Dion v. Batten , 248 N.C. App. 476 ( 2016 )

IN THE COURT OF APPEALS OF NORTH CAROLINA
No. COA16-63
Filed: 2 August 2016
Duplin County, No. 10 CVS 952
THOMAS DAVID DION, Plaintiff,
v.
WILLIAM ROBERT BATTEN, SR., Defendant.
Appeal by Plaintiff and Unnamed Defendants Neuwirth Motors and
Brentwood Services, Inc. from order entered 4 June 2015 by Judge W. Allen Cobb, Jr.
in Superior Court, Duplin County. Heard in the Court of Appeals 6 June 2016.
Baker & Slaughter, by H. Mitchell Baker, for Plaintiff.
Teague Campbell Dennis & Gorham, LLP, by Bruce A. Hamilton, Matthew W.
Skidmore, and Justin G. May, for Unnamed Defendants Neuwirth Motors and
Brentwood Services, Inc.
Hoof & Hughes, PLLC, by J. Bruce Hoof, for Unnamed Defendant Foremost
Insurance Company.
Hedrick, Gardner, Kincheloe & Garofalo, L.L.P., by Ellen P. Wortman, for
Unnamed Defendant Government Employees Insurance Company.
McGEE, Chief Judge.
Thomas David Dion (“Plaintiff”), Neuwirth Motors (“Neuwirth”), and
Brentwood Services, Inc. (“Brentwood”) appeal from an order determining the
DION V. BATTEN
Opinion of the Court
amount of a workers’ compensation subrogation lien on a judgment obtained by
Plaintiff against William Robert Batten, Sr. (“Defendant”). We affirm.
I. Background
Plaintiff was employed by Neuwirth as a servicing agent. In the course and
scope of his employment with Neuwirth, Plaintiff was driving on Oriole Drive in
Wilmington, North Carolina on 20 March 2008, when the vehicle he was driving was
struck by a vehicle driven by Defendant, who had failed to stop at a red light. As a
result of the crash, Plaintiff sustained multiple injuries. Because the crash occurred
during the course and scope of Plaintiff’s employment with Neuwirth, Plaintiff was
entitled to, and filed a claim for, workers’ compensation benefits pursuant to Chapter
97 of the North Carolina General Statutes. Plaintiff, Neuwirth, and Neuwirth’s
workers’ compensation servicing agent, Brentwood, agreed that Plaintiff was entitled
to $528,665.61 for injuries sustained in the crash. The agreement between Plaintiff,
Neuwirth, and Brentwood was approved by the Industrial Commission by order
entered 14 November 2012.1 Pursuant to N.C. Gen. Stat. § 97-10.2(f), Neuwirth and
Brentwood asserted a lien against any third party recovery.
In addition to the workers’ compensation claim, Plaintiff filed the present
lawsuit against Defendant on 16 November 2010, asserting a claim of negligence.
After the complaint was filed, and as permitted by N.C. Gen. Stat. § 20-279.21(b)(4),
1 The Industrial Commission’s order provided that Plaintiff’s attorney was to receive a fee of
$50,000.00, to be paid out of the total recovery.
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a trio of interested insurance companies entered the lawsuit by filing answers as
unnamed defendants: Nationwide Mutual Insurance Company (“Nationwide”);
Foremost Insurance Company (“Foremost”); and Government Employees Insurance
Company (“GEICO”). Defendant maintained a policy with Nationwide that provided
liability insurance coverage in the amount of $30,000.00, and underinsured motorist
coverage (“UIM coverage”) in the amount of $100,000.00. Plaintiff maintained
insurance policies with Foremost and GEICO that provided UIM coverage for
damages Defendant was entitled to in excess of the limits of Defendant’s Nationwide
policy.
Sometime after filing an answer to Plaintiff’s complaint, Nationwide tendered
its policy limits of $100,000.00.2 Disbursement of the funds was approved by the
Industrial Commission by order entered 9 December 2011, and provided that the
$100,000.00 would be dispersed in equal shares to: (1) Plaintiff; (2) Plaintiff’s counsel,
for attorney’s fees; and (3) Neuwirth and Brentwood. The order also stated that
“[n]othing contained in this Order shall be construed as a waiver of . . .
defendant/workers’ compensation carrier’s lien. Plaintiff and defendant/workers’
2
UIM coverage “is deemed to apply to the first dollar of an underinsured motorist coverage
claim beyond amounts paid to the claimant under the exhausted liability policy.” N.C. Gen. Stat. §
20-279.21(b)(4) (2015). The limit of UIM coverage “applicable to any claim is determined to be the
difference between the amount paid to the claimant under the exhausted policy . . . and the limit of
[UIM coverage] applicable to the motor vehicle involved in the accident.” Id. Accordingly, Nationwide
paid $30,000.00 under the “exhausted policy,” and $70,000.00 in UIM coverage, for a total of
$100,000.00.
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Opinion of the Court
compensation carrier explicitly acknowledge the defendant/workers’ compensation
carrier’s right to assert a lien against the proceeds of any additional third-party funds
paid to [P]laintiff.” Plaintiff’s insurance policies with Foremost and GEICO each
provided that either party had the option to require arbitration. Plaintiff, Foremost,
and GEICO decided to exercise that option, and the matter was referred to
arbitration. Arbitration began on 8 April 2015 and, on 13 April 2015, the arbitration
panel decided Plaintiff was entitled to recover $285,000.00 from Defendant for
personal injuries sustained in the 20 March 2008 crash.
The trial court entered the arbitration award as a judgment on 12 May 2015.
R p 36. In entering the judgment, the trial court determined that the arbitration
award “should be reduced by the amount of $100,000.00 which had previously been
paid to Plaintiff” by Nationwide. The trial court awarded interest on the full amount,
$285,000.00, from 16 November 2010, when the lawsuit was filed, to 9 December
2011, when Nationwide tendered its policy limits. The trial court also awarded
interest on the reduced amount, $185,000.00, from 10 December 2011 through 1 May
2015.
Foremost filed a motion on 4 May 2015 to determine the subrogation amount
pursuant to N.C.G.S. § 97-10.2(j), and the trial court held a hearing on Foremost’s
motion three days later. Following the hearing, the trial court entered a written order
on 4 June 2015 “determin[ing]” the appropriate amount of Neuwirth’s and
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Opinion of the Court
Brentwood’s workers’ compensation subrogation lien. The trial court concluded as a
matter of law that the
rights to, and the amount of the employers and workers[’]
compensation carrier’s lien under [N.C.G.S. §] 97-10.2 were
created by, and set forth and defined in, and are limited by
[N.C.G.S. §] 97-10.2 and specifically sub-sections (f)(1)c.
and (j)[.] . . . As that lien is a creature of statute, employers
and workers[’] compensation carriers necessarily have no
right to recover any amount of money by reason of such lien
which is greater than, or other than such amount as
provided by [N.C.G.S.] § 97-10.2(f)(1)c. and (h).
The trial court further concluded that although Neuwirth and Brentwood paid
workers’ compensation benefits to Plaintiff totaling $528,665.61, “their workers[’]
compensation subrogation lien [could not] exceed $285,000.00, that being the total
amount of the [j]udgment obtained by [Plaintiff] in this lawsuit in compensation for
his injuries.” Accordingly, the trial court found the amount of the workers’
compensation subrogation lien to be “$190,000.000, which is calculated by
subtracting attorney’s fees ($95,000.00), interest ($74,291.50) and court costs
($160.00) from the judgment amount obtained by Plaintiff [] by [j]udgment in this
lawsuit ($359,451.50).” Plaintiff, Brentwood, and Neuwirth appeal.
II. Analysis
Plaintiff, Brentwood, and Neuwirth (collectively, “Appellants”) present two
jurisdictional arguments: (1) Foremost – as a “third party,” and not an “employer” or
“employee” – lacked standing to apply for a determination of the subrogation amount;
and (2) even if Foremost did have standing, the trial court nevertheless acted outside
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Opinion of the Court
of its subject matter jurisdiction when ruling on Foremost’s motion. In the
alternative, Appellants contend the trial court: (1) misinterpreted N.C. Gen. Stat. §
97-10.2(j); (2) abused its discretion by reducing the amount of the workers’
compensation lien from the “statutory amount;” and (3) erred by failing to make
findings of fact that adequately evidenced the trial court’s consideration of a
statutorily required factor.
(A) Standing
Appellants contest Foremost’s standing to apply for a determination of the
subrogation amount. Standing “refers to whether a party has a sufficient stake in an
otherwise justiciable controversy that he or she may properly seek adjudication of the
matter.” Lee Ray Bergman Real Estate Rentals v. N.C. Fair Housing Ctr., 153 N.C.
App. 176, 179, 568 S.E.2d 883, 886 (2002) (citing Sierra Club v. Morton, 405 U.S. 727,
31 L. Ed. 2d 636 (1972)).3 “Standing is a necessary prerequisite to the court’s proper
exercise of subject matter jurisdiction.” Creek Pointe Homeowner’s Ass’n v. Happ, 146
N.C. App. 159, 164, 552 S.E.2d 220, 225 (2001), disc. review denied, 356 N.C. 161, 568
S.E.2d 191 (2002). “If a party does not have standing to bring a claim, a court has no
subject matter jurisdiction to hear the claim.” Coker v. DaimlerChrysler Corp., 172
N.C. App. 386, 391, 617 S.E.2d 306, 310 (2005) (citation omitted). Whether a party
3 While Appellants did not challenge Foremost’s standing in the trial court, “subject matter
jurisdiction exists only if a plaintiff has standing and subject matter jurisdiction can be raised at any
time in the court proceedings, including on appeal.” Village Creek Prop. Owners’ Ass’n, Inc. v. Town of
Edenton, 135 N.C. App. 482, 485 n.2, 520 S.E.2d 793, 795 n.2 (1999) (citation omitted).
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has standing is a question of law that this Court reviews de novo. Indian Rock Ass’n
v. Ball, 167 N.C. App. 648, 650, 606 S.E.2d 179, 180 (2004). “Under a de novo review,
the [C]ourt considers the matter anew and freely substitutes its own judgment for
that” of the trial court. Craig v. New Hanover Cty. Bd. of Educ., 363 N.C. 334, 337,
678 S.E.2d 351, 354 (2009) (citation and internal quotation marks omitted).
In determining whether N.C.G.S. § 97-10.2(j) confers standing upon Foremost
to apply for a determination of the subrogation amount, we begin with the text of the
statute. See Correll v. Division of Social Services, 332 N.C. 141, 144, 418 S.E.2d 232,
235 (1992) (“Statutory interpretation properly begins with an examination of the
plain words of the statute.” (citation omitted)). “When the language of a statute is
clear and unambiguous, there is no room for judicial construction, and the courts
must give it its plain and definite meaning.” Lemons v. Old Hickory Council, 322 N.C.
271, 276, 367 S.E.2d 655, 658 (1988) (citations omitted); see also State v. Wiggins, 272
N.C. 147, 153, 158 S.E.2d 37, 42 (1967) (“It is elementary that in the construction of
a statute words are to be given their plain and ordinary meaning unless the context,
or the history of the statute, requires otherwise.” (citation omitted)).
The statute at issue in this case, N.C.G.S. § 97-10.2(j), provides in relevant
part:
Notwithstanding any other subsection in this section, in
the event that a judgment is obtained by the employee in
an action against a third party, or in the event that a
settlement has been agreed upon by the employee and the
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Opinion of the Court
third party, either party may apply to the resident superior
court judge of the county in which the cause of action arose
or where the injured employee resides, or to a presiding
judge of either district, to determine the subrogation
amount.
N.C. Gen. Stat. § 97-10.2(j) (2015) (emphasis added). Considering the words as they
appear in the statute, and giving those words their plain and ordinary meaning, it is
clear that N.C.G.S. § 97-10.2(j) permits Foremost to apply for a determination of the
subrogation amount. The statute provides that when an “employee” – such as
Plaintiff – obtains a judgment against, or arrives at a settlement with, a “third party,”
then “either party may apply . . . to determine the subrogation amount.” Id. Under
subsection (j), either the “employee” or the “third party” may apply for a
determination of the subrogation amount. Thus, whether Foremost could apply for a
determination of the subrogation amount turns on whether it was a “third party” as
that term is used in the statute.
Subsection (a) of the same statute confirms that Foremost is, indeed, a “third
party” with standing to make the motion. Subsection (a) describes who qualifies as a
“third party”:
The right to compensation and other benefits under this
Article for disability, disfigurement, or death shall not be
affected by the fact that the injury or death was caused
under circumstances creating a liability in some person
other than the employer to pay damages therefor, such
person hereinafter being referred to as the “third party.”
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Opinion of the Court
N.C. Gen. Stat. § 97-10.2(a) (2015). Foremost, as the underinsured motorist carrier
liable for payment of damages for the injuries Defendant caused Plaintiff, meets that
statutory definition. See Levasseur v. Lowery, 139 N.C. App. 235, 238, 533 S.E.2d
511, 513-14 (2000) (noting that “under N.C. Gen. Stat. § 97-10.2, payments made by
the UIM carrier as well as the tort-feasor are from a ‘third party’” (citation omitted));
Creed v. R.G. Swaim and Son, Inc., 123 N.C. App. 124, 128-29, 472 S.E.2d 213, 216
(1996) (same). This reading of N.C.G.S. §§ 97-10.2(a) and (j) is reinforced by N.C.
Gen. Stat. § 20-279.21(b)(4), which provides that underinsured motorist insurers
“shall have the right to appear in defense of the claim without being named as a party
therein, and without being named as a party may participate in the suit as fully as if
it were a party.” N.C. Gen. Stat. § 20-279.21(b)(4) (2015).
Appellants contend this reading of the statutory text is foreclosed by this
Court’s decision in Easter-Rozzelle v. City of Charlotte, ___ N.C. App. ___, 780 S.E.2d
244 (2015). Specifically, Appellants point to the following excerpt from Easter-
Rozzelle:
Pursuant to subsection (j) of [N.C. Gen. Stat. § 97-10.2],
following the employee’s settlement with the third party,
either the employee or the employer may apply to a superior
court judge to determine the subrogation amount. N.C.
Gen. Stat. § 97-10.2(j) (2013). “After notice to the employer
and the insurance carrier, after an opportunity to be heard
by all interested parties, and with or without the consent
of the employer, the judge shall determine, in his
discretion, the amount, if any, of the employer’s lien.”
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Easter-Rozzelle, ___ N.C. App. at ___, 780 S.E.2d at 248 (emphasis added). We agree
that this quotation, standing alone, appears to provide that only an “employer” or an
“employee” – but not a “third party” – may move to determine the subrogation
amount. It is well settled that “[w]here a panel of the Court of Appeals has decided
the same issue, albeit in a different case, a subsequent panel of the same court is
bound by that precedent, unless it has been overturned by a higher court.” In the
Matter of Appeal from Civil Penalty, 324 N.C. 373, 384, 379 S.E.2d 30, 37 (1989).
However, it is equally well settled that “[l]anguage in an opinion not necessary
to the decision is obiter dictum and later decisions are not bound thereby.” Trustees
of Rowan Tech. v. Hammond Assoc., 313 N.C. 230, 242, 328 S.E.2d 274, 281 (1985)
(citations omitted); see also Baker v. Smith, 224 N.C. App. 423, 431 n.5, 737 S.E.2d
144, 149 n.5 (2012).
Our Supreme Court has stressed: “[I]t is a maxim not to be
disregarded, that general expressions in every opinion are
to be taken in connection with the case in which those
expressions are used. If they go beyond the case, they may
be respected, but ought not to control the judgment in a
subsequent suit where the very point is presented for
decision.”
MLC Auto., LLC v. Town of Southern Pines, 207 N.C. App. 555, 564, 702 S.E.2d 68,
75 (2010) (quoting State v. Jackson, 353 N.C. 495, 500, 546 S.E.2d 570, 573 (2001)).
An examination of Easter-Rozelle reveals that the quote Appellant’s urge us to
follow is obiter dictum. Easter-Rozelle involved the question of whether an employee,
injured during the course and scope of his employment, could seek worker’s
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Opinion of the Court
compensation benefits after he had settled a personal injury claim with a third-party
tortfeasor without the employer’s or the Industrial Commission’s knowledge or
consent. Easter-Rozelle, ___ N.C. App. at ___, 780 S.E.2d at 246-50. Which parties
had standing to apply for a determination of the subrogation amount was not a
question presented for adjudication in Easter-Rozelle. See id.
In the present case, by contrast, Plaintiff properly filed for workers’
compensation benefits, and received the Industrial Commission’s approval for
disbursement of third party funds. And, unlike in Easter-Rozelle, the standing issue
is squarely presented for adjudication in the case now before us. Accordingly, we find
the above-quoted passage from Easter-Rozelle to be obiter dictum, by which we are
not bound. We do not lightly disregard any statement in a prior published opinion of
this Court. However, applying fundamental principles of statutory construction,
discussed above, we hold that N.C.G.S. § 97-10.2(j) confers standing upon Foremost,
as a “third party,” to apply for a determination of the subrogation amount.
(B) Subject Matter Jurisdiction
Appellants argue that, notwithstanding Foremost’s standing to move for a
determination of the subrogation amount, the trial court lacked subject matter
jurisdiction to rule on Foremost’s motion. Appellants contend the amount of the
workers’ compensation lien is statutorily set and, thus, the trial court has extremely
circumscribed ability to reduce the amount of the lien. Subject matter jurisdiction
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Opinion of the Court
refers to a court’s “power to pass on the merits of the case,” Boyles v. Boyles, 308 N.C.
488, 491, 302 S.E.2d 790, 793 (1983), and is “conferred upon the courts by either the
North Carolina Constitution or by statute.” Dare Cnty. v. N.C. Dep’t of Ins., 207 N.C.
App. 600, 610, 701 S.E.2d 368, 375 (2010) (citation and quotation marks omitted).
Whether a trial court has subject matter jurisdiction is a question of law, which is
reviewed de novo on appeal. Phillips v. Orange County Health Dep’t, ___ N.C. App.
___, ___, 765 S.E.2d 811, 815 (2014).
In the present case, the relevant statute provides that if: (1) a judgment is
obtained by the employee in an action against a third party; or (2) a settlement has
been agreed upon by the employee and the third party,
either party may apply to the resident superior court judge
of the county in which the cause of action arose or where
the injured employee resides, or to a presiding judge of
either district, to determine the subrogation amount. After
notice to the employer and the insurance carrier, after an
opportunity to be heard by all interested parties, and with
or without the consent of the employer, the judge shall
determine, in his discretion, the amount, if any, of the
employer’s lien[.]
N.C.G.S. § 97-10.2(j) (emphasis added). In the present case, a judgment was obtained
by Plaintiff against Defendant, and Foremost applied – as it was entitled, see supra
at 5-11 – for a determination of the subrogation amount. Under the plain language
of the statute, the authority of the trial court was triggered, allowing it to exercise
discretion in determining the subrogation amount. Therefore, the trial court
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Opinion of the Court
possessed subject matter jurisdiction pursuant to N.C.G.S. § 97-10.2(j) to determine
the subrogation amount.
Appellants ask us to draw a distinction between “determining” the amount of
a subrogation lien – which, in their view, a trial court lacks subject matter jurisdiction
over because the amount of the lien is statutorily set – and “reducing” or “eliminating”
the lien – over which, according to Appellants, a trial court possesses subject matter
jurisdiction, but only in a limited set of circumstances. We find no support for this
argument in the text of N.C.G.S. § 97-10.2(j) or this Court’s precedent.
N.C.G.S. § 97-10.2(j) itself uses the word “determine,” and states that, after a
proper party has applied to a judge “to determine the subrogation amount,” the judge
“shall determine, in his discretion, the amount, if any, of the employer’s lien.”
N.C.G.S. § 97-10.2(j) (emphases supplied). It is true, as Appellants note, that cases
from this Court have used an assortment of verbs, sometimes in the same case, to
describe the trial court’s powers under N.C.G.S. § 97-10.2(j). See, e.g., Alston v. Fed.
Express Corp., 200 N.C. App. 420, 424-25, 684 S.E.2d 705, 708 (2009) (stating the
trial court has discretion under N.C.G.S. § 97-10.2(j) to “adjust” the amount of a
workers’ compensation lien”); Childress v. Fluor Daniel, Inc., 172 N.C. App. 166, 168-
69, 615 S.E.2d 868, 869-70 (2005) (stating an employer’s lien on third party recovery
can be “reduced or eliminated” pursuant to N.C.G.S. § 97-10.2); id. at 169, 615 S.E.2d
at 870 (noting that N.C.G.S. § 97-10.2(j) explicitly gives the trial court jurisdiction to
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Opinion of the Court
“set” the amount of the workers’ compensation subrogation lien). However, cases
from this Court and our Supreme Court have also used “determine,” the statutory
term. Johnson v. Southern Industrial Constructors, 347 N.C. 530, 535, 495 S.E.2d
356, 358 (1998); Hieb v. Lowery, 344 N.C. 403, 409, 474 S.E.2d 323, 326 (1996); Holden
v. Boone, 153 N.C. App. 254, 259, 569 S.E.2d 711, 714 (2002); Levasseur, 139 N.C.
App. at 238, 533 S.E.2d at 513-14. Given use of the term “determine” by both
appellate courts to describe the trial court’s powers under N.C.G.S. § 97-10.2(j), and
use of that term by the General Assembly in drafting N.C.G.S. § 97-10.2(j), we decline
to draw an unyielding distinction between “reducing” or “eliminating” a workers’
compensation subrogation lien, and “determining” the amount of such a lien.
Pursuant to N.C.G.S. § 97-10.2(j), the trial court possessed subject matter jurisdiction
to rule on Foremost’s application to “determine” the subrogation amount.
C. Interpretation of N.C.G.S. § 97-10.2
Appellants argue the trial court erred in its interpretation of N.C.G.S. § 97-
10.2. They contend the trial court miscalculated the statutory amount of a workers’
compensation subrogation lien, and erred by concluding that a workers’ compensation
lien cannot exceed the amount of proceeds recovered against the third party
tortfeasor. We review the trial court’s statutory interpretation de novo. A&F
Trademark, Inc. v. Tolson, 167 N.C. App. 150, 153, 605 S.E.2d 187, 190 (2004)
(citations omitted). Statutory interpretation begins with the plain meaning of the
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Opinion of the Court
words of the statute. Radzisz v. Harley Davidson of Metrolina, 346 N.C. 84, 89, 484
S.E.2d 566, 569 (1997) (citation omitted).
The present case involves a situation in which the amount paid by the
employee and its workers’ compensation servicing agent is much greater than the
amount of the third party recovery; while Neuwirth and Brentwood paid $528,665.61
in workers’ compensation benefits, Plaintiff was awarded a substantially smaller
sum, $285,000.00, in his third party suit against Defendant. Appellants argue that
the amount of the lien may exceed the amount of proceeds recovered against a third
party tortfeasor. We disagree.
N.C.G.S. § 97-10.2 provides, as relevant to this argument:
(f)(1) . . .if an award final in nature in favor of the
employee has been entered by the Industrial
Commission, then any amount obtained by any
person by settlement with, judgment against,
or otherwise from the third party by reason of
such injury or death shall be disbursed by
order of the Industrial Commission for the
following purposes and in the following order
of priority:
...
c. Third to the reimbursement of the
employer for all benefits by way of
compensation or medical compensation
expense paid or to be paid by the
employer under award of the Industrial
Commission.
...
(h) In any . . . settlement with the third party,
every party to the claim for compensation shall have a lien
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Opinion of the Court
to the extent of his interest under (f) hereof upon any
payment made by the third party by reason of such
injury . . . and such lien may be enforced against any person
receiving such funds.
N.C.G.S. §§ 97-10.2(f)(1), (h) (emphasis added). A reading of N.C.G.S. §§ 97-10.2(f)(1)
and (h) confirms that the amount of a workers’ compensation subrogation lien cannot
exceed the amount of proceeds recovered from third party tortfeasors. N.C.G.S. §97-
10.2(h) gives an employer who has paid workers’ compensation benefits a “lien to the
extent of his interest under (f) hereof upon any payment made by the third party[.]”
N.C.G.S. § 97-10.2(h) (emphasis added). N.C.G.S. § 97-10.2(f)(1), in turn, states that
the only funds subject to the lien are the “amount obtained . . . from the third party[.]”
Intuitively, the Industrial Commission cannot disburse, and the employer cannot
have a lien on, an amount larger than the amount actually recovered from the third
party tortfeasor, in this case $285,000.00. See also Grant Constr. Co. v. McRae, 146
N.C. App. 370, 374, 553 S.E.2d 89, 91-92 (2001) (“If [an] employee is injured by a third
party, the non-negligent employer must still pay workers’ compensation benefits, but
can claim a subrogation lien on any proceeds the employee wins in a subsequent
lawsuit against the third party.” (emphasis added) (citation omitted)); George L.
Simpson, III, North Carolina Uninsured and Underinsured Motorist Insurance § 1:12
n.4 (2015-16 ed.) (noting that N.C.G.S. §§ 97-1 et seq. “gives the employer and its
workers’ compensation insurer a lien on payments made to the injured employee by
any third-party tortfeasor, to the extent of the workers’ compensation benefits paid
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to the employee. (emphasis added)). Accordingly, we hold that where the amount of
workers’ compensation benefits paid by the employer and their servicing agent to an
employee is greater than all amounts obtained by the employee from a third party
tortfeasor, the amount of the workers’ compensation lien is equal to the amount of
the judgment, and shall be disbursed pursuant to N.C.G.S. § 97-10.2.
D. Abuse of Discretion
Appellants next argue the trial court abused its discretion in determining the
amount of the workers’ compensation subrogation lien to be $190,000.00. N.C.G.S. §
97-10.2(j) “grants the trial court discretion to determine the amount of a workers’
compensation lien and the trial court’s decision is reviewed on appeal under an abuse
of discretion standard.” Kingston v. Lyon Constr., Inc., 207 N.C. App. 703, 711, 701
S.E.2d 348, 354 (2010) (citation omitted). “In exercising its discretion, the trial court
is to make a reasoned choice, a judicial value judgment, which is factually supported
by findings of fact and conclusions of law sufficient to provide for meaningful
appellate review.” Id. (quotation marks, ellipses, and citation omitted).
In its order determining the amount of Neuwirth’s and Brentwood’s workers’
compensation subrogation lien, the trial court made fourteen findings of fact cogently
identifying the parties and explaining the proceedings, both in this case and in the
workers’ compensation case between Plaintiff, Neuwirth, and Brentwood. The trial
court then made eleven conclusions of law that demonstrate its thorough
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consideration of the necessary statutory factors. Beginning with the amount of the
judgment – $285,000.00 – the trial court correctly identified that court costs,
attorney’s fees, and interest are not subject to the workers’ compensation subrogation
lien. See N.C.G.S. § 97-10.2(f)(1)a.–b. (providing that a judgment against a third
party tortfeasor “shall be disbursed” first to the “payment of actual court costs” and
second to the payment of the “fee of the attorney representing the person making
settlement or obtaining judgment”); Bartell v. Sawyer, 132 N.C. App. 484, 486, 512
S.E.2d 93, 94 (1999) (holding that a workers’ compensation lien holder is not entitled
to “a pro-rata share of the pre-judgment interest [a] plaintiff received on his third
party recovery”).
Nevertheless, Appellants argue that the trial court abused its discretion by
determining the workers’ compensation subrogation lien was $190,000.00, because
doing so “effectively releas[ed] Foremost and GEICO from liability[.]” We do not
agree. Foremost and GEICO contractually obligated themselves to provide Plaintiff
with UIM coverage in satisfaction of the judgment obtained against Defendant. The
arbitration panel decided Plaintiff was entitled to $285,000.00 in compensation for
injuries he sustained – not $528,665.61. The trial court – in accordance with N.C.G.S.
§§ 97-10.2(f)(1)-2) and Bartell – then excluded court costs, attorney’s fees, and interest
from the amount of the judgment, and determined the amount of Neuwirth’s and
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Opinion of the Court
Brentwood’s workers’ compensation subrogation lien to be $190,000.00. The trial
court did not abuse its discretion in doing so.
E. Sufficiency of the Trial Court’s Findings of Facts
Finally, Appellants argue the trial court failed to make statutorily-required
findings of fact in its 4 June 2015 order. Alleged violation of a statutory mandate
presents a question of law, which we review de novo on appeal. See Brown v. Flowe,
349 N.C. 520, 523, 507 S.E.2d 894, 896 (1998). N.C.G.S. § 97-10.2(j) provides in
relevant part:
After notice to the employer and the insurance carrier,
after an opportunity to be heard by all interested parties,
and with or without the consent of the employer, the judge
shall determine, in his discretion, the amount, if any, of the
employer’s lien, whether based on accrued or prospective
workers’ compensation benefits, and the amount of cost of
the third-party litigation to be shared between the employee
and employer. The judge shall consider the anticipated
amount of prospective compensation the employer or
workers’ compensation carrier is likely to pay to the
employee in the future, the net recovery to plaintiff, the
likelihood of the plaintiff prevailing at trial or on appeal,
the need for finality in the litigation, and any other factors
the court deems just and reasonable, in determining the
appropriate amount of the employer’s lien.
N.C.G.S. § 97-10.2(j) (emphasis added). Appellants contend that N.C.G.S. § 97-10.2(j)
mandates a finding by the trial court regarding the “amount of costs of the third-
party litigation to be shared between the employee and employer” (the “cost sharing
consideration”), and that, in the present case, the trial court’s order is incomplete for
failing to make any findings of fact regarding the cost sharing consideration. While
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Opinion of the Court
we agree with Appellants that, under our precedents, an order must contain a finding
of fact regarding the cost of the third party litigation to be shared between the
employee and employer, we conclude that the trial court’s order in the present case
adequately addressed this required consideration.
Subsection (j) consists of four sentences; the second and third sentences
(quoted above) are relevant to this argument. Whether N.C.G.S. § 97-10.2(j) requires
findings of fact regarding the cost of third-party litigation to be shared between an
employer and employee was squarely addressed by this Court in In re Estate of
Bullock, 188 N.C. App. 518, 655 S.E.2d 869 (2008). In Bullock, this Court quoted the
second and third sentences of subsection (j), and held that “it is clear from the use of
the words ‘shall’ and ‘and’ in subsection (j), that the trial court must, at a minimum,
consider the factors that are expressly listed in the statute. Otherwise, such words
are rendered meaningless.” 188 N.C. App. at 526, 655 S.E.2d at 874. The Court then
went on to describe “the cost of litigation to be shared between [employee] and
[employer]” as a “mandated statutory factor[],” and faulted the trial court in that case
for not making a finding nor giving “any indication” that the factor was “considered.”
Id. In accord with Bullock, a trial court determining the amount of a workers’
compensation subrogation lien is required, at a minimum, to take into consideration
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DION V. BATTEN
Opinion of the Court
the cost of the third party litigation to be shared between the employee and
employer.4
In the present case, we conclude that the trial court’s order gives sufficient
indication that the “mandatory statutory factor” regarding the cost of the third party
litigation to be shared between the employee and employer was considered. The trial
court’s order notes that: (1) the arbitration panel found that Plaintiff was entitled to
recover $285,000.00 against Defendant; (2) the court costs were $160.00; (3) Plaintiff’s
attorney’s fees as of the date of the order totaled $83,333.33 – $50,000.00 of which is
attributed to work done as part of the workers’ compensation case, and the other
$33,333.33 originating from Nationwide’s payment of $100,000.00 in the third-party
litigation; (4) Plaintiff’s attorney’s fee agreement with Plaintiff “relative to the civil
action is one third (1/3) of the amount paid on the judgment in this case, after
litigation expenses and costs are paid;” and (5) the “workers[’] compensation carrier
intend[ed] to allow [Plaintiff’s attorney] to recover his agreed upon attorney fee
and . . . exclude[d] that attorney fee from the amount of the Employer/Workers[’]
Compensation carrier’s subrogation lien.”
4 In its brief, GEICO contends a plain reading of N.C.G.S. § 97-10.2(j) shows there is no such
requirement, and urges this Court to disregard cases which hold to the contrary. Of course, “[w]e have
no authority to overrule this Court’s prior decision” in Bullock. Wells v. Cumberland Cty. Hosp. Sys.,
Inc., 181 N.C. App. 590, 593, 640 S.E.2d 400, 403 (2007); see also In the Matter of Appeal from Civil
Penalty, 324 N.C. at 384, 379 S.E.2d at 37. We therefore decline GEICO’s invitation to do so.
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DION V. BATTEN
Opinion of the Court
In its order, the trial court considered the amount Plaintiff and his attorney
had received, and would receive in the future, as a result of the third party litigation;
took into account the court costs that had been paid; and noted that Neuwirth and
Brentwood intended to exclude Plaintiff’s attorney’s fees from the amount of the
workers’ compensation subrogation lien. Taken together, these findings of fact are
sufficient to show that the trial court considered “the amount of cost of the third-party
litigation to be shared between the employee and employer.” N.C.G.S. § 97-10.2(j); see
also Bullock, 188 N.C. App. at 526, 655 S.E.2d at 874.
III. Conclusion
For the reasons stated, Foremost had standing to apply for a determination of
the subrogation amount, and the trial court possessed subject matter jurisdiction to
determine the amount. The trial court’s 4 June 2015 order determining the amount
of Neuwirth’s and Brentwood’s workers’ compensation subrogation lien is affirmed.
AFFIRMED.
Judges HUNTER JR. and DILLON concur.
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