CASE NO. 3322 CRB-7-96-4
COMPENSATION REVIEW BOARD
WORKERS’ COMPENSATION COMMISSION
MAY 17, 2001
CITY OF STAMFORD
AON RISK SERVICES OF CONN.
The claimant was represented by Joseph L. Gerardi, Esq., 1074 Hope Street, Stamford, CT 06907.
The respondents were represented by Richard Bartlett, Esq., McGann, Bartlett & Brown, 281 Hartford Turnpike, Suite 401, Vernon, CT 06066.
This Petition for Review from the March 29, 1996 Finding and Order of the Commissioner acting for the Seventh District was heard December 1, 2000 before a Compensation Review Board panel consisting of the Commission Chairman John A. Mastropietro and Commissioners Robin L. Wilson and Leonard S. Paoletta.
JOHN A. MASTROPIETRO, CHAIRMAN. The claimant has petitioned for review from the March 29, 1996 Finding and Order of the Commissioner acting for the Seventh District.1 He argues on appeal that the trier erred by finding that the respondent had a viable claim under § 31-293 for a credit against the proceeds of a third-party settlement entered into by the claimant (plaintiff). We affirm the trial commissioner’s decision, though we agree with the claimant’s assertion concerning the applicability of § 31-293 to underinsured motorist insurance proceeds.
The parties stipulated that the claimant, a firefighter for the respondent city of Stamford, suffered compensable injuries during the course of his employment on January 17, 1990, when a Stamford EMS vehicle he was driving2 was struck from behind by another motor vehicle. See Joint Exhibit 1. His medical bills from those injuries totaled $21,034.47, and were paid by the respondent. He was also totally incapacitated from the date of injury through March 25, 1991, and from July 22, 1991 to August 2, 1991, for which time periods he received a total of $32,109.41 in total disability benefits. On October 21, 1991, the claimant and the third party’s motor vehicle insurer, USF&G, settled his injury claims for $300,000.00, while reserving all rights that he might have against Luigi Giorno and/or Serpe Bros. (the business that owned the vehicle) for the value of his injuries that exceeded that amount. The respondent was not a party to this settlement agreement, and had no knowledge of it until December 18, 1991. The claimant reimbursed the city $53,143.88 for the medical bills and disability benefits it had paid to date.
The claimant then commenced an action against Giorno and Ralph D’Agostini (the other principal of Serpe Bros.) for the value of his injuries exceeding $300,000.00. The respondent intervened in that action on February 5, 1992 as a party plaintiff seeking reimbursement for amounts it had paid and might still become obligated to pay under the Workers’ Compensation Act. Meanwhile, the claimant and CIGNA, the motor vehicle insurer for Stamford EMS’s vehicle, settled an underinsured motorist claim for $15,000.00 on February 16, 1993. As with the earlier settlement, the respondent was not a party to this compromise, and was unaware of it until February 24, 1994. By then, the civil complaint and the intervening complaint against Giorno and D’Agostini had been dismissed (as of June 25, 1993) for failure to prosecute with reasonable diligence. Neither party moved to open this judgment, and the dismissal remains final.
The trial commissioner found that the respondent’s attorney sent the claimant’s counsel a letter on November 6, 1991, asking for an update on the status of settlement negotiations in his third-party case. The respondent’s lawyer wrote, “Do you plan on filing a third-party suit? Would you please provide notice to this office of your third party litigation, including the docket number and a copy of the complaint.” Findings, ¶ 12, quoting Respondent’s Exhibit 1. Claimant’s counsel replied on December 18, 1991 that he had negotiated a partial settlement of the third-party claim, with issues remaining as to the proper amount of the workers’ compensation lien. (He thought that this amount should be $51,079.32.) Counsel also stated, “I do intend on filing a third-party action to protect the claims of Robert Schreck, and I will mail a copy of the writ and complaint to you.” Findings, ¶ 13(e), quoting Respondent’s Exhibit 2. On July 13, 1992, counsel wrote to the respondent, “In response to your June 30 request, I have enclosed my trustee check in the amount of $53,143.99 . . . which reimburses the city of Stamford for its wo[r]kers’ compensation lien on Robert Schreck third-party claim.” Findings, ¶ 14, quoting Respondent’s Exhibit 3.
Section 31-293(a) provides that an employee who suffers a compensable injury under circumstances that make a third party legally liable to pay damages may bring an action against such entity as well as a workers’ compensation claim against his employer. In such a case, an employer who has paid, or become obligated to pay, compensation may also proceed at law to recover any sums paid or payable from the responsible third party. The statute explains, “If either such employee or such employer brings such action against such third person, he shall forthwith notify the other . . . of such fact . . . and such other may join as a party plaintiff in such action within thirty days after such notification, and, if such other fails to join as a party plaintiff, his right of action against such third person shall abate.” Section § 31-293 (Rev. to 1990). A judgment in favor of an employee or employer against a third party does not terminate the employer’s obligation to pay compensation in the future. Instead, the statute requires that proceeds from the action be apportioned so that the reimbursement claim of the employer takes precedence over any further recovery for the claimant. A reimbursement claim consists of both compensation paid and an amount equal to the present worth of any probable future payments that the employer has become obligated to pay by award. The statute also provides that “No compromise with such third person by either employer or employee shall be binding upon or affect the rights of the other, unless assented to by him.”3
In applying § 31-293, the trier concluded that the respondent’s failure to strictly adhere to the law’s provisions by pursuing its own action against the third-party tortfeasor resulted from its reliance on the representations of the claimant’s attorney, and its reasonable belief that the lien/moratorium problem was an “open and viable issue, which would be dealt with as the case progressed . . . .” Findings, ¶ C. The trier also found that the claimant’s $53,143.88 repayment constituted an incomplete reimbursement of compensation benefits received from the employer. He therefore ruled that the city of Stamford continued to have rights to a credit against the third-party proceeds, with the exact amount of the credit or moratorium to be determined either by agreement or by a commissioner’s order. The claimant has appealed that ruling to this board.4
First, we address the claimant’s challenges to certain factual findings of the trial commissioner. Specifically, the claimant contends that there was insufficient evidence in the record to support the trier’s findings that (a) the respondent’s failure to maintain an action against the third-party tortfeasor was caused by its reliance on the representations of the claimant’s attorney, and (b) the respondent had not been fully reimbursed for the compensation benefits that it had paid. We note that the claimant did not file a Motion to Correct as per Admin. Reg. § 31-301-2, thereby directing the trial commissioner’s attention to these alleged factual errors and giving him an opportunity to make the requested corrections. The absence of such a motion curtails our ability to scrutinize the subordinate facts found as part of our review, and as a practical matter limits us to the existing factual findings. Kelley v. Venezia Transport Services, 4184 CRB-2-00-2 (March 8, 2001); Mycek v. U.S. Surgical Corp., 3669 CRB-3-97-8 (August 26, 1998).
There is indeed identifiable evidence in the record to support a finding that the city of Stamford relied on the assertions of claimant’s counsel that he had already negotiated a partial settlement of his client’s third-party claim, and that the city would be notified of any third-party lawsuit. See Respondent’s Exhibits 1, 2. It appears that the claimant later settled with the automobile insurer of Stamford EMS, unbeknownst to the city, and allowed his third-party civil suit against Giorno and D’Agostini (which the city had joined) to lapse through inaction. The trier had grounds upon which to conclude that the respondent reasonably believed that the claimant’s counsel was keeping it apprised of his efforts to satisfactorily reimburse it for sums expended as compensation, while something else was in fact occurring. As for the amount of the lien, we note that an employer is generally entitled to be reimbursed not only for benefits paid in the past and the present value of known future benefits, but is also entitled to a credit for unknown future benefits against the net proceeds of a third party recovery. Enquist v. General Datacom, 218 Conn. 19, 26 (1991). For that reason, the respondent could be entitled to a further offset here regardless of the amount it has already paid, assuming its rights to reimbursement have been properly preserved under § 31-293.
The question remains, however, whether the respondent’s reliance on the representations of claimant’s counsel has any legal consequence in this context. Under the common law, a cause of action for personal injuries cannot be assigned. Dodd v. Middlesex Mutual Assurance Co., 242 Conn. 375, 382 (1997).5 A Connecticut employer’s right to obtain reimbursement from a third-party tortfeasor in workers’ compensation cases is a statutory claim that is solely derived from § 31-293. Libby v. Goodwin Pontiac-GMC Truck, Inc., 241 Conn. 170, 177 (1997) citing Durniak v. August Winter & Sons, Inc., 222 Conn. 775, 782 (1992). “The ability of someone other than the injured party, e.g. the employer, to bring or to intervene in an action against a third party is a clear deviation from the common law. . . . Consequently, this statutory grant of right must be strictly construed and limited to those matters clearly within its scope.” Dodd, supra, 383.
Section 31-293(a), by its express terms, establishes a right of recovery for an employer who (a) brings a reimbursement action against a third party who is legally liable for damages arising from a compensable injury, or (b) joins as a party plaintiff in a claimant’s action against a third party within thirty days of having been notified of such action by writ or certified mail. The statute contains no express provision that exempts an employer from following these statutory dictates based on a claimant’s assurances that full repayment will be tendered following negotiation with the third-party tortfeasor. Though we properly adhere to a policy of strictly construing exceptions to the common law and to the remedial purpose of the Workers’ Compensation Act; see, e.g., Green v. General Dynamics, 245 Conn. 66, 71 (1998); we do not believe that a respondent is foreclosed from invoking equitable principles such as reliance in a dispute over the application of a Chapter 568 statute.
In Libby, supra, our Supreme Court made it clear that prior to the enactment of Public Act 1993, No. 228, § 7 (see n.3, supra), “an employer [was] not entitled to a credit in the amount of the employee’s settlement proceeds against the employer’s future workers’ compensation liability . . . unless the employer [had] either intervened in the employee’s action against the third-party tortfeasor or [had] brought a direct action against the third party tortfeasor.” Id., 178. The respondents below had made no attempt to protect their rights under § 31-293 prior to the claimant’s settlement, nor had the claimant paid or promised to pay them a portion of his recovery. However, we have distinguished Libby from a case in which the claimant has signed an (unapproved) agreement stating that his employer’s workers’ compensation insurer was entitled to reimbursement from settlement proceeds. Longo v. Leibovitz, 3464 CRB-3-96-11 (Jan. 15, 1998). There, the agreement provided that, in exchange for $20,000.00, the insurer would waive the remainder of its lien, and would no longer be liable for past, present or future disability benefits and medical costs resulting from the claimant’s compensable injury. “[The insurer’s] failure to strictly adhere to the provisions of § 31-293 resulted from its reliance on the agreement which was signed by the claimant. . . . The trial commissioner’s conclusion [that the insurer did not forfeit its reimbursement right] is consistent with the well-established principle of workers’ compensation law which is ‘the avoidance of two independent compensations for the injury.’” Id., quoting Enquist, supra, 26.
Much like Longo, and in contrast to Libby, the instant case involves a workers’ compensation liability carrier whom the claimant informed would be reimbursed for its lien. Though no written agreement was drafted in the form of a standard contract between the two parties, the claimant did send a check to the respondent for $53,143.99 as reimbursement for its existing lien against his third-party claim, and also agreed to notify the respondent of his action against the third-party tortfeasors (thereby recognizing that his employer might potentially have some interest in any proceeds from that action). By reimbursing the city for its lien, the claimant gave the respondent reasonable ground to expect that he would concomitantly honor its right to a credit or a moratorium equivalent to the remainder of his third-party recovery from USF&G. As noted above, an employer’s § 31-293 claim consists not only of the amount of compensation paid on account of an injury, but also the present worth of any probable future payments, either known or unknown, that it becomes obligated to pay by virtue of an award. Enquist, supra, 23. The employer retains a continuing right to a credit for these amounts to the extent that there are excess proceeds from a third party recovery. Id., 25-26; see also, Schiano v. Bliss Exterminating, 57 Conn. App. 406, 413 (2000) (commissioner must determine value of plaintiff’s portion of settlement to calculate amount of credit). The trial commissioner found that such a right exists here by virtue of the claimant’s representations to the respondent. Such a legal conclusion is consistent with our holding in Longo, and must herein be affirmed by this board on appeal.
In terms of any other source of a credit beyond the claimant’s initial settlement with USF&G, however, it would appear that the respondent has no viable claim. First, the dismissal of the Superior Court complaint against the third party tortfeasors, Giorno and D’Agostini, obviously precludes either the plaintiff/claimant or the intervening plaintiff/respondent from obtaining any recovery from those defendants. However, the dismissal of this action does not somehow eliminate the respondent’s moratorium derived from the USF&G settlement, as argued by the claimant in his brief. See Brief, p. 10.
Meanwhile, the respondent may not take credit under § 31-293 for the amount that the claimant collected from CIGNA pursuant to the uninsured/underinsured motorist policy of Stamford EMS. In Dodd, supra, our Supreme Court held that payments made pursuant to an uninsured motorist policy are paid on behalf of the insured based upon a contractual liability, and not on behalf of the financially irresponsible motorist who has caused the insured’s injuries. Id., 384. Reasoning that the term “third party” under § 31-293 refers only to tort actions between an injured party and a wrongdoer, and not to contract actions between an insured and an insurer, the Court held that an employer or its workers’ compensation insurer could not avail itself under § 31-293 of the plaintiff/claimant’s recovery from the uninsured motorist provision of his automobile insurance policy. The same analysis was applied by our Appellate Court to an employee’s recovery from the uninsured motorist insurance carrier of his employer, as the holding of Dodd did not depend upon whether the insured was the employer or the employee. Matteo v. Alvarez, 53 Conn. App. 452, 454-55 (1999). Here, Stamford EMS is virtually interchangeable with the claimant’s employer for the purpose of our analysis. The claimant was driving its vehicle in the course of his employment with the city, and there is no allegation that Stamford EMS bears any responsibility as a tortfeasor for the accident suffered by the claimant on January 17, 1990. Therefore, the claimant’s $15,000 settlement with CIGNA pursuant to Stamford EMS’ underinsured motorist insurance policy cannot be added to the value of the respondent’s moratorium.
The trial commissioner’s decision is hereby affirmed.
Commissioners Robin L. Wilson and Leonard S. Paoletta concur.
1 The claimant’s appeal was originally dismissed by this board on the ground that it had been filed in an untimely manner, contravening the ten-day appeal period of § 31-301(a). Schreck v. Stamford, 3322 CRB-7-96-4 (Sept. 23, 1997). Though the claimant’s appeal petition was admittedly filed thirteen days after the trial commissioner’s order had been issued, counsel argued that the post office had unsuccessfully attempted to deliver a copy of the decision one day after the decision was sent (without identifying the nature of the undelivered item), and had not tried to re-deliver the letter again until over a week later. The Appellate Court reversed our decision, holding that notice had to be sent to the claimant rather than to his counsel. Schreck, 51 Conn. App. 92 (1998). The Supreme Court then reversed the Appellate Court’s decision regarding the necessity of sending notice to the claimant personally in order to trigger the ten-day appeal period, but went on to hold that the § 31-301(a) appeal period is tolled “when a party wishing to appeal establishes that, through no fault of his own, he did not receive notice of the commissioner’s decision within ten days of the date that it was sent.” Schreck, 250 Conn. 592, 595 (1999). The matter was then remanded to this board for further proceedings. We independently concluded that counsel did not receive notice of the trier’s decision within the ten-day appeal period, thereby entitling the claimant to reinstatement of his appeal. Schreck, 3322 CRB-7-96-4 (July 21, 2000). We then rescheduled argument on those issues that the appellant had initially raised, but that this board had not addressed in its prior consideration of the Schreck matter. BACK TO TEXT
2 This vehicle was owned by the Stamford EMS Foundation, Inc., and was usually driven by a Stamford EMS paramedic. The claimant was driving this vehicle because he and another firefighter had taken an ambulance to the scene of a medical emergency, while the paramedic had arrived separately. When the patient was subsequently transported to the hospital, the paramedic accompanied one of the firefighters in the ambulance, while the claimant drove to the hospital in the paramedic’s Stamford EMS vehicle rather than leaving it unattended at the scene. BACK TO TEXT
3 In 1993, a sentence was added to § 31-293(a) stating that when an employer, insurance carrier or the Second Injury Fund has paid compensation to a claimant whose injuries give rise to legal liability on the part of a third party, the employer, insurer or Fund “shall have a lien upon any judgment received by the employee against the party or any settlement received by the employee from the party” as long as written notice of the lien is given to the party prior to such judgment or settlement. This provision does not implicate reimbursement claims arising from injuries that occurred before the July 1, 1993 effective date of this revision, however. Libby v. Goodwin Pontiac-GMC Truck, Inc., 241 Conn. 170, 178-79 n.7 (1997). BACK TO TEXT
4 Among the claimant’s appellate arguments is the contention that this board should vacate the trial commissioner’s March 29, 1996 decision on the ground that it was not issued within 120 days of the conclusion of the last hearing as required by § 31-300. See Stewart v. Tunxis Service Center, 237 Conn. 71 (1996). Although the closing of the record on November 2, 1995 indeed occurred over 120 days before the issuance of the trier’s decision, the claimant raised no objection to the lateness of that decision until after it had been issued. We have stated, “when the 120-day time limit has long passed, and a party has made no indication that it has an objection to the lateness of a decision, this board is inclined to interpret that inaction as an intent to waive the 120-day time limit. A party shall not be allowed to choose to enforce its right to invalidate a ruling only after the party reviews the decision and decides that it is adverse to its interests, barring special circumstances.” Stewart v. Tunxis Service Center, 16 Conn. Workers’ Comp. Rev. Op. 69, 71, 1684 CRB-6-93-4 (Oct. 30, 1996); see also, Wilson v. Stamford, 3268 CRB-7-96-2 (November 7, 1997). This reasoning applies squarely to the circumstances here, as the first mention of a tardy decision was made in the claimant’s Reasons of Appeal. “We will not allow parties to acquire a type of veto power over a decision by failing to object to a late award until they have an opportunity to see whether they approve of the result.” Minneman v. Norwich Board of Education, 2294 CRB-2-95-2 (Dec. 13, 1996). Thus, we hold that the claimant waived his right to enforce the 120-day time limit in § 31-300. BACK TO TEXT
5 Our Supreme Court has explained that the reasons for the rule forbidding the assignment of personal injury actions are myriad: “unscrupulous interlopers and litigious persons were to be discouraged from purchasing claims for pain and suffering and prosecuting them in court as assignees; actions for injuries that in the absence of statute did not survive the death of the victim were deemed too personal in nature to be assignable; a tort-feasor was not to be held liable to a party unharmed by him; and excessive litigation was thought to be reduced.” Dodd v. Middlesex Mutual Assurance Co., 242 Conn. 375, 382-83 (1997). BACK TO TEXT