Court Opinion

ID: 4678805
Source: CourtListenerOpinion
Date Created: 2021-04-20 14:02:59.571147+00
Date Added: 2024-06-11T08:03:46.260338
License: Public Domain

IN THE SUPERIOR COURT OF THE STATE OF DELAWARE

JOHN HENRY and DARLENE                     )
HENRY,                                     )
                                           )
            Plaintiffs,                    )
                                           )
      v.                                   )     C.A. No. N18C-03-092 ALR
                                           )
THE CINCINNATI INSURANCE                   )
COMPANY and STATE FARM                     )
MUTUAL AUTOMOBILE                          )
INSURANCE COMPANY,                         )
                                           )
            Defendants.                    )

                          Submitted: February 26, 2021
                            Decided: April 19, 2021

      Upon Motion to Intervene by Employer Horizon Services, Inc. and
     Workers’ Compensation Carrier Eastern Alliance Insurance Company
                                 DENIED

                          MEMORANDUM OPINION

Elisa A. Greenberg, Esquire, Elzufon Austin & Mondell, P.A., Attorney for Horizon
Services, Inc. and Eastern Alliance Insurance Company.

Jonathan B. O’Neill, Esquire, Kimmel, Carter, Roman, Peltz & O’Neill, P.A.,
Attorney for Plaintiffs.

William A. Crawford, Esquire, Franklin & Prokopik, Attorney for Defendant The
Cincinnati Insurance Company.

Patrick G. Rock, Esquire, Heckler & Fabrizzio, Attorney for Defendant State Farm
Mutual Automobile Insurance Company.

Rocanelli, J.
      Plaintiff John Henry was operating a motor vehicle in the course of his

employment with Horizon Services (“Employer”) when Henry was rear-ended by a

third-party tortfeasor.1 Henry injured his neck, back and right shoulder. Consistent

with the worker’s compensation no-fault scheme, Henry received worker’s

compensation benefits for his work-related injuries.

      Eastern Alliance Insurance Company is Employer’s workers’ compensation

carrier (“Comp Carrier”). According to Comp Carrier, more than $150,000.00 has

been paid to Henry in workers’ compensation benefits. Comp Carrier asserts a lien

against any recovery by Henry (“Comp Lien”).2 The third-party tortfeasor was

insured by Liberty Mutual with a policy limit of $50,000.00 per occurrence. Henry

settled his liability claim with the tortfeasor and received the tortfeasor’s $50,000.00

policy limit.3 The settlement proceeds were paid to the Comp Carrier towards

satisfaction of the Comp Lien.4

1
  The motor vehicle accident took place on September 29, 2015. Henry’s wife,
Darlene, seeks recovery for loss of consortium.
2
  Reimbursement of a workers’ compensation lien from a third-party settlement
recovery is addressed in 19 Del. C. § 2363(e).
3
  The third-party claim was resolved on or about January 11, 2018.
4
  The lien is reduced by the full $50,000 recovered because the Comp Carrier is
responsible for the reasonable attorneys’ fees and costs pursuant to 19 Del C. §
2363(f). Proportionately, Comp Carrier is responsible for the entire cost of
reasonable expenditures because Comp Carrier received the entire benefit of the
policy limits. See Johnson v. State, 2020 WL 7861339 (Del. Super. Dec. 31, 2020).
                                           1
      In this lawsuit, Henry seeks recovery from the insurance companies providing

underinsured motorist (“UIM”) coverage. Employer’s vehicle was insured under a

policy with Cincinnati Insurance Company (“CIC”) which included UIM coverage

with limits of $1,000,000.00 per accident. Henry had an automobile policy with

State Farm Mutual Automobile Insurance Company (“State Farm”) which also

provided UIM coverage.       Henry has made claims for UIM coverage under

Employer’s policy as well as his own policy.5 (The UIM insurance company

defendants are referenced collectively as “UIM Carriers.”)

      In a Memorandum Opinion issued July 31, 2018, this Court granted CIC’s

motion to dismiss. This Court found that the applicable version of the workers’

compensation statute was the version of the statute in effect on the date of the

accident, September 29, 2105.6 Relying on the Delaware Supreme Court’s decision

5
  On March 12, 2018, Henry and his wife, Darlene Henry, filed this lawsuit seeking
underinsured motorist benefits from CIC. On December 20, 2018, Henry and his
wife also filed suit for UIM benefits from their own automobile insurer in C.A. No.
18C-12-226-JRJ. By Order dated March 11, 2020, these two lawsuits arising from
the same automobile accident were consolidated.
6
  The legislature amended the workers’ compensation statute in response to a
decision of the Superior Court in Simpson v. State, 2016 WL 425010 (Del. Super.
Jan. 28, 2016), where the Superior Court ruled, in an issue of first impression, that
an employee who accepts workers’ compensation may not also accept UIM benefits
where the employer is self-insured for purposes of UIM coverage. In response to
Simpson, the legislature amended the exclusivity clause of the WCA. The post-
amendment version of the WCA’s exclusivity clause states:
      Except as expressly included in this chapter and except as to uninsured
      motorist benefits, underinsured motorist benefits, and personal injury
                                         2
in Robinson v. State,7 this Court ruled (i) that the pre-amendment version of the

workers’ compensation statute applied and (ii) under the exclusivity clause of the

pre-amendment version, Henry is prohibited from receiving both workers’

compensation benefits and UIM benefits under Employer’s UIM insurance policy.8

The Delaware Supreme Court reversed, holding that the exclusivity provision of the

workers’ compensation statute does not prevent an employee from receiving UIM

benefits provided by an automobile liability policy from a third-party insurance

company purchased by the employer.9 This lawsuit was reinstated on remand by the

Delaware Supreme Court.10

      The pending motion to intervene turns on whether Comp Carrier may satisfy

the Comp Lien with benefits paid to Henry from UIM insurance coverage purchased

by Henry and by Henry’s Employer. Henry and the UIM Carriers oppose the motion

       protection benefits, every employer and employee, adult and minor,
       shall be bound by this chapter respectively to pay and to accept
       compensation for personal injury or death by accident arising out of and
       in the course of employment, regardless of the question of negligence
       and to the exclusion of all other rights and remedies.
19 Del. C. § 2304 (effective Sept. 6, 2016) (emphasis added).
7
  176 A.3d 1274 (Del. 2017).
8
  Simpson, 2017 WL 425010, at *4.
9
  Henry v. Cincinnati Ins. Co., 212 A.3d 285, 287 (Del. 2019).
10
   This case was reopened June 27, 2019; an Answer was filed September 26, 2019;
and a Trial Scheduling Order was issued October 22, 2019. Trial is scheduled for
July 19, 2021.
                                        3
to intervene on the grounds that the Comp Lien may not be asserted against this UIM

coverage. This is the Court’s decision on the motion to intervene.

                                  DISCUSSION

      Comp Carrier asserts a “right” of intervention11 based on its claim of a

statutory right to assert a lien for workers’ compensation benefits paid to Henry.12

11
   Comp Carrier’s motion asserts intervention as a matter of right under Rule 24(a)
which provides:
       Upon timely application anyone shall be permitted to intervene in an
       action: (1) When a statute confers an unconditional right to intervene;
       or (2) when an applicant claims an interest relating to the property or
       transaction which is the subject matter of the action and the application
       is so situated that the disposition of the action may as a practical matter
       impair or impede the applicant’s ability to protect that interest, unless
       the applicant’s interest is adequately represented by existing parties.
Super. Ct. Civ. R. 24(a).
12
   See 19 Del. C. § 2363(e). Section 2363(e) provides:
       In an action to enforce the liability of a third party, the plaintiff may
       recover any amount which the employee or the employee’s dependents
       or personal representative would be entitled to recover in an action in
       tort. Any recovery against the third party for damages resulting from
       personal injuries or death only, after deducting expenses of recovery,
       shall first reimburse the employer or its workers’ compensation
       insurance carrier for any amounts paid or payable under the Workers’
       Compensation Act to date of recovery, and the balance shall forthwith
       be paid to the employee or the employee’s dependents or personal
       representative and shall be treated as an advance payment by the
       employer on account of any future payment of compensation benefits,
       except that for items of expense which are precluded from being
       introduced into evidence at trial by § 2188 of Title 21, reimbursement
       shall be had only from the third-party liability insurer and shall be
       limited to the maximum amounts of the third party’s liability insurance
       coverage available for the injured party, after the injured party’s claim
       has been settled or otherwise resolved.
                                         4
Neither statutory law nor decisional precedent supports Comp Carrier’s assertion of

the Comp Lien against recovery by Henry of UIM coverage.13 For the reasons set

forth below, the motion for intervention must be denied.

   A.      Employer and Comp Carrier do not have a right to intervene because
           there is no statutory right to assert a lien against UIM coverage.

        According to the decisions of the Delaware Supreme Court in Simendinger v.

National Union Fire Insurance Co.,14 and Adams v Delmarva Power & Light Co.,15

a workers’ compensation carrier does not have a lien against proceeds recovered for

UIM benefits. Although Adams and Simendinger preceded Henry, neither case was

overruled by the Court in Henry.16 Adams and Simendinger are still good law.

        In Adams, a 1990 decision of the Delaware Supreme Court, the Court

concluded that an employer is not entitled to a lien for workers’ compensation

benefits against an employee’s own underinsured motorist insurance coverage.17

19 Del. C. § 2363(e).
13
   Comp Carrier argued at oral argument that the Court should look to the legislative
purposes underlying the amendment to 19 Del. C. § 2304 to determine if Comp
Carrier has a “right” of intervention. However, the statute is not ambiguous;
accordingly, a review of the legislative purpose is not necessary or appropriate. See
Progressive N. Ins. Co. v. Mohr, 47 A.3d 492, 496–97 (Del. 2012) (reiterating that
if a statute is ambiguous that “the interpretation that best furthers the legislative
purposes underlying the [] statutory scheme must prevail”).
14
   Simendinger v. National Union Fire Ins. Co., 74 A.3d 609 (Del. 2013).
15
   Adams v. Delmarva Power & Light Co., 575 A.2d 1103 (Del. 1990).
16
   See Henry, 212 A.3d 285.
17
   Adams, 575 A.2d at 1107.
                                         5
More recently, in the Court’s 2013 decision in Simendinger, the Delaware Supreme

Court reaffirmed its holding in Adams that a worker’s compensation lien may not be

asserted against UIM benefits, even where, as in Simendinger, the coverage was

procured by the employer. Simendinger therefore extended the Adams holding from

UIM benefits procured personally by the injured worker to UIM benefits purchased

by the employer.18 Accordingly, decisional law is settled. A worker’s compensation

lien may not be asserted against recovery from UIM benefits regardless of whether

that insurance coverage is secured by an employee or an employer. Therefore, since

neither Employer nor Comp Carrier has a lien against UIM benefits paid to Henry,

neither has a statutory right to intervene in this action.

     B.     The UIM Carriers do not “step into the shoes of the alleged tortfeasor”
            except to the extent that fault by the alleged tortfeasor must be
            established.

          Against this back-drop of well-settled law that a worker’s compensation

carrier may not assert a lien against UIM benefits, the Delaware Supreme Court

issued its decision in this case. As noted, the Court did not overturn Adams or

Simendinger.      Instead, the Henry Court, without addressing whether the pre-

amendment or post-amendment version of the exclusivity clause applied, held that

the worker’s compensation insurer is not an “employer” under the workers’

18
     Simendinger, 74 A.3d at 612.
                                            6
compensation statute and is therefore not entitled to the exclusivity clause which

applies to employers.19

      Nevertheless, in dicta, the Court stated that the UIM insurance company

“steps into the shoes of the alleged tortfeasor.”20 Comp Carrier has seized on this

dicta to argue “[a]s Defendant now stands in the shoes of an independent third party

liability carrier, personal injury damages payable to Mr. Henry are subject to the

Intervenors’ workers’ compensation lien under 19 Del. C. § 2363.”21

      However, a careful reading of the decisional law does not support Comp

Carrier’s position. Instead, the Delaware Supreme Court addressed burdens of proof

and the requirement to establish fault. Specifically, when it referenced “stepping

into the shoes” of an alleged tortfeasor in Henry, the Court cited Progressive

Northern Insurance Co. v. Mohr22 which presented an issue of first impression in

Delaware.23 In Progressive Northern Insurance Co., the Court held that the personal

injury protection (“PIP”) statute must be construed to require PIP coverage for a

pedestrian struck on a Delaware road by a driver insured in any state, including a

Delaware insured driver.24 The phrase at issue appeared in the dissent of then-Chief

19
   Henry, 212 A.3d at 289–90.
20
   Id. at 290.
21
   Mot. to Intervene ¶ 12.
22
   Progressive N. Ins. Co., 47 A.3d 492.
23
   Id. at 495.
24
   Id. at 502.
                                           7
Justice Steele who rejected the majority’s holding, stating the majority’s attempt to

analogize mandated no-fault coverage to mandated fault coverage ignored the

distinction between the two.25 According to the reasoning in the dissent, a distinction

is necessary because, unlike UIM coverage that requires proving duty, breach,

causation and damages, PIP coverage is a no-fault scheme which provides benefits

in addition to those afforded by the standard automobile coverage.26 The dissent

used this distinction to explain that, when making a claim for UIM coverage, the

insurance company “stands in the shoes of the other driver and the person making

the claim must prove fault.”27

      Thus, Henry did not overrule Adams or Simendinger when the Court stated

that the UIM insurance company “steps into the shoes of the alleged tortfeasor.”

Rather, the Court merely emphasized that, as is true for a direct claim against a third-

party tortfeasor, fault by the alleged third-party tortfeasor must be established before

UIM insurance will provide benefits for a claim over and above the insurance policy

limits of the third-party tortfeasor. Accordingly, Comp Carrier has no right to assert

its Comp Lien against any recovery against UIM benefits that might be achieved by

25
   Id. at 503.
26
   See id. at 504.
27
   Id. at 504 n.55 (emphasis added).
                                           8
Henry in this lawsuit and, therefore, intervention would merely complicate this

lawsuit by introducing an additional set of unrelated claims.

                                 CONCLUSION
      For the reasons stated herein, this Court finds that there is no statutory right

of recovery for a worker’s compensation lien against UIM insurance coverage.

Accordingly, Comp Carrier has no right to intervene pursuant to Rule 24(a). Where,

as here, there is no right to recovery, intervention would be futile and distracting.

Thus, Employer and Comp Carrier’s motion to intervene must be denied.

      NOW, THEREFORE, this 19th day of April 2021, the Motion to Intervene

by Horizon Services, Inc. and Eastern Alliance Insurance Company is hereby

DENIED.

      IT IS SO ORDERED.

                                       Andrea L. Rocanelli
                                       ______________________________
                                       The Honorable Andrea L. Rocanelli

                                          9