Present: All the Justices
THELMA E. HAWKINS
OPINION BY JUSTICE A. CHRISTIAN COMPTON
v. Record No. 971154 February 27, 1998
COMMONWEALTH OF VIRGINIA/
SOUTHSIDE VIRGINIA TRAINING CENTER
FROM THE CIRCUIT COURT OF THE CITY OF PETERSBURG
James F. D’Alton, Jr., Judge
In this appeal, we construe Code § 65.2-313, a statute
added in 1994 to the Virginia Workers’ Compensation Act, Code
§§ 65.2-100 through –1310. We consider whether a circuit court,
and not the Workers’ Compensation Commission, in ruling upon an
employer’s petition for reimbursement of compensation benefits
paid, has jurisdiction to decide the amount of an employee’s
future benefits, when the employee has recovered from a third-
party tortfeasor a sum greater than the amount of the past
benefits.
On February 7, 1994, appellant Thelma E. Hawkins, the
employee, sustained a compensable back injury in an industrial
accident while working for the Commonwealth of Virginia at the
Southside Virginia Training Center located in Dinwiddie County.
She sustained a herniated cervical disk that damaged her spinal
cord. Pursuant to a memorandum of agreement between the
employee and the employer, the Commission entered an award under
the Act in December 1994 for payment of temporary total
disability benefits, the reasonable cost of medical care, and
attorney’s fees.
In February 1995, the employee filed an action for damages
in the court below against a number of physicians who “attended”
or treated her following the accident. She alleged the
defendants had been guilty of medical negligence for, among
other things, failing to timely diagnose and appropriately treat
the spinal cord injury that caused her present condition of
quadriplegia.
In July 1996, while the action was pending, the employer
filed the petition that generated the present dispute.
Proceeding pursuant to Code § 65.2-310, the employer alleged
that it had paid “indemnification benefits” to the plaintiff-
employee pursuant to the Act and had “incurred expenses for
medical bills arising out of the incident which is the subject
of the [pending] action” totalling $229,150 on the date the
petition was filed. The employer further alleged that it was
entitled to recover the amount it had already paid the
plaintiff-employee, including both compensation benefits and
medical expenses, “should this case proceed to judgment for the
plaintiff or settlement.”
The employer asked the court to enter an order requiring
the parties to “ascertain the amount of compensation paid and
expenses for medical, surgical and hospital attention and
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supplies incurred by the employer” under the Act. The employer
also asked the court to require “the judgment debtor to pay such
compensation and expenses,” less the employer’s “share of
expenses and attorney’s fees, so ascertained by the court, out
of the amount of the judgment” or settlement, as provided in
§ 65.2-310.
The malpractice action was settled for $850,000. In the
August 1996 order dismissing the action, the court retained
“jurisdiction over the issue of the Employer’s lien herein
asserted.” Reciting that the employee and the Commonwealth-
employer “dispute the validity of the asserted lien and the
amount thereof," the court ordered the sum of $230,000 withheld
from the settlement proceeds “until such time as the issues
relating to the amount, and extent, if any, of any lien claimed
by” the employer were resolved by the court.
Upon consideration of deposition testimony, documentary
evidence, and argument of counsel, the trial court entered the
March 1997 order from which we awarded the employee this appeal.
The order provides: “[T]he Court finds that the Commonwealth’s
lien amounts to $127,948.00 for medical expenses and the
Commonwealth is not entitled to any lien for indemnity paid
through July 6, 1996. The Court finds that the Commonwealth’s
proportionate share of attorney’s fees and costs is 31.7%.”
The order further provides that the employee reimburse the
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Commonwealth the foregoing sum less $40,559.52 for the
Commonwealth’s proportionate share of attorney’s fees and costs
in the third-party action, for a net payment of $87,388.48. On
appeal, there is no dispute over these provisions.
The following sentence of the order is the subject of this
controversy: “The Court further finds that the Commonwealth is
entitled to a credit equivalent to 68.3% of (1) indemnity
benefits paid after August 27, 1996, and (2) a credit equivalent
to 68.3% of all medical expenses accrued after July 6, 1996,
until such time as these indemnity benefits and medical expenses
total $493,162.00.”
On appeal, the employee presents the following questions.
First, “Where the employer’s petition sought a determination
under § 65.2-310 of the amount of its lien based upon
$229,150.00 in payments through July 6, 1996, did the trial
court have jurisdiction to decide the worker’s continuing
compensation benefits arising after July 6, 1996 under” the Act?
Second, “Assuming the trial court had jurisdiction to
decide the claimant’s rights after July 6, 1996, did the
Commonwealth bear its burden of proving the extent to which
third-party medical negligence increased its indemnity
liability?”
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Resolution of the first question is dispositive of this
appeal. Therefore, we shall not address further the second
question.
Several statutes within the Act are relevant here. Code
§ 65.2-700 deals with the jurisdiction of the Workers’
Compensation Commission and specifies:
“All questions arising under this title, if not
settled by agreements of the parties interested
therein with the approval of the Commission, shall be
determined by the Commission, except as otherwise
herein provided.”
Code § 65.2-310, under which the Commonwealth proceeded in
this case, furnishes protection to an employer when an employee
sues third parties and provides as pertinent:
“In any action by an employee . . . against any person
other than the employer, the court shall, on petition
. . . of the employer at any time prior to verdict,
ascertain the amount of compensation paid and expenses
for medical, surgical and hospital attention and
supplies . . . incurred by the employer under the
provisions of this title and deduct therefrom a
proportionate share of such amounts as are paid by the
plaintiff for reasonable expenses and attorney’s fees
as provided in § 65.2-311; and, in event of judgment
against such person other than the employer, the court
shall in its order require that the judgment debtor
pay such compensation and expenses of the employer,
less said share of expenses and attorney’s fees, so
ascertained by the court out of the amount of the
judgment, so far as sufficient, and the balance, if
any, to the judgment creditor.”
Code § 65.2-311 apportions attorney’s fees and expenses
between the employer and employee in an action under § 65.2-310
and provides as pertinent:
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“In any action, or claim for damages, by an
employee . . . against any person other than the
employer, . . . if a recovery is effected, either by
judgment or voluntary settlement, the reasonable
expenses and reasonable attorney’s fees of such
claimant[] shall be apportioned pro rata between the
employer and the employee . . . as their respective
interests may appear.”
In 1994, the General Assembly adopted Code § 65.2-313, the
statute that is at the center of this dispute. Acts 1994, ch.
586. As pertinent, the statute provides:
“In any action or claim for damages by an employee
. . . against any person other than the employer under
§ 65.2-310, . . . if a recovery is effected, the
employer shall pay to the employee a percentage of
each further entitlement as it is submitted equal to
the ratio the total attorney's fees and costs bear to
the total third-party recovery until such time as the
accrued post-recovery entitlement equals that sum
which is the difference between the gross recovery and
the employer’s compensation lien. In ordering
payments under this section, the Commission shall take
into account any apportionment made pursuant to
§ 65.2-311.
For the purposes of this section, ‘entitlement’
means compensation and expenses for medical, surgical
and hospital attention and funeral expenses to which
the claimant is entitled under the provisions of this
title, which entitlements are related to the injury
for which the third-party recovery was effected.”
On appeal, the Attorney General, urging affirmance, refers
to § 65.2-313 and notes it applies to “any action” under § 65.2-
310. Thus, he argues, because the matter was pending in the
circuit court upon the employer’s petition, “there can be no
question that this matter arose in an action under § 65.2-310,”
and that the circuit court had jurisdiction.
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The Attorney General insists that “the plain language” of
§§ 65.2-310 and –313 does not limit a circuit court’s authority
“to considering only those events occurring on or before the
date of the petition.” He points out that § 65.2-310 states
“the court shall” ascertain the amount of “compensation paid”
and “expenses . . . incurred.” He says this language shows “a
circuit court’s jurisdiction is continuing in nature,
encompassing all compensation paid and expenses incurred” under
the Act.
Continuing, the Attorney General contends the second
sentence of § 65.2-313 additionally “provides direction to the
Commission, requiring that when the Commission is ordering
payments under § 65.2-313, it shall follow the apportionment
previously made pursuant to § 65.2-311.” He maintains that if
the General Assembly meant the Commission to have exclusive
jurisdiction “for such determinations,” the first sentence of
§ 65.2-313 “would have explicitly stated ‘the Commission shall,’
as was done in the second sentence.”
We do not agree with the Attorney General. Before we
proceed to construe § 65.2-313, we shall review the state of the
law, relevant to the issue presented, at the time of the
statute’s 1994 enactment.
In Circuit City Stores, Inc. v. Bower, 243 Va. 183, 413
S.E.2d 55 (1992), this Court upheld a trial court’s
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apportionment of attorney’s fees and expenses under the Act with
respect to a death claim when the employee had recovered from
third-party tortfeasors. The Court stated that former Code
§ 65.1-42 (now § 65.2-310) “requires the trial court to consider
only amounts actually paid by the employer in fixing the amount
of the employer’s lien,” but that the statute “does not restrict
the trial court’s consideration to amounts actually paid in
apportioning the attorney’s fees.” Id. at 188, 413 S.E.2d at
57. Thus, the Court approved apportionment of attorney’s fees
and expenses based on the entire amount of a fixed 500-week
award.
In Bohle v. Henrico County Sch. Bd., 246 Va. 30, 431 S.E.2d
36 (1993), the Court considered the method to be used for
apportioning attorney’s fees and expenses under the Act when
payment of compensation benefits to an injured employee had been
suspended following a settlement between the employee and a
third-party tortfeasor. The Court adopted the approach used by
the Commission, that is, “once the employee’s net third-party
recovery is determined, the employee will be entitled to payment
of no further compensation or medical expenses subsequent to the
date fixed in the suspension order until the employee can
establish that further benefit entitlements exceed the net
amount received by the employee from the third-party recovery.”
Id. at 35, 431 S.E.2d at 39. We said, however, that “the
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Commission has not foreclosed the payment of attorney’s fees in
increments as medical expenses and compensation benefits accrue
during the suspension period.” Id.
Against this background and addressing the interests of
employees and employers following a third-party recovery, the
1994 General Assembly acted by adopting legislation codified as
§ 65.2-313.
The Act (introduced as House Bill 1279) is not a model of
clarity. For an article describing the drafting of House Bill
1279, see Louis D. Snesil, Prorating the Costs of a Third-Party
Recovery, The Journal of the Virginia Trial Lawyers Association,
Summer 1994, at 26, 28 (“The final version of this statute was
hammered out hurriedly by representatives of the compensation
carriers and VTLA during a subcommittee meeting of the Senate
Commerce and Labor Committee”).
Thus, in construing the act we shall look first to its
title. A title may be read in an attempt to ascertain an act’s
purpose, though it is no part of the act itself. Miller v.
Commonwealth, 180 Va. 36, 41, 21 S.E.2d 721, 723 (1942). The
title reads: “An Act to amend the Code of Virginia by adding in
Chapter 3 of Title 65.2 a section numbered 65.2-313, relating to
workers’ compensation; suspension of benefits following recovery
from third party.” Acts 1994, ch. 586.
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Considering the title of the act together with the text of
the statute, we conclude that § 65.2-313 contemplates a
situation where there has been a suspension of benefits, as in
Bohle, after the employee has recovered from a third-party
tortfeasor a sum larger than the total of the past payments of
benefits. We cannot determine from this record whether benefits
have been suspended in this case. Nevertheless, that
circumstance does not materially impact the jurisdictional
question.
Turning to the statute, we note that nowhere is the word
“court” used. Nonetheless, the legislature clearly intended for
a circuit court to have jurisdiction because the opening clause
refers to an “action” under § 65.2-310, which does authorize
“the court” to proceed. The crucial issue then becomes: How
far does the court’s jurisdiction extend under § 65.2-313?
We hold that the circuit court’s jurisdiction extends only
to the point where it determines the amount of compensation
benefits, as opposed to attorney’s fees and costs, actually paid
by the employer. This is confirmed by use of the past tense in
§ 65.2-310, “incurred by the employer,” and by this Court’s
statement in Bower that the predecessor to § 65.2-310 “requires
the trial court to consider only amounts actually paid by the
employer in fixing the amount of the employer’s lien.” 243 Va.
at 188, 413 S.E.2d at 57.
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We further hold that § 65.2-313 permits the circuit court
to apportion attorney’s fees and costs based on the amount of
benefits paid in the past, and benefits to be paid in the future
until, in the language of § 65.2-313, “the accrued post-recovery
entitlement equals that sum which is the difference between the
gross recovery and the employer’s compensation lien.” This is
consistent with the Court’s statement in Bower that the
precedessor to § 65.2-310 “does not restrict the trial court’s
consideration to amounts actually paid in apportioning the
attorney’s fees.” 243 Va. at 188, 413 S.E.2d at 57.
This construction comports with the structure of § 65.2-
313, which, in the first sentence, sets forth the formula for
computing the amount the employer “shall pay,” and refers, in
the second sentence, to the Commission “ordering payments” – the
court sets the apportionment percentage and the Commission
orders the amount of the future payments taking “into account”
the apportionment percentage.
Stated differently, and incorporating the statutory
language, the employer is liable for payment “of each further
entitlement as it is submitted” based upon a percentage “equal
to the ratio the total attorney’s fees and costs bear to the
total third-party recovery” until the time when “the accrued
post-recovery entitlement equals that sum which is the
difference between the gross recovery and the employer’s
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compensation lien.” When the circuit court has fixed that
percentage and has determined the amount of the lien for payment
of past benefits, the Commission enters the picture and orders
the appropriate payments to be made, taking into account the
apportionment percentage fixed by the court. See Eghbal v.
Boston Coach Corp., 23 Va. App. 634, 638-39, 478 S.E.2d 732,
734-35 (1996) (summary of Commission’s manner of calculation of
offset due employer under § 65.2-313).
Our conclusion is buttressed by the provisions of Code
§ 65.2-700 granting jurisdiction to the Commission over all
questions arising under the Act, “except as otherwise herein
provided.” We do not believe § 65.2-313 plainly provides
“otherwise” as to future payments.
Turning to the order that is the subject of this appeal, we
shall apply the foregoing analysis. In the order, the trial
court fixed the amount of the Commonwealth’s lien for medical
expenses, determined the Commonwealth was not entitled to any
lien for past compensation, and set the proportionate share of
attorney’s fees and costs at a fixed percentage. The trial
court acted within its jurisdiction in making these rulings, and
they are not contested on appeal.
However, the court improperly undertook to apply the
apportionment percentage to compensation benefits to be paid and
medical expenses to be incurred in the future “until such time
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as these indemnity benefits and medical expenses total
$493,162.00.” (This figure apparently equals a sum that is the
difference between the gross third-party recovery and the
employer’s lien on the amount of the recovery.) This was beyond
the court’s jurisdiction and was error, for the reasons that we
have articulated.
Accordingly, the order from which this appeal is taken will
be affirmed, in part, and reversed, in part. We will modify the
order by striking the contested third sentence of the second
paragraph of the order, and will enter final judgment upon the
order as modified.
Affirmed in part,
reversed in part,
modified, and final judgment.
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