enforce Workmen s Compensation Lien. Appearances: Motion Granted. OPINION John S. Malik, Esquire, Wilmington, DE Attorney for Kenneth A. Miller, Jr., and Sangay Miller. J. R. Julian, Esquire, Wilmington, DE Attorney for Bell Atlantic-Delaware, Inc.. JOHN E. BABIARZ, JR., JUDGE. 1

2 Bell Atlantic-Delaware, Inc. ( Bell or Employer has filed a motion to enforce its workmen s compensation lien against settlement proceeds received by Plaintiffs Kenneth Miller and Sangay Miller for injuries resulting from a motor vehicle accident with a third party tortfeasor. Under the Workmen s Compensation Act, Bell has a subrogation right to be reimbursed from the settlement proceeds for workmen s compensation payments, even though Bell has a separate pending action against the tortfeasor. For this reason, Bell s motion to enforce its workmen s compensation is Granted. FACTS The facts underlying Bell s reimbursement claim are not in dispute. Plaintiff Kenneth Miller was injured in a motor vehicle accident with Defendant Patrell Purcell during the scope of his employment with Bell. As a result of the accident, Bell paid $126,000 in workers compensation payments and $15,000 in PIP benefits to or on behalf of Miller for medical expenses and lost wages. Both Miller and Bell filed suit against Purcell to recover damages from the accident. A consolidated trial in Superior Court resulted in a mistrial because of a hung jury. Miller then settled with one of Defendant s insurance carriers for approximately $50,000. This Court granted Bell s motion to place $20,000 of these proceeds in escrow pending resolution of Bell s workers compensation lien. Bell now seeks reimbursement from the settlement proceeds. After deducting the costs of recovery, which include $15,000 in costs and one-third of the recovery in attorney s fees, Bell seeks to recover the remaining $18,333. DISCUSSION 2

3 Bell argues that under 19 Del. C. 2363(e 1 an employer has an absolute right to reimbursement for workers compensation benefits from any recovery received by the employee from a third-party tortfeasor. Miller argues that Bell s separate pending action against the tortfeasor precludes Bell from recovering any of the settlement proceeds because such recovery would constitute double indemnification. As a threshold matter, the Court notes that although Bell refers to reimbursement of both workers compensation payments and PIP coverage, Bell s argument for reimbursement is based solely on the subrogation statute contained in the Workmen s Compensation Act. In so arguing, Bell relies on this Court s ruling at trial that the payments for both PIP and workmen s compensation were to be considered as one workmen s compensation lien because Bell was self-insured for both. As noted by Miller in his answering brief, this ruling was made for evidentiary reasons at trial to avoid confusing the jury with the distinctions 1 Section 2363(e provides in part as follows: In an action to enforce the liability of a third party, the plaintiff may recover any amount which the employee or the employee s dependants or personal representative would be entitled to recover in an action in tort. Any recovery against the third party for damages resulting from personal injuries or death only, after deducting expenses for recovery, shall first reimburse the employer or its workers compensation insurance carrier for any amounts paid or payable under the Workers Compensation Act to date of recovery, and the balance shall forthwith be paid to the employee or the employee s dependants or personal representative and shall be treated as an advance payment of compensation benefits.... 3

4 between workmen s compensation benefits and PIP benefits. Because Bell acknowledges that PIP coverage accounts for $15,000 of the $141,000 paid, the Court concludes that Bell s subrogation rights extend to the workmen s compensation payment of $126,000. The Workmen s Compensation Act, 19 Del. C. Ch. 23, creates liability in an employer for compensation to a covered employee for an occupational disease or injury. Section 2363(a permits an injured employee to bring an action against a third-party tortfeasor even if he has accepted workmen s compensation benefits. This section also provides a right of subrogation in the employer or its carrier for workmen s compensation payments made for a third party s tort. The subrogation provision prevents a double recovery by the employee for any one industrial injury and permits the employer to recoup its compensation payments. 2 Section 2363(b provides that both the employee and the employer have the right to settle a third party action, and such settlement is not a bar to the other interested party pursuing its claims under 2363(c. The employer s right to reimbursement is addressed in 2363(e, which provides that [a]ny recovery against the third party.., after deducting expenses of recovery, shall first reimburse the employer for workmen s compensation benefits paid to employee. Any balance is to be paid to the employee and treated as an advance payment by the employer for any future workers compensation benefits. Based on the clear language of 2363(e, Bell argues that an employer s right to reimbursement is absolute. 2 Moore v. General Foods, Del. Supr., 459 A.2d 126, 128 (1983 (citations omitted. 4

5 Although Delaware courts have not described the employer s right to reimbursement as absolute, they have adhered to the unambiguous and mandatory terms 3 of 2362(e and have ordered reimbursement under a variety of circumstances. 4 On facts similar to those in the case at bar, this Court in Esterling v. Bd. of Trustees of the Firemen s Pension Fund, found that the any recovery language of 2363(e encompasses recovery from either a judgment or a settlement. The Esterling Court also found that, if the reimbursement does not fully satisfy the amount paid in compensation benefits, the employer can pursue its action against the tortfeasor. 5 The Court stated that [s]ince the subrogation clause is for the benefit of the employer who has paid or becomes liable, the employer/carrier cannot be limited in its attempts to recover the benefits paid. 6 3 Esterling at *4. 4 See, e.g., Harris v. New Castle County, Del. Supr., 513 A.2d 1307 (1996 (allowing complete reimbursement to a carrier under an uninsured motorists policy, even though settlement included payments for both husband and wife; Moore v. General Foods, Del. Supr., 459 A.2d 126 (1983 (holding that where the Industrial Accident Board found that employee s present condition was causally related to a prior work accident, the net settlement recovery from the prior accident was subject to statutory credits even though the release failed to itemize or allocate damages. 5 Del. Super., 1988 WL 77774, aff d, Del. Supr., 6 Id. at *4. 5

6 Despite the clear language of 2363(e and the Esterling holding, Miller argues that subrogation is an equitable right that can limited by circumstance. Miller relies on Baio v. Commercial Union Insurance Co., 7 where the carrier was precluded from recovering its workers compensation payments because it represented not only the employee but also had a tort liability insurance contract with one of the alleged tortfeasors, and defended its insured against the employee. The carrier relied, as does Bell in this case, on the mandatory language of 2363(e that an injured worker shall reimburse the carrier. Aside from the clear conflict of interest, the Court stated that [o]f course, [the carrier] has a statutory right to reimbursement of the compensation payments it made on Baio s account. There is no question about that. 8 However, the Court concluded that the carrier s unethical conduct removed it from the otherwise mandatory reimbursement provision of 2363(e. 9 No such conduct exists in the case at bar. Miller argues that the possibility of double indemnification created by Bell s separate action against Purcell precludes Bell from reimbursement. However, Esterling endorses an employer s right to first seek reimbursement from the employee s settlement funds and then proceed with a separate action against the tortfeasor if the settlement funds do not fully cover the workers compensation payments. 10 In this case, Bell can recover $18,333, after deducting court costs and 7 Baio v. Commercial Union Ins. Co., Del. Supr., 410 A.2d 502 ( Id. at Id. 10 Id. at *4. 6

7 attorney s fees from the settlement proceeds, far less than its $126,000 workmen s comp payment. Thus, the Court concludes that Bell is entitled to be reimbursed pursuant to 2363(e and to proceed to trial on the separate action if it so chooses. 7

8 CONCLUSION For the foregoing reasons, Bell Atlantic s motion to enforce its workmen s compensation lien is Granted. It Is So ORDERED. Judge John E. Babiarz, Jr. JEB,jr/RMP/BJW Original to Prothonotary 8