White Elec. Co., Inc. v. Bak

COURT OF APPEALS OF VIRGINIA

Present: Judges Baker, Bray and Overton
Argued at Norfolk, Virginia

WHITE ELECTRIC COMPANY, INC.
and
STATE FARM GENERAL INSURANCE COMPANY

v. Record No. 1279-95-1 OPINION
BY JUDGE JOSEPH E. BAKER
CHARLES JOSEPH BAK, JR. MARCH 12, 1996

FROM THE VIRGINIA WORKERS' COMPENSATION COMMISSION
William J. G. Barnes (James Hall Revere, III;
Waddell & Barnes, P.C., on briefs), for
appellants.

Stephen J. Davis (Shuttleworth, Ruloff &
Giordano, P.C., on brief), for appellee.

White Electric Company, Inc. and State Farm General

Insurance Company (jointly referred to herein as employer) appeal

from a decision of the Workers' Compensation Commission

(commission) that rejected employer's motion to deny further

compensation benefits to Charles Joseph Bak, Jr. (claimant) on

the ground that claimant settled his third-party action against

Paul Ferranti (Ferranti) without notifying or obtaining

employer's agreement to the terms of the settlement. In its

opinion, the commission noted that the parties were familiar with

the facts and that it would repeat only those necessary to

explain its opinion. The facts stated in this opinion are facts

found by the commission. Although employer submits four

questions for our consideration, the determinative issue is

whether the facts are sufficient to support the commission's
decision that claimant's settlement did not deprive employer of

subrogation rights under the Workers' Compensation Act (Act). If

claimant's actions operated to deprive employer of its rights,

claimant would be barred from obtaining further compensation

benefits.

On appeal, we must view the facts in the light most

favorable to the party prevailing before the commission. Crisp

v. Brown's Tysons Corner Dodge, Inc., 1 Va. App. 503, 504, 339

S.E.2d 916, 916 (1986). The commission's opinion states that on

January 23, 1990, claimant was injured in a motor vehicle

accident with Lisa Lannigan (Lannigan). Employer denied

claimant's contention that his injuries were job-related. A

hearing was held before Deputy Commissioner Arrighi (Arrighi),

who found that claimant had suffered a temporomandibular joint

(TMJ) injury which was job-related and that employer was

responsible for compensation benefits.
When employer failed to accept responsibility for the

injuries, claimant petitioned the commission to require employer

to comply with Arrighi's finding. On August 24, 1993, another

hearing was held, this one before Deputy Commissioner Phillips

(Phillips). Phillips also ruled that the TMJ injury was

job-related and compensable. In that hearing, Dr. Michael J.

Kelley, an oral surgeon, was declared to be the treating

physician for the TMJ injury. Employer denied that claimant's

dental problems were job-related and requested a review by the

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full commission.

While the foregoing described proceedings were pending, on

January 23, 1991 claimant was involved in a motor vehicle

accident with Ferranti. The parties stipulated that the injuries

received in the Ferranti accident were not job-related; however,

in a third-party action filed against Ferranti, in his motion for

judgment, claimant alleged that as a result of Ferranti's

negligence, claimant suffered aggravation of his pre-existing TMJ

condition. In the course of that suit, claimant responded to

interrogatories propounded to him, swearing that he had presently

incurred or in the future would incur medical expenses relating

to the TMJ injury in the sum of $17,098. 1 Without notifying

employer--or seeking its agreement--claimant settled his suit

against Ferranti for $8,000.

On October 25, 1994, on employer's application, a further

hearing was held, this time before Deputy Commissioner Lahne

(Lahne). Employer contended that any condition from which

claimant suffered was caused by his failure to cooperate with

medical treatment and that claimant was barred from receiving

further compensation benefits because he settled his suit against

Ferranti without employer's knowledge or agreement. In support

of that contention, employer asserted that the medical evidence

showed that the injuries claimant incurred in the January 23,
1
The parties further stipulated that claimant had filed a
third-party action against Lannigan, asserting that Lannigan had
caused his injuries. The Lannigan suit was still pending.

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1991 accident aggravated claimant's TMJ condition, and that the

$17,908 in medical expenses claimed by claimant resulted from

this aggravation. Lahne stated that the determinative issues

were as follows:
Are the claimant's dental problems as
outlined by Dr. Hooper causally related to
the 1/23/90 work accident and its aftermath?

and

Is the claimant barred from receipt of
further compensation benefits by virtue of
his settlement of the personal injury claim
arising from his 1/23/91 accident?

Lahne found that claimant failed to meet his burden to prove

that his dental problems were job-related. Stating that this

case was controlled by Barnes v. Wise Fashions, 16 Va. App. 108,

428 S.E.2d 301 (1993), and Green v. Warwick Plumbing & Heating

Corp., 5 Va. App. 409, 364 S.E.2d 4, appeal denied, 371 S.E.2d 7

(1988), Lahne also found that claimant was barred from receiving

further benefits because of his settlement of the third-party

claim against Ferranti. Claimant appealed Lahne's opinion to the

full commission.

The commission found that, although the treating physician,

Dr. Kelley, initially found that claimant had "reaggravated his

old problem," later reports disclosed that no further treatment

was necessary after March 15, 1991. The reports also failed to

state what, if any, consequence continued beyond that date.

The commission further noted that claimant was examined by

Dr. Stanley H. Legum, a dentist, Dr. William S. Dodson, an oral

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surgeon, and Dr. Christopher A. Hooper, a dentist, and none

related claimant's condition to his January 23, 1991 accident.

Specifically, Dr. Dodson reported:
It is possible to state that the second
accident that occurred on 1/23/91 had no
influence on the left TM joint. There is no
evidence of any further displacement of the
articular disc. As stated previously the
second accident which occurred on 1/23/91 has
no influence on this case whatever as related
to any type of injury about the TM joints.

After review of the medical reports, the commission found

that City of Newport News v. Blankenship, 10 Va. App. 704, 396

S.E.2d 145 (1990), paralleled this case and held that "claimant's

exacerbation resolved in short period of time without change in

claimant's symptoms from the previous accident." We have

reviewed those reports and cannot say the commission was plainly

wrong or that the following findings by the commission are

without support in the evidence:
[W]here the employer's rights to
reimbursement for compensation or medical
care are limited, and where the compromise
settlement is sufficient to compensate the
employer and carrier for such loss, there is
no prejudice to the employer from the
unilateral settlement and benefits are not
forfeited. Blankenship, supra.
The facts in this case show that the
claimant at most suffered a transient
increase in symptoms as a result of the 1991
accident, for which he was treated by Dr.
Kelley on January 24, February 11, February
15, and March 15, 1991. The total costs of
those treatments is shown by the record to be
$140.00, which amount was more than covered
by the settlement negotiated by the claimant
and his attorneys for the 1991 accident.
Therefore, the rights of the employer to
fully recover the costs of care attributable

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 even in part to the intervening accident, and
the claimant's benefits under the Act for
treatment of the work injury are not
forfeited.

Employer argues that this case is controlled by Green and

Barnes. We disagree.

Under Code § 65.2-309, an employer is subrogated to the

rights of a claimant against a third party for sums the employer

has paid or might pay to the claimant. 2
When an employer's right to subrogation is
defeated by an employee's settlement with a
third party without the knowledge or consent
of the employer, the employee's benefits
under the Workers' Compensation Act are
terminated.

Green, 5 Va. App. at 412, 364 S.E.2d at 6 (quoting Safety-Kleen

Corp. v. Van Hoy, 225 Va. 64, 69, 300 S.E.2d 750, 753 (1983));

see Barnes, 16 Va. App. at 111, 428 S.E.2d at 302.

In each of the cases cited above, the commission resolved

conflicting evidence in favor of the employer and the Court found

credible evidence to support the commission's findings:
On appellate review, we must construe the
evidence in the light most favorable to the
party prevailing below. Factual findings by
the commission that are supported by credible
evidence are conclusive and binding upon this
Court on appeal. The existence of contrary
evidence in the record is of no consequence
if credible evidence supports the
commission's findings.

Barnes at 109, 428 S.E.2d at 301-02 (citations omitted).
2
Code § 65.2-812 places employer's insurance company in
employer's position when that company becomes liable to pay
compensation benefits to the claimant.

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Applying those principles to the case before us, Barnes and Green

may be distinguished.

We agree with the commission that the facts in Blankenship

more nearly control this case. In Blankenship, as in the case

before us, the aggravation of claimant's condition was

short-lived and insufficient to justify a finding that the

third-party settlement prejudiced employer's subrogation rights.

Moreover, the commission accepted claimant's third-party

attorney's testimony that, in the third-party action, he could

not prove the TMJ aggravation allegations asserted in the

pleadings and, therefore, was forced to accept the $8,000

settlement offer.
Whether claimant's failure to obtain medical treatment

aggravated his condition and delayed his recovery to the

prejudice of employer is a question of fact decided by the

commission adversely to employer. The record supports its

findings.

Accordingly, the decision of the commission is affirmed.
Affirmed.

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