Opinion
No. CV07-6000541S
July 19, 2010
MEMORANDUM OF DECISION RE INTERVENING PLAINTIFFS' MOTION FOR APPORTIONMENT
This action arises out of a motor vehicle accident that occurred in Waterbury Connecticut on September 7, 2006, wherein the plaintiff, Donna Yeager, while in the course of her employment was struck from behind by an automobile operated by one defendant, Maria Alvarez. On May 2, 2007, the plaintiff's employer Priority Care Inc. (PCI) moved to intervene because it had become obligated to make certain payments to and on behalf of the plaintiff in accordance with the Workers' Compensation Laws of Connecticut. This motion was granted on May 19, 2007 by Agati, J. On June 4, 2009, after a trial to a jury in front of this court, the plaintiff was awarded, $396,242 in economic damages and $983,998 in non-economic damages for a total award of $1,380,240. Thereafter, the defendants' insurance company tendered $300,000 — the full amount of the defendant's insurance policy." By agreement of PCI's counsel and counsel for the plaintiff, the plaintiff's attorney was allowed to take the sum of $100,000 as a legal fee, leaving the remaining $200,000 in escrow.
The plaintiff brought this action against Maria Alvarez and Benito Alvarez d/b/a Benny's Used Cars a/k/a Benny's Auto Repair, Benny's Used Cars and Benny's Auto Repair.
PCI then filed a motion for apportionment on August 16, 2008, and now seeks payment of all the remaining funds pursuant to General Statutes § 31-293, part of the Workers' Compensation Act. On March 23, 2010, counsel for the plaintiff filed a memorandum in opposition to this motion. The court held a hearing on this matter on March 25. 2010. At this hearing, PCI notified the court that as of March 25, 2010, it had paid the sum of $235,179.97, consisting of $119,142.23 in medical payments and $116,037.74 in compensation benefits. In addition, the plaintiff has a check for $19,166.66 for costs pursuant to the court's original ruling on the bill of costs and the plaintiff's motion for review of the order of taxation. On April 9, 2010, the plaintiff filed an affidavit of her attorney, Michael D'Amico, with thirty-five exhibits to support her request for additional attorneys fees and costs. On May 7, 2010, PCI filed a response to the plaintiff's March 23, 2010 memorandum and an objection to the affidavit filed by the plaintiff. The plaintiff filed a reply to PCI's memorandum on May 7, 2010.
The plaintiff originally sought $28,946.16 in her bill of costs. The court granted a portion of the plaintiff's bill of costs and subsequently granted the plaintiff's motion for review, granting an additional $10,725 for expert witness fees.
The plaintiff, in her memorandum of March 23, 2010, argues the following: First, that because the plaintiff has not received the whole of her economic and non-economic damages, the make-whole doctrine precludes PCI from seeking apportionment of its workers' compensation lien under General Statutes § 31-293(a). Second, apportionment of the economic and non-economic damages awarded to the plaintiff, such that the plaintiff would receive nothing, violates Art I § 10 of the Connecticut Constitution by denying the plaintiff open access to the courts and the right to seek full redress for her injuries. Third, apportionment as PCI requests results in the plaintiff not being made whole and, thereby, deprives her of her fundamental right to seek full redress of her injuries and open access to the courts, which violates the equal protection clause of the Connecticut Constitution. Fourth, even if the court is persuaded that PCI's lien takes precedence over the claims of the plaintiff, the court should apportion the remaining funds equal to the proportion of the lien to the total verdict. In addition, the plaintiff claims that she is entitled to additional attorneys fees and costs of suit in the amount of $42,167.94, consisting of $32,275.44 in additional costs and $9,892.55 in post-verdict attorneys fees incurred prior to August 10, 2009, the date the policy limits were tendered by the defendant's insurance company. The plaintiff claims that all these expenses were incurred in the preparation and presentation of her case.
Attorney D'Amico represented at oral argument that he was requesting $51,442.10 in costs but acknowledged that $19,166.66, which has been paid, should be deducted from this amount.
PCI objects to all the plaintiff's claims and her allegations of costs. As to the costs, PCI's position is that by order dated November 27, 2009, and subsequent order dated January 11, 2010, wherein the court acted upon the bill of costs submitted by the plaintiff, the plaintiff received $19,166.66 as her costs. Thus, it argues, she is not entitled to any additional costs. As to the remaining $200,000, PCI's position is that § 31-293(a) is controlling and that this statute permits it to recover all the expenses it paid for workers' compensation and that the employee will be left with any excess. Since, in this case, the excess is less than the amounts paid out by the employer, PCI argues that it is entitled to the whole $200,000 and that the plaintiff, unfortunately, gets nothing.
At the March 25, 2010 hearing, Attorney D'Amico represented that though he had not yet received the $19,166.66 from Harleyville Insurance, he was notified that the funds had been mailed. Subsequently, D'Amico notified the court that these funds were received on April 7, 2010.
The plaintiff claims that PCI's position is patently unfair because she is unable to recover the full amount of the verdict in her favor. The plaintiff argues that, if she had been able to collect the full amount of the verdict, compensation to the plaintiff would not be an issue.
The plaintiff filed an appeal of the underlying action on July 21, 2009. The appeal has been transferred to the Supreme Court and briefs have been filed.
The issue on appeal is the following. During the course of this litigation the plaintiff, Donna Yeager, filed an offer of judgment pursuant to Practice Book § 17-14 for the amount of the defendant's policy of $300,000.00. This offer was not accepted in the time allotted. The defendant then filed a motion for an extension of time to accept the offer or in the alternative to strike the offer. The defendant's argument was that the plaintiff had not made full disclosure of the extent of her injuries and thus the defendant could not properly evaluate the offer. This court after hearing the arguments of counsel agreed with the defendant and struck the offer of judgment. The plaintiff has taken an appeal from that ruling. If the plaintiff were to prevail on appeal, the plaintiff would be entitled to statutory interest pursuant to Practice Book § 17-18.
DISCUSSION I
Section 31-293(a) states that "[i]f the employer and employee join as parties plaintiff in the action and any damages are recovered, the damages shall be so apportioned that the claim of the employer shall take precedence over that of the injured employee in the proceeds of recovery after the deduction of reasonable and necessary expenditures, including attorneys fees, incurred by the employee in effecting the recovery." (Emphasis added.) This statute goes onto to say "if the damages, after deducting the employee's expense as provided in this section, are more than sufficient to reimburse the employer, damages shall be assessed in his favor in a sum sufficient to reimburse him for his claim, and the excess shall be assessed in favor of the injured employee." Section 31-293(a).
"One of the principal purposes of § 31-293(a) is to reimburse an employer for the expenses it has incurred, on account of a workers' compensation claim, when the employee has recovered damages in a third party action in which the employer has properly intervened . . . The right of recovery of the employer is superior to the right of the employee to the proceeds of any third party claim. The two purposes served by this provision are: (1) [i]t insures that the party responsible for an injury will not benefit by payments made to the injured employee by the employer[; and] (2) [i]t denies the injured employee double compensation for the same injury." (Citation omitted; internal quotation marks omitted.) Gurliacci v. Mayer, 218 Conn. 531, 576, 590 A.2d 914 (1991)
"The legislature specifically stated in § 31-293(a) that 'damages shall be assessed' in the employer's favor, if sufficient, after deduction of the employee's expenses from the total of the award." Id., 575. "In light of the purposes of § 31-293(a), it is clear that the legislature's use of 'shall' is mandatory." Id., 576. "[T]he trial court must first deduct from the total awarded damages the plaintiff's expenditures, including attorneys fees, and then, if an excess remains, award to [the party who provided workers' compensation] the total amount of medical bills, and other relevant expenditures, that it paid for the plaintiff as workers' compensation." Id.
In this case, the compensation to each party is limited by the facts of the case. In the underlying action, the jury awarded the plaintiff $1,380,000; however, due to the limits of the defendants' insurance policy, the money paid in this action only amounts to $300,000. The plaintiff's trial court attorney received $100,000 as a fee, which represents a third of the total amount paid in this case. The parties are in agreement that $100,000 is a reasonable attorneys fee for the trial court representation the plaintiff's attorney provided. The plaintiff's attorney has also received $19,166.66 in costs. The plaintiff now, however, requests additional costs and attorneys fees totaling $42,167.94 — $9,892.55 in additional attorneys fees for appellate representation and $32,275.44 in additional costs related to the Superior Court trial."
First, with respect to appellate court fees, these fees may also be deducted as they are incurred as a result of the plaintiff "effecting the recovery." Section 31-293(a). Under the plain language of § 31-293, an intervening plaintiff may only be compensated from the awarded damages "after the deduction of reasonable and necessary expenditures, including attorneys fees, incurred by the employee in effecting the recovery . . ." (Emphasis added.) While PCI argues that it is not involved in the appeal of this action, it cannot deny that any fees incurred as a result of the appeal are derived from the plaintiff's attempt to effectuate recovery. Section 31-293 creates a statutory preference for the payment of attorneys fees first in order to avoid the situation where an attorney might refuse to litigate an action because a party has a workers' compensation lien. Knowing that the fee takes precedence over the workers' compensation lien, attorneys will not hesitate to take valid claims, which helps assure the plaintiff of her day in court. Sometimes this representation requires appellate representation. If a defendant in an underlying action appealed, the plaintiff would be required to incur appellate attorneys fees in order to maintain any judgment found in her favor. The same can be true even if the plaintiff is the one to appeal. Therefore, the deduction of additional attorneys fees for appellate representation is proper. However, because this action is currently pending before our Supreme Court, which will undoubtedly result in additional attorneys fees, the court will reserve judgment as to what the reasonable attorneys fees will ultimately be.
Second, the plaintiff has improperly raised issues of additional costs at a hearing for a motion for apportionment. Practice Book § 18-5 provides in relevant part: "(a) Except as otherwise provided in this section, costs may be taxed by the clerk in civil cases fourteen days after the filing of a written bill of costs provided that no objection is filed . . . (b) Either party may move the judicial authority for a review of the taxation by the clerk by filing a motion for review of the taxation of costs within twenty days of the issuance of the notice of taxation by the clerk."
Here, the plaintiff's costs are incorrectly before the court. The plaintiff filed a bill of costs on June 18, 2009, for 28,946.16, which was granted in the amount of $8,441.66. The plaintiff then moved for a review, and the court granted an additional $10,725. Together this totals $19,166.66, which have been sent to the plaintiff. The next record the court has on this issue is the plaintiff, at oral argument on March 25, 2010, representing that she is entitled to a total of $51,442.10 in costs and submitting a lengthy affidavit in support on April 9, 2010. First, no formal motion to review the costs taxed is before the court. Second, the plaintiff has already had one opportunity to move the court to approve her bill of costs and most of these expenses were not raised at that time. If the plaintiff had incurred costs and wished to be reimbursed for them, the bill of costs and a formal motion to review these costs was the proper way to bring these expenses to the court's attention. To the extent that any of these expenses were in the original bill of costs, the court has already ruled on them. Finally, Practice Book § 18-5 requires a motion to review to be brought within twenty days of a ruling. Even if the court treated the plaintiff's argument as its own motion, the last granting of costs was made on January 11, 2010. The plaintiff did not raise the issue of expenses to the court again until March 23, 2010, which is well beyond the twenty-day requirement. As a result, the plaintiff is limited to the $19,166.66 in costs. However, as noted above, because this action remains on appeal and more costs may be incurred in effecting the ultimate recovery in this case, the court shall reserve judgment on what additional reasonable costs may be incurred from the appeal.
Furthermore, in accordance with the language of § 31-293(a), PCI is entitled to the remaining $200,000 in satisfaction of their $235,179.97 lien. The parties are in agreement that $100,000 is a reasonable attorneys fee for the plaintiff's attorney and, as stated above, $19,166.66 is attributable from costs. PCI represented at oral argument that $19,166.66 and $100,000 were paid as the plaintiff's reasonable and necessary expenditures and attorneys fee respectively. Only $200,000 remains from the original $300,000 paid by the defendants' insurance company. Section 31-293(a) requires payment to the party who provided workers' compensation after the payment of the attorneys fees and the reasonable and necessary expenditures. The statute only permits the employee plaintiff to recover any excess. As PCI's lien exceeds the remaining amount, there is no excess to pay to the plaintiff. However, since the court is reserving judgment on the issue of what the reasonable appellate attorneys fees are, $30,000 is to remain in escrow in order to pay these fees and PCI shall receive the other $170,000.
The $19,166.66 in costs were paid separately and not from the $300,000 held in escrow.
II
Next, because the plaintiff has argued that this result is harsh, the court will address the plaintiff's four arguments against following the statute's clear apportionment requirements.
A
First, the plaintiff argues that the court should apply the make-whole doctrine. The plaintiff cites to Wasko v. Manella, 269 Conn. 527, 849 A.2d 777 (2004), and In re DeLucia, 261 B.R. 561 (Conn. 2001), to support of her proposition. The court in In re DeLucia explained that the make-whole doctrine is the principle that "absent an agreement to the contrary, an insurance company may not enforce a right to subrogation until the insured has been fully compensated for her injuries, that is . . . made whole." 261 B.R. 561, 567. However, the court explicitly stated that the make-whole doctrine is a "default common law rule." Id., 566. Because the legislature specifically enacted a statutory apportionment scheme in § 31-293, the statute will control over the default common law rule.
This analysis is further supported by Wasko, wherein the court compared an insurer's right to subrogation to collect money paid to an insured against the payment scheme of § 31-293. Wasko v. Manella, 269 Conn. 527, 849 A.2d 777 (2004). In Wasko, the plaintiff insurance company argued that it had a statutory right to bring a subrogation action and collect all monies paid to its client for the negligence of the defendant. Id., 536. The court compared the statute requiring the standard form for fire insurance to § 31-293 and noted that the language requiring the employer's claim to "take precedence over that of the injured employee in [distribution of] the proceeds of the recovery . . ." is absent in any statutory scheme governing fire insurance. Id., 537. By comparison, at common law "when the insured has sustained a loss in excess of the reimbursement by the insurer, the insured is entitled to be made whole for his entire loss . . ." Id., 537 n. 8. Because the language requiring that an employer's, or an insurer's, claim take precedence was absent from the applicable statute, the court found that the common law principles controlled.
The decision in Wasko emphasizes that the common-law scheme, commonly called the make-whole doctrine in other jurisdictions, can be overridden by statutory schemes such as § 31-293. To do otherwise would be to ignore the clear intent of our legislature and our laws. As a result, the so-called make-whole doctrine is inapplicable in the present case.
B
Second, the plaintiff argues that to the extent that § 31-293(a) requires payment to PCI, thus exhausting all damages and leaving the plaintiff with nothing, § 31-293 violates Article I § 10 of the Connecticut Constitution. In support the plaintiff cites the language of Article I that reads "[a]ll courts shall be open, and every person, for an injury done to him in his person, property or reputation, shall have remedy by due course of law, and right and justice administered without sale, denial or delay."
The plaintiff's second argument fails to account for the fact that the plaintiff has had access to our courts and to relief through the workers' compensation benefits she received. The Workers' Compensation Act "represents a complex and comprehensive statutory scheme balancing the rights and claims of the employer and the employee arising out of work-related personal injuries." (Internal quotation marks omitted.) Durniak v. August Winter Sons, Inc., 222 Conn. 775, 781, 610 A.2d 1277 (1992). "The concept underlying third party actions is the moral idea that the ultimate loss from wrongdoing should fall upon the wrongdoer . . . It is equally elementary that the claimant should not be allowed to keep the entire amount both of his or her compensation award and of the common-law damage recovery. The obvious disposition of the matter is to give the employer so much of the negligence recovery as is necessary to reimburse it for its compensation outlay, and to give the employee the [remaining amount]." (Citation omitted.) Cruz v. Montanez, 294 Conn. 357, 371, 984 A.2d 704 (2009). In this case, the plaintiff has received workers' compensation benefits to compensate her for the injuries she has suffered. While it is unfortunate that there are no funds in excess of this amount, to bypass repayment of PCI in favor of the plaintiff would destroy the careful balancing mechanisms the legislature has put in place.
C
Third, the plaintiff argues that the inability to be made whole infringes on her fundamental rights, which violates the equal protection clause of the Connecticut Constitution. "When a statute is challenged on equal protection grounds . . . the reviewing court must first determine the standard by which the challenged statute's constitutional validity will be determined. If, in distinguishing between classes, the statute either intrudes on the exercise of a fundamental right or burdens a suspect class of persons, the court will apply a strict scrutiny standard [under which] the state must demonstrate that the challenged statute is necessary to the achievement of a compelling state interest . . . If the statute does not touch upon either a fundamental right or a suspect class, its classification need only be rationally related to some legitimate government purpose in order to withstand an equal protection challenge." (Internal quotation marks omitted.) State v. Higgins, 265 Conn. 35, 65-66, 826 A.2d 1126 (2003).
The plaintiff argues that as a seriously disabled worker she is treated differently than less seriously injured workers because a less seriously injured worker would not lose his entire judgment to the party who paid workers' compensation. Furthermore, she argues that as a worker she is treated differently from non-workers to whom § 31-293 does not apply.
However, the plaintiff's argument must fail. In her opposition the plaintiff cites language from Daly v. Delponte, 225 Conn 499, 513, 624 A.2d 876 (1993), that a statute is unconstitutional if it affects a fundamental right and highlights the words fundamental right. However, the plaintiff has cited no law to indicate that recovery of an entire jury award is a fundamental right. Furthermore, while the plaintiff has attempted to make arguments that she is being treated differently, the plaintiff has failed to cite any authority that she is part of a recognized protected or suspect class. Therefore, the alleged classification, if any, need only be rationally related to some legitimate governmental purpose. While the court is not persuaded that any real classification has occurred, even if it has, such distinctions are rationally related to the government's rational purpose of balancing the interests between the employer and the employee. Thus, the plaintiff's third argument fails.
D
Fourth, the plaintiff argues that the court should apportion liability according to the percentage of the amount awarded that PCI paid such that the plaintiff will receive a percentage of her award. Essentially, using 1.3 million as 100%, the plaintiff argues that PCI should only receive 17%, which is 39,980.59, because PCI's original lien of $235,179.97 is only 17% of $1,380,000.
The plaintiff's fourth argument must fail because the plaintiff has ignored the clear policy behind § 31-293 to reimburse the employer for all of the expenses it has paid on the employee's behalf prior to paying the employee. This scheme exists "to ensure that . . . the ultimate loss [falls on] the wrongdoer . . . by allowing the employer to take action in order to recover the workers' compensation benefits [that] it was legally obligated to pay to its injured employee." (Internal quotation marks omitted.) Cruz v. Montanez, supra, 294 Conn. 371. "[Section 31-293(a)] protects an injured employee by allowing the employee to sue a third party tortfeasor in a private cause of action for damages . . . that are uncompensated by a workers' compensation award . . . [T]he employer's statutory right to subrogation of the proceeds of the employee's claim against the tortfeasor implements the public policy of preventing double recovery by an injured employee . . ." (Citation omitted.) Durniak v. August Winter Sons, Inc., supra, 222 Conn. 779-80.
To follow the plaintiff's argument forces the employer to bear the loss. While the plaintiff argues that she is bearing a loss, the plaintiff ignores the fact that she has been compensated in the amount of $235,179.97 from workers' compensation. The legislature has created a clear statutory preference for the reimbursement of the employer before any compensation to the employee and the Supreme Court has upheld this scheme. As a result, the award shall not be divided according to percentages.
CONCLUSION
For the foregoing reasons the motion for apportionment is granted. The court finds the plaintiff's attorney fees of $100,000 to be reasonable and the reasonable costs and fees have already been paid. PCI shall be compensated up to the amount of its lien with any remaining funds pursuant to Workers' Compensation Laws. The court, however, reserves judgment on the amount of reasonable attorneys fees and any additional costs incurred during the course of the appeal until the appeal in this case has been completed. Accordingly, the court orders that the sum of $30,000 shall remain in escrow until the court determines the amount of the appellate legal fees and costs, the balance of the funds being held in escrow of $170,000.00 is ordered turned over to PCI. Orders may enter accordingly.