Virginia Municipal Group Self-Insurance v. Crawford

66 Va. Cir. 236, 2004 Va. Cir. LEXIS 310
CourtSalem County Circuit Court
DecidedNovember 24, 2004
DocketCase No. (Chancery) CH03-59
StatusPublished
Cited by3 cases

This text of 66 Va. Cir. 236 (Virginia Municipal Group Self-Insurance v. Crawford) is published on Counsel Stack Legal Research, covering Salem County Circuit Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Virginia Municipal Group Self-Insurance v. Crawford, 66 Va. Cir. 236, 2004 Va. Cir. LEXIS 310 (Va. Super. Ct. 2004).

Opinion

By Judge Stanley P. Klein

In these Cross-Motions for Summary Judgment, the court must address the Complainant Virginia Municipal Group Self-Insurance Association’s (“VML”) assertion that Virginia law recognizes a cause of action for unjust enrichment, which entitles it to a reimbursement of workers’ compensation benefits it previously distributed to Defendant Gary Chance Crawford following an injury sustained within the scope of his employment. VML contends that Virginia has a strong public policy against injured parties receiving a double recovery for their injuries and that the principles underlying that public policy mandate that Crawford reimburse VML from the proceeds of his legal malpractice settlement with attorney Bruce D. Rasmussen. These proceeds stem from Rasmussen’s failure to file a personal injuiy action against the University of Virginia (“the third-party tortfeasor”) before the expiration of the applicable statute of limitations, for the injuries suffered by Crawford that led to VML’s payment of workers’ compensation benefits to him. Crawford responds that neither Virginia’s Workers’ Compensation statutory scheme nor [237]*237Virginia common law supports VML’s alleged cause of action under the factual circumstances present here.

After full consideration of the arguments presented and all of the applicable authorities, the court grants Crawford’s Motion for Summary Judgment for the reasons discussed below and holds that VML is not legally entitled to reimbursement of the previously distributed workers’ compensation benefits because of the settlement obtained by Crawford in his legal malpractice action.

I. Background

Crawford was injured in an accident in his wheelchair while attending a seminal- at the University of Virginia on August 15, 1995. Both parties agree that Crawford sustained these injuries within the scope of his employment for the City of Salem. He has been, during all relevant times, the Clerk of the Court for the Circuit Court of the City of Salem. On December 23, 1996, pursuant to an award by the Virginia Workers’ Compensation Commission, VML, a group self-insurance association and the carrier for the City of Salem, Virginia, paid to Crawford workers’ compensation benefits amounting to $214,049.22. Subsequent to the Workers’ Compensation Commission’s award, Crawford retained Rasmussen to file a personal injury action against, inter alia, the University of Virginia. Rasmussen, however, failed to file the claim within the relevant statute of limitations. As a result, Crawford subsequently sued his attorney for legal malpractice in the Circuit Court of the City of Salem.

In that action, VML (in conjunction with the City of Salem) filed a Notice of Lien based upon the sum it had previously distributed to Crawford as workers’ compensation benefits in order to assert a statutory right of subrogation under Virginia Code § 65.2-309 and § 65.2-310 (“the workers’ compensation subrogation statutes”). The reduced lien now claimed by VML, after deduction for Crawford’s attorney’s fees and costs, totals $113,446.09. On November 17, 2000, Crawford settled his malpractice action against Rasmussen for $575,000.00. After payment of attorney’s fees and costs, his recovery amounted to $305,002.00. The record herein is not entirely clear whether VML filed its Notice of Lien before or after Crawford settled the legal malpractice case against Rasmussen.

Following this settlement, Crawford filed a motion to quash the aforementioned lien, arguing that the workers’ compensation subrogation statutes do not authorize a lien on proceeds acquired from a legal malpractice action. Rather than contesting this motion, VML withdrew its notice of lien on [238]*238Crawford’s malpractice proceeds without prejudice and filed an application with the Workers’ Compensation Commission requesting that the Commission suspend distribution of Crawford’s future benefits to the extent that the malpractice settlement exceeded the amount that VML had paid under the workers’ compensation claim. On April 29, 2002, the Commission denied VML’s request, ruling that it lacked the authority to provide such a credit against Crawford’s net recovery from his legal malpractice settlement. VML did not appeal that decision.

VML thereafter filed the instant Bill of Complaint against Crawford alleging that “Crawford has been unjustly enriched to VML’s detriment----” Bill of Complaint, paragraph 17, and that Crawford should therefore reimburse VML for the benefits it paid to him, less a pro-rata share of Crawford’s attorney’s fees and expenses arising out of the legal malpractice action. After the filing of the Bill of Complaint, the judges of the Twenty-Third Judicial Circuit collectively recused themselves from this matter due to Crawford’s close ties with those courts. On June 6,2003, the Supreme Court of Virginia designated this judge to preside over this dispute in their stead. This judge had also been designated to preside over Crawford’s case against Rasmussen.

On June 27,2003, Crawford filed two Pleas in Bar and one Demurrer on unrelated issues. After briefing and oral argument, this court denied those defensive pleadings. The parties then filed a joint Stipulation of Facts and agreed that the court should rule on the merits of this matter through Cross-Motions for Summary Judgment. After a phone conference with the court, each side fully briefed the issues and agreed that the court would rule without further oral arguments.

II. Analysis

Whether a payor of workers’ compensation benefits can seek reimbursement from an injured payee who receives compensation from a legal malpractice claim, which arises from the circumstances which led to the payment of the workers’ compensation benefits, appears to be an issue of first impression in Virginia. Although courts in other jurisdictions have addressed this issue, the analysis of each of those courts has focused on that state’s workers’ compensation subrogation statutes rather than on an equitable theory of unjust enrichment. The conclusions reached by those courts have also been decidedly mixed, with some holding that the employer is entitled to the legal malpractice proceeds through subrogation, see Poole v. Workers’ Comp. Appeal Bd., 810 A.2d 1182 (Pa. 2002); Graham v. Liberty Mut. Group, 1998 [239]*239U.S. Dist. LEXIS 20026 (E.D. Pa. 1998); Frazier v. New Jersey Mfrs. Ins. Co., 667 A.2d 670 (N.J. 1995); Williams v. Katz, 23 F.3d 190 (7th Cir. 1994) (interpreting Illinois law); Bongiorno v. Liberty Mut. Ins. Co., 630 N.E.2d 274 (Mass. 1994); Tallerday v. Delong, 842 P.2d 1023 (Wash. App. 1993); Toole v. EBI Cos., 838 P.2d 60 (Or. 1992); McDowell v. LaVoy, 408 N.Y.S.2d 148 (App. Div. 1978), aff'd, 390 N.E. 1179 (N.Y. 1979), while others have held that the employer is not entitled to such proceeds. See Woodward v. Pratt, Bradford, & Tobin, P.C., 684 N.E.2d 1147 (Ill. App. 1997); Smith v. Long, 505 N.W.2d 429 (Wisc. App. 1993); Sladek v. K Mart Corp., 493 N.W.2d 838 (Iowa 1992); Travelers Ins. Co. v. Breese, 675 P.2d 1327 (Ariz. App. 1983); Mount Pleasant Special Sch. Dist. v. Gebhart, 378 A.2d 146 (Del. Ch. 1977); Fink v. Dimick, 179 F. Supp. 354 (D. Conn. 1959).

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Cite This Page — Counsel Stack

Bluebook (online)
66 Va. Cir. 236, 2004 Va. Cir. LEXIS 310, Counsel Stack Legal Research, https://law.counselstack.com/opinion/virginia-municipal-group-self-insurance-v-crawford-vaccsalem-2004.