Opinion
C.A. No. 07C-08-89 PLA.
Submitted: November 9, 2007.
Decided: December 12, 2007.
ON PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT DENIED.
This 12th day of December, 2007, upon consideration of the Motion for Summary Judgment filed by Plaintiff State of Delaware (the "State"), it appears to the Court that:
1. The material facts are not dispute. Defendant Jennifer Foley ("Foley") became injured while employed by the Christiana School District on January 21, 2004. She received worker's compensation benefits as a result of her compensable work injury in the approximate amount of $116,000.00.
2. Foley then filed a tort action against her alleged tortfeasors. After a trial, a jury awarded her $625,000.00 in damages but reduced her award by one-half, finding Foley to be comparatively negligent by 50%.
3. The State has filed a motion for summary judgment pursuant to 19 Del. C. § 2363 ("Section 2363"), demanding reimbursement of its workers' compensation lien in the amount of $67,004.00. Foley has already paid the State $33,503.00, amounting to one-half the amount that the State requests, less a proportionate share of her costs and expenses.
Foley and the State disagree on how to calculate this amount. Foley argues that the amount due the State under 19 Del. C. § 2363(e) should be reduced by 50% because of the jury's finding of Foley's comparative negligence (before deducting attorneys' fees and a proportionate share of net costs). In contrast, the State believes that the amount should only be reduced by Foley's proportionate share of attorneys' fees and costs and should not be reduced by Foley's comparative negligence. See Docket 7, Ex. A.
4. The State argues that permitting Foley to pay only one-half of the requested amount would double her recovery and unjustly enrich her. Strictly applying the language of the statute, it contends that there is no provision for a reduction of the lien when an employee's award is reduced by a finding of comparative negligence. To support this argument, the State relies upon Marciniak v. Pennsylvania Railroad Co., a case in which the District Court held that a third party tortfeasor could not avoid reimbursement where an employer was contributorily negligent.
The Court contacted counsel for both parties to request whether either party would like the opportunity to have oral argument. Defense counsel promptly responded that no argument was needed and that Foley would be content to rest on the papers. Plaintiff's counsel, however, never returned the Court's phone calls, and as a result, the Court assumes that the State is content to have the Court rule on the papers.
152 F. Supp. 89 (D. Del. 1957).
5. Foley makes a similar unjust enrichment argument against the State. That is, she submits that by requiring her to pay an additional $33,503.00, the State would be unjustly enriched because it "decided to sit on the sidelines and not participate in [Foley's third party negligence] trial." Foley notes that the State's reliance on one sentence in Section 2363(e) is misplaced because it fails to consider the context of the entire subsection, which plainly indicates that it is a pure subrogation statute. Foley further argues that, under Keeler v. Harford Mutual Insurance Co., permitting the State to recover the full amount, without sharing in the costs and expenses associated with the suit, would be inequitable.
Docket 7, ¶ 4.
672 A.2d 1012 (Del. 1996).
6. When considering a motion for summary judgment, the Court's function is to examine the record to ascertain whether genuine issues of material fact exist and to determine whether the moving party is entitled to judgment as a matter of law. If the record reveals that there are no material facts in dispute and judgment as a matter of law is appropriate, then summary judgment will be granted. Where there are no material facts at issue, and the dispute focuses on a question of law, summary judgment is appropriate.
Super Ct. Civ. R. 56(c).
Id.
Sierra Club v. Del. Dep't of Natural Res. and Envtl. Control, 919 A.2d 547, 555 (Del. Mar. 9, 2007) (App. II), aff'g Sierra Club v. DNREC, C.A. No. 1724-N (Del.Ch. Jun. 19, 2006).
7. Section 2363 mandates that the employee reimburse the State for "any amounts paid or payable under the Worker's Compensation Act to date of recovery . . ." when an employee who has received workers' compensation benefits for a compensable work injury subsequently recovers damages from a third party tortfeasor. "[T]he purpose underlying 19 Del. C. § 2363(e) is to prevent the employee from receiving compensation for wage losses from a third-party tortfeasor when the losses have already been compensated through workers' compensation." The statute is a pure subrogation statute, and only permits an employer to recover precisely what the employee recovered in the third party tortfeasor action.
State v. Calhoun, 634. A2d 335, 337 (Del. 1993).
See Bell Atlantic-Delaware, Inc. v. Saporito, 875 A.2d 620, 622-23 (Del. 2005); Keeler v. Hartford Mut. Ins. Co., 672 A.2d 1012 (Del. 1996).
8. With these principles in mind, the Court concludes that Foley has fully discharged her lien, and that the State is not entitled to the additional sum of $33,503.00. Foley's damage recovery was reduced by one-half as a result of the jury's finding that was Foley comparatively negligent. Had the State, instead of Foley, pursued this litigation, Section 2363 would have permitted the State to recover only half of Foley's damages because the State could only collect "any amount which the employee . . . would be entitled to recover in an action in tort." Because Foley could only recover half of her damages, the statute also limits the State to half of the total amount.
9. Moreover, in my judgment, permitting the State to recover all of its lien, without a reduction for Foley's comparative negligence, would be inequitable. In Keeler v. Harford Mutual Insurance Co., the Delaware Supreme Court refused to permit Harford Mutual Insurance Co. ("Harford"), an insurance carrier who paid workers' compensation benefits to Keeler, to recover its entire lien under Section 2363 even though Keeler had recovered damages from a third party tortfeasor in excess of Harford's payments. In reaching this conclusion, the Supreme Court noted that Section 2363(e) must be read in the context of the entire statute. The Court also noted that Professor Larson's text, upon which this Court has often relied in interpreting worker's compensation issues, now recognizes that a majority of jurisdictions require that the employer share the employee's costs and fees before the employer may recover its lien. In so holding, the Court concluded:
Keeler, 672 A.2d at 1016.
Id. at 1015. Professor Larson's text states, in pertinent part:
In a substantial majority of states, when a third party suit is brought or recovery effected by the employee, the employer or carrier is now obliged to pay a portion of the attorney's fees out of his share. The emergence of this majority rule is the result of both a number of legislative amendments, not least in the major compensation jurisdictions, and of a similar trend in decisional law. 2A Arthur Larson, The Law of Workmen's Compensation § 74.32(a), at 14-535 (1995).Id. at 1015 n. 1.
The direction of the statute that expenses are to be "apportioned . . . between the parties as their interests appear," 19 Del. C. § 2363(f), imparts an equitable concept that neither party achieve an advantage not attributable to that party's effort in bringing about the result. Requiring Keeler to shoulder the full cost of recovery in this case yields an unfair result. He initiated and successfully completed the litigation which produced full recovery for Harford as well as himself. For Harford to step in after recovery and demand satisfaction of its lien without contributing to the effort or cost of recovery is patently unfair and at clear variance with the statutory mandate of apportionment.
Id. at 1017.
10. Applying the rationale of Keeler, the Court concludes that permitting the State to recover the full lien in this case, when Foley's own award was substantially reduced, would be inequitable and contrary to Section 2363's mandate of apportionment. It is undisputed that the State did not share any of the expenses associated with Foley's lawsuit against her tortfeasor. To allow the State now to collect the full amount of its lien from Foley's recovery when it did not participate or aid in the litigation would be similarly inequitable.
11. The State's reliance on Marciniak v. Pennsylvania Railroad Co. is misplaced. In that case, the District Court held that an employer's contributory negligence could not be raised by a third party tortfeasor as an affirmative defense to paying the employee. In this case, however, the employer's negligence, if any, is irrelevant to the application of Section 2363. Foley's negligence, however, is relevant to a third party claim under Section 2363 because the State, had it chosen to pursue litigation against Foley's tortfeasor, could assert her negligence, and hers alone, as a defense. Marciniak is therefore inapplicable.
12. As a practical matter, had Foley recovered nothing from the jury, the State would still have had to pay benefits to Foley under the Act. Although Foley recovered damages in an amount greater than her worker's compensation payments, even with the 50 percent reduction for comparative negligence, the State can only recover what Foley could recover under Section 2363, and it can only do so after it shares in Foley's costs and fees. Here, Foley recovered only half of what her damages were, and since the State did not participate in Foley's third party suit, Section 2363 should not permit the State to recover the remaining $33,503.00.
13. For all of the foregoing reasons, the Court concludes that Foley fully discharged her lien, and the State cannot recover an additional $33,503.00 under 19 Del. C. § 2363. Accordingly, the State's Motion for Summary Judgment is hereby DENIED.
IT IS SO ORDERED.