Court Opinion

ID: 9911152
Source: CourtListenerOpinion
Date Created: 2023-12-19 16:13:24.486661+00
Date Added: 2024-06-11T12:56:13.021075
License: Public Domain

COURT OF APPEALS OF VIRGINIA

            Present: Chief Judge Decker, Judges Humphreys, Beales, Huff, O’Brien, AtLee, Malveaux,
PUBLISHED

                      Athey, Fulton, Ortiz, Causey, Friedman, Chaney, Raphael, Lorish, Callins and White
            Argued at Richmond, Virginia

            MICHAEL BROWN
                                                                                 OPINION BY
            v.     Record No. 1100-22-1                                       JUDGE GLEN A. HUFF
                                                                               DECEMBER 19, 2023
            TIMOTHY L. KIRKPATRICK

                                            UPON A REHEARING EN BANC

                         FROM THE CIRCUIT COURT OF THE CITY OF NEWPORT NEWS
                                       David F. Pugh, Judge Designate

                           Steven L. Lauer (S. Geoffrey Glick; The Joel Bieber Firm, on briefs),
                           for appellant.

                           John D. McGavin (Kara A. Schmidt; McGavin, Boyce, Bardot,
                           Thorsen & Katz, PC, on brief), for appellee.1

                           Amicus Curiae: Virginia Association of Defense Attorneys (Robert
                           F. Friedman; Harmon, Claytor, Corrigan & Wellman, on brief), for
                           appellee.

                   In April 2022, a jury awarded Michael Brown (“appellant”) a judgment against Timothy

            Kirkpatrick (“appellee”) for damages arising from a motor vehicle accident. Appellant received

            the full amount of the judgment from a combination of payments made by his own automobile

            insurance carrier as well as the automobile insurance carrier for the tortfeasor motorist, appellee.

            Despite these payments, appellant refused to mark the judgment satisfied.

                   Upon appellee’s motion, pursuant to Code § 8.01-455, the Circuit Court for the City of

            Newport News (the “trial court”) ordered the judgment to be marked satisfied. Appellant

                   1
                     The Virginia Association of Defense Attorneys moved for leave to file an amicus brief
            in this matter along with said brief in support of appellee. This Court grants the motion.
appealed, claiming the trial court erred in crediting appellee for the payments made by

appellant’s own insurance carrier. Because his insurance carrier had waived its right to

subrogation against the underinsured motorist, appellant argued he was free to collect the full

judgment amount against appellee without any offset for the payments made under his own

contract of insurance.

       After considering the effect of the subrogation waiver, a divided panel of this Court

agreed with appellant and reversed the trial court’s order. Appellee’s petition for rehearing en

banc was granted, and the mandate of the panel was stayed. Upon reconsideration en banc, this

Court now affirms the trial court’s judgment.

                                         BACKGROUND2

       In May 2018, appellant and appellee were involved in an automobile accident. At the

time of the accident appellee was insured by State Farm Mutual Automobile Insurance Company

(“State Farm”) with coverage limits of $50,000. Appellant’s contract of automobile insurance

was with United Services Automobile Association (“USAA”) and included $300,000 in

uninsured/underinsured motorist (“UIM”) coverage. Appellant filed a personal injury lawsuit

against appellee, and USAA was served in accordance with the UIM statute: Code § 38.2-2206.3

       Prior to trial, USAA reached an agreement with State Farm whereby USAA would waive

its right of subrogation against appellee if State Farm continued defending the case through trial.

       2
         The pertinent facts are not in dispute. In particular, both parties agree that USAA
waived its subrogation right against appellee, but they disagree on the effect of that waiver under
Code § 38.2-2206.
       3
          Code § 38.2-2206(F) first requires the insured to “serve a copy of the process” upon the
UIM insurer in any action “instituted against the owner or operator of an uninsured or
underinsured motor vehicle” when the insured intends “to rely on the uninsured or underinsured
coverage provision or endorsement . . . .” It further provides that the insurer shall “have the right
to file pleadings and take other action allowable by law in the name of the owner or operator of
the uninsured or underinsured motor vehicle or in its own name.” Code § 38.2-2206(F)
(emphasis added).
                                                -2-
Following a jury trial, during which State Farm satisfied its end of the bargain, judgment was

entered against appellee in the amount of $286,000. State Farm paid its coverage amount

($50,000) toward satisfaction of the judgment. And in accordance with the insurance carriers’

pre-trial agreement, USAA paid the remaining balance of $236,000.4

       Despite receiving payments totaling $286,000, the total amount of the judgment entered

against appellee, appellant refused USAA’s request to mark the judgment satisfied. Because he

carried UIM coverage and USAA had waived its subrogation rights, appellant argued that

USAA’s payment should not be credited toward the judgment and that appellant was free to

recover another $236,000 directly from appellee. Appellee moved the trial court to enter an

order marking the judgment satisfied.5 Over appellant’s objection, the trial court granted the

motion and entered the requested order.

       This appeal followed.

                                    STANDARD OF REVIEW

       Central to this appeal is the interpretation of Virginia’s UIM statute, Code § 38.2-2206.

“Questions of statutory interpretation . . . are subject to de novo review on appeal, and we owe

no deference to the circuit court’s interpretation of the statutory scheme.” Esposito v. Va. State

Police, 74 Va. App. 130, 133 (2022). Courts are duty bound “to construe the law as it is

written.” Hampton Roads Sanitation Dist. Comm’n v. City of Chesapeake, 218 Va. 696, 702

(1978). “When construing a statute, our primary objective ‘is to ascertain and give effect to

legislative intent,’ as expressed by the language used in the statute.” Va. Elec. & Power Co. v.

State Corp. Comm’n, 295 Va. 256, 262-63 (2018) (quoting Cuccinelli v. Rector & Visitors of the

       4
           Interest and costs were borne by State Farm.

       Code § 8.01-455 allows a “defendant in any judgment” to move the court to mark the
       5

judgment satisfied “upon proof that the judgment has been paid off or discharged.”
                                             -3-
Univ. of Va., 283 Va. 420, 425 (2012)). “We must determine the legislative intent by what the

statute says and not by what we think it should have said.” Miller & Rhoads Bldg., L.L.C. v. City

of Richmond, 292 Va. 537, 541-42 (2016) (quoting Carter v. Nelms, 204 Va. 338, 346 (1963)).

“When the language of a statute is unambiguous, we are bound by the plain meaning of that

language.” Conyers v. Martial Arts World of Richmond, Inc., 273 Va. 96, 104 (2007) (citations

omitted).

                                            ANALYSIS

       As required under Code § 38.2-2206(A), all automobile insurance policies issued in

Virginia, or covering vehicles principally garaged or used in Virginia, must include UIM

coverage.6 Recovery of such underinsurance benefits is “subject to the conditions set forth in

[Code § 38.2-2206].” Code § 38.2-2206(B)(4). As relevant here, Code § 38.2-2206(G) provides

that “[a]ny insurer paying a claim [for underinsurance benefits] . . . shall be subrogated to the

rights of the insured to whom the claim was paid . . . .” (Emphasis added). In the insurance

context, the principle of subrogation dictates that “an insurer that has paid a loss under an

insurance policy is entitled to all the rights and remedies belonging to the insured against a third

party with respect to any loss covered by the policy.” Subrogation, Black’s Law Dictionary

(11th ed. 2019).

       In the case at hand, USAA paid underinsurance benefits to appellant in accordance with

the UIM provision of their existing policy. As the insurer paying such claim, USAA became the

owner of the subrogation rights by operation of law when it completed its payment of

underinsurance benefits to appellant. See Code § 38.2-2206(G). As such, USAA alone owned

the right to recoup the amount of its UIM insurance payment from appellee—the tortfeasor. See

       6
        Uninsured coverage in the statute is treated as the generic category that includes
underinsurance coverage. Code § 38.2-2206(A).
                                               -4-
Code § 38.2-2206(G) (providing that the UIM carrier “shall be subrogated to the rights of the

insured to whom the claim was paid . . . to the extent that payment was made” (emphasis

added)). Furthermore, appellant’s receipt of USAA’s $236,000 payment, in accordance with

Code § 38.2-2206(G), precluded him from seeking to obtain that amount from appellee. Simply

put, under the plain meaning of the UIM statute, the subrogation right belonged exclusively to

USAA and appellant no longer had a right to recover the amount paid by USAA directly against

appellee. Id.

        Moreover, as sole owner, USAA was free to use the subrogation rights as it saw fit.

Here, USAA used its subrogation rights to negotiate with State Farm prior to trial.7 Importantly,

the two insurance carriers agreed that, in exchange for State Farm defending the case through

trial, USAA would not exercise its subrogation right. Agreeing to not exercise its subrogation

right did not divest USAA of that right. Under the provisions of Code § 38.2-2206, USAA

remained the lawful owner of the subrogation right, thereby retaining the exclusive authority to

choose whether to exercise it. That power can be a powerful bargaining chip to UIM carriers

involved in litigation initiated by their insureds. Indeed, USAA’s agreement to not exercise its

right to collect from appellee provided valuable consideration to support its contract with State

Farm.

        Notwithstanding the plain meaning of the statute, appellant argues that payments of UIM

benefits should be treated like medical payments or disability payments that are sometimes

        7
           USAA and State Farm agreed that USAA’s right to collect an excess judgment against
State Farm’s insured would be waived in exchange for State Farm providing a defense through
trial. If judgment had been within State Farms’ coverage, there would have been no UIM
payment and no subrogation right. Code § 38.2-2206(G). But in this case, the judgment
exceeded State Farm’s coverage, thus triggering USAA’s contractual obligation to make
payment pursuant to the terms of appellant’s UIM coverage.
                                              -5-
sheltered by the collateral source doctrine.8 Once again, the plain meaning of the words chosen

by the General Assembly resolves the issue at hand. At the outset, Code § 38.2-2206(B)(4)

explicitly states that recovery of UIM benefits is “subject to the conditions set forth in [Code

§ 38.2-2206].” By that language, the General Assembly created a set of rules unique to the

payment and recovery of UIM benefits by automobile insurance carriers.

       And unlike the subrogation rights that belong to the insurance carrier once a UIM claim

is paid pursuant to Code § 38.2-2206(G), medical payments are treated differently under

Virginia’s motor vehicle statutes. Code § 38.2-2216 specifically prohibits “reducing the amount

of damages covered under the liability or [UIM] coverages of the policy by the amount of

payments made by the insurer under the medical expense or other medical payments coverage of

the policy.”

       Comparing the words chosen by the General Assembly in these differing statutes

demonstrates the limited circumstances under which the collateral source doctrine applies. “The

maxim expressio unius est exclusio alterius applies when mention of a specific item in a statute

implies that omitted items were not intended to be included.” Virginia-Pilot Media Cos., LLC v.

       8
          The collateral source doctrine is encountered in two different contexts: (1) as an
evidentiary issue during trial and (2) as a substantive matter outside of trial. Typically, the
collateral source rule is invoked to exclude from trial any evidence of payment made by the
insurance carrier. Va. R. Evid. 2:411. The issue presented here, however, is outside of trial and
is governed by the motor vehicle statute instead. In the case at bar, appellant was made whole,
and appellee remained liable to USAA only for UIM insurance payments paid by USAA,
although State Farm successfully settled that liability with USAA in exchange for bearing the
cost of defense through trial. Generally, the collateral source doctrine instructs that
“compensation or indemnity received by a tort victim from a source collateral to the tortfeasor
may not be applied as a credit against the quantum of damages the tortfeasor owes.” Acordia of
Va. Ins. Agency, Inc. v. Genito Glenn, L.P., 263 Va. 377, 387 (2002) (quoting Schickling v.
Aspinall, 235 Va. 472, 474 (1988)). This doctrine, however, is “a narrow exception to both the
default rule against double recoveries and the principle that compensatory damages cannot leave
a plaintiff better off than before the injury.” Dominion Res. Inc. v. Alstom Power, Inc., 297 Va.
262, 270-01 (2019). Substantively, medical benefits are the only insurance payment that may
not reduce the amount of damages. See Code § 38.2-2216.
                                                 -6-
Dow Jones & Co., 280 Va. 464, 468-69 (2010). “[W]hen the General Assembly has used

specific language in one instance[] but omits that language or uses different language when

addressing a similar subject elsewhere in the Code, we must presume that the difference in the

choice of language was intentional.” Zinone v. Lee’s Crossing Homeowner’s Ass’n, 282 Va.

330, 337 (2011). Based on the words chosen by the General Assembly, payment of medical

expenses is subject to the collateral source doctrine while payment of UIM coverage is not.

       Lastly, appellant relies on Llewellyn v. White, 297 Va. 588 (2019), to apply the collateral

source doctrine and recover from appellee. Llewellyn dealt with the common law principle,

modified by statute in Virginia, that settlement with one tortfeasor was a settlement as to all.

Llewellyn, 297 Va. at 596. In that case, the Supreme Court clarified that Code § 8.01-35.1 did

not bar recovery against a tortfeasor where the UIM insurance carrier settled with its insured,

before suit, such that no UIM coverage existed at the time of trial. Id. at 603. The Court

recognized that the UIM coverage sounded in contract and therefore was not subject to the laws

regarding joint tortfeasors.9 Id. at 601-03.

       Llewellyn is distinguishable from this matter based on the position of the various parties.

In Llewellyn, the insured tort victim settled with her own insurer prior to trial. Such agreement

did not include the opposing party. Here, in contrast, the tort victim’s insurance carrier—

USAA—obtained the subrogation right when it paid appellant’s claim but then contracted away

that right with the opposing party. The inclusion of appellee and appellee’s insurer here had no

       9
          After making its ruling, the Court provided further explanation suggesting that its
“conclusion is reflected by and consistent with the structure of Virginia’s UIM statute, Code
§ 38.2-2206.” Llewellyn, 297 Va. at 598. It went on to say, “if there is an agreement between
the UIM carrier and the defendant, the defendant may be entitled to credit against any judgment
received by the plaintiff, up to the amount owed . . . pursuant to [the UIM carrier’s] subrogation
rights.” Id. at 600. The Supreme Court also pointed out that in its case there was no agreement
involving the tortfeasor. Id. The UIM carrier was therefore no longer involved because it had
settled its coverage with its insured before litigation was pursued. Id.
                                                  -7-
effect on USAA’s obligations to appellant under their contract. But, as discussed above, the

contractual relationship in which USAA negotiated with its subrogation rights does not make the

UIM payments to appellant a collateral source. Accordingly, appellant’s reliance on Llewellyn is

misplaced.

                                         CONCLUSION

       For the foregoing reasons, the trial court’s judgment is affirmed.

                                                                                       Affirmed.

                                               -8-
Humphreys, J., with whom Chaney and Lorish, JJ. join, dissenting.

       Under Code § 8.01-455, judgment-debtors may only escape their tort liability if their debt

has been “paid off or discharged.” Because nothing in the record before this Court indicates that

Kirkpatrick’s debt was paid off or discharged, I respectfully dissent from the majority’s holding

that Kirkpatrick was entitled to have his judgment-debt set aside.

       Our Supreme Court has applied the collateral source rule to UIM benefits in Llewellyn v.

White, 297 Va. 588 (2019), and the majority ignores this conclusion in finding that the collateral

source rule does not apply to UIM benefits. Llewellyn makes clear that Kirkpatrick’s tort

liability was not “paid off” as a result of USAA fulfilling its UIM obligations. The Llewellyn

Court’s holding on this point is plain: “[a] person who is negligent and injures another owes to

the latter full compensation for the injury inflicted[,] . . . and payment for such injury from a

collateral source in no way relieves the wrongdoer of [the] obligation.” Id. at 601 (second, third,

and fourth alterations in original) (quoting Acuar v. Letourneau, 260 Va. 180, 189 (2000)).

Specifically, the Court noted that “damages, recoverable of personal injuries inflicted through the

negligence of another are not to be reduced by reason of the fact that the injured party had been

partly compensated for his loss by insurance which he has procured and for which he has paid.”

Id. Admittedly, this doctrine permits a tort plaintiff to receive a double recovery, but as the

Court held in Llewellyn, “the better option is to allow plaintiff to retain the ‘windfall’ that results

from his foresight in voluntarily electing to purchase [UIM] coverage rather than allowing

defendant . . . to be the ultimate beneficiary of plaintiff’s decision to procure additional insurance

coverage.” Id. at 602 (quoting Hairston v. Harward, 821 S.E.2d 384, 394 (N.C. 2018)).10

       10
          The majority suggests Virginia courts narrowly apply the collateral source rule. To the
contrary, Virginia has a long history of applying the rule to benefits “wholly independent of the
defendant.” Johnson v. Kellam, 162 Va. 757, 764 (1934).
                                                -9-
        Because Kirkpatrick is not entitled to credit for the payments USAA made to Brown

under Brown’s UIM coverage, Kirkpatrick’s debt has not been “paid off” by virtue of those

payments. The remaining question, then, is whether Kirkpatrick’s debt has been “discharged.”

The majority appears to hold that a subrogee has the authority to discharge a subrogation claim

to the detriment of the subrogor. Even assuming that a subrogee has that authority, this holding

presupposes that USAA did, in fact, discharge the debt Kirkpatrick owed to USAA pursuant to

its subrogation rights.11 The record does not support this conclusion.

        The record shows only that USAA agreed with Kirkpatrick that it was “willing to waive

subrogation against [Kirkpatrick] if State Farm continues the defense on behalf of Defendant,

Timothy Kirkpatrick, through the trial of this matter.” To reach the conclusion that Kirkpatrick

is entitled to relief from his tort liability, the majority necessarily equates the waiver of the

subrogation right with the discharge of the underlying tort liability. This conflating of waiver

and discharge misunderstands the nature of the subrogation right.

        The waiver of the right to pursue recovery, a right that is wholly derivative of the

insured’s right, is conceptually distinct from a settlement, release, or discharge of the underlying

debt. In addressing the fact that the subrogee waived their subrogation right with the subrogor

the Llewellyn Court noted that “[the subrogee] agreed with [plaintiff] not to interfere with [her]

right to collect from [defendant] any amounts [defendant] was found to owe [plaintiff].”

Llewellyn, 297 Va. at 600 (emphasis added). Simply put, the subrogation right is the right of the

        11
           Virginia courts have not previously authoritatively decided whether a subrogee has the
authority to settle a subrogation claim to the detriment of the subrogor and at least two of our
sister state courts have reached different conclusions on the question. Compare Ferrellgas, Inc.
v. Yeiser, 247 P.3d 1022, 1027-28 (Colo. 2011) (holding that an insurance company’s settlement
of a nearly $200,000 subrogation claim for $175,000 with the tortfeasor reduced the insured
subrogor’s tort judgment by the full $200,000), with Sunnyland Farms, Inc. v. Cent. N.M. Elec.
Coop., Inc., 301 P.3d 387 (N.M. 2013) (holding that a defendant may not obtain a subrogation
lien against the recovery a plaintiff would obtain from that same defendant).
                                                - 10 -
subrogee (USAA in this instance) to stand in the shoes of the insured (Brown) and pursue a third

party (Kirkpatrick) for a loss caused by that third party. On the other hand, a “discharge” is

“[a]ny method by which a legal duty is extinguished; esp., the payment of a debt or satisfaction

of some other obligation.” Discharge, Black’s Law Dictionary (11th ed. 2019). In this case, the

majority conflates the very different concepts of “waiver” and “discharge.”

       Waiver is the “voluntary relinquishment or abandonment” of “a legal right or advantage.”

Waiver, Black’s Law Dictionary, supra. Had USAA exercised its right of subrogation instead of

waiving it and then agreed to release Kirkpatrick from his tort liability in exchange for State

Farm’s defense of the claim at trial, then perhaps Kirkpatrick’s tort liability would be

“discharged.”12 But instead, USAA simply agreed with Kirkpatrick to abandon its right to stand

in Brown’s shoes and seek to recover from Kirkpatrick any amounts he owed to Brown pursuant

to its subrogation right. In other words, in this case, USAA and Kirkpatrick bargained for a

waiver of USAA’s subrogation right—it did not bargain for the discharge of Kirkpatrick’s

underlying tort liability. The majority seems to consider this a distinction without a difference,

but precision in its application is the hallmark of the law and eliding the difference between a

waiver of a subrogation right and the discharge of underlying tort liability undermines that

precision.

       The distinction between waiver of a right to subrogation and the discharge of a

tortfeasor’s underlying tort liability is only one reason the majority errs. A second is that the

majority mistakes the UIM’s posture upon payment of a claim as “subrogated to the rights of the

insured” for the injured party having assigned its rights to recover to the UIM. An assignment is

a transfer of a property right, and an absolute assignment “leaves the assignor no interest in the

       12
          I reiterate that this conclusion first requires a holding that the subrogee indeed had the
authority to settle the underlying tort liability.
                                                   - 11 -
assigned property or right.” Assignment, Black’s Law Dictionary, supra. When the majority

holds that “USAA became the owner of the subrogation rights by operation of law when it

completed its payment of underinsurance benefits to appellant,” that “USAA alone owned the

right to recoup the amount of its UIM insurance payment from appellee,” and that “the

subrogation right belonged exclusively to USAA,” it essentially holds that USAA’s fulfillment

of its contractual obligation to pay underinsurance benefits to its insured operated to assign

USAA the exclusive right to recover the amount of its UIM insurance payment.

       But subrogation and assignment are not synonymous. Nationwide Mut. Ins. Co. v.

Minnifield, 213 Va. 797, 799 (1973). Our Supreme Court, examining a contractual right of

subrogation, characterized subrogation as a right of reimbursement “against the fund recovered”

by the injured party who had also received insurance payments under a policy. Collins v. Blue

Cross, 213 Va. 540, 544 (1973) (recognized as abrogated in part by statute in Reynolds Metals

Co. v. Smith, 218 Va. 881, 883 (1978)); cf. State Farm Mut. Auto. Ins. Co. v. Kern, 976 N.E.2d

716, 720 (Ind. Ct. App. 2012) (a subrogation clause “provides that once an insured receives

payment from a third-party tortfeasor, the insurer is entitled to reimbursement for the amount of

benefits it previously paid to the insured”). Unlike the operation of an absolute assignment, upon

a waiver of subrogation, the insured retains the right to recover the full amount of damages

against the tortfeasor. For this reason, we agree with the Indiana Court of Appeals that “when a

judgment is entered against a third-party tortfeasor, said judgment is not satisfied when the

plaintiff’s insurer compensated the plaintiff due to the third-party tortfeasor’s being

underinsured.” Kern, 976 N.E.2d at 720. The tortfeasor “is not entitled to benefit from [the

injured party]’s carefulness and assiduousness in obtaining underinsured motorist insurance

coverage.” Id. Put differently, when a UIM carrier “explicitly waive[s] its rights to subrogation”

it “never possessed the right to recover the UIM benefits” so “the claim to recover such damages

                                                - 12 -
remained at all times” with the insured plaintiff. Voge v. Anderson, 512 N.W.2d 749, 751 (Wis.

1994).

         Additionally, the North Carolina case on which the Llewellyn Court chiefly relied

involved this exact situation where the subrogee “waived its subrogation rights against

defendant.” Hairston, 821 S.E.2d at 387. The Hairston court saw “no reason why defendant

should be entitled to different treatment simply because [the insurer] elected to waive its

statutory subrogation rights rather than attempting to enforce them.” Id. at 395.

         USAA bargained away its right to pursue recovery from Kirkpatrick in exchange for his

appearance and participation at trial. Kirkpatrick received the benefit of that bargain because

USAA no longer has the right to recover against him. That agreement has no impact on Brown’s

right to recover against Kirkpatrick. Like the North Carolina Supreme Court, I see no reason

why Kirkpatrick should be able to escape his tort liability because USAA declined to pursue its

subrogation rights.

         Accordingly, because I do not think that this record supports the conclusion that

Kirkpatrick’s debt was “paid off” or “discharged” as the statute requires, I would hold that the

judgment of the circuit court should be reversed. I, therefore, respectfully dissent.

                                                - 13 -
            VIRGINIA:
                        In the Court of Appeals of Virginia on      Tuesday     the 8th day of August, 2023.
PUBLISHED

            Michael Brown,                                                                                            Appellant,

            against             Record No. 1100-22-1
                                Circuit Court No. CL2001195F-15

            Timothy L. Kirkpatrick,                                                                                   Appellee.

                                                Upon a Petition for Rehearing En Banc

              Before Chief Judge Decker, Judges Humphreys, Beales, Huff, O’Brien, AtLee, Malveaux, Athey, Fulton,
                                   Ortiz, Causey, Friedman, Chaney, Lorish, Callins and White

                   On July 19, 2023 came the appellee, by counsel, and filed a petition requesting that the Court set aside

            the judgment rendered herein on July 5, 2023, and grant a rehearing en banc on the issue(s) raised in the

            petition.

                   On consideration whereof and pursuant to Rule 5A:35 of the Rules of the Supreme Court of Virginia,

            the petition for rehearing en banc is granted and the appeal of those issues is reinstated on the docket of this

            Court. The mandate previously entered herein is stayed pending the decision of the Court en banc.

                   The parties shall file briefs in compliance with the schedule set forth in Rule 5A:35(b). The appellant

            shall attach as an addendum to the opening brief upon rehearing en banc a copy of the opinion previously

            rendered by the Court in this matter. An electronic version of each brief shall be filed with the Court and

            served on opposing counsel.1

                                                      A Copy,
                                                            Teste:
                                                                                  A. John Vollino, Clerk

                                                                     original order signed by a deputy clerk of the
                                                              By:    Court of Appeals of Virginia at the direction
                                                                     of the Court

                                                                                  Deputy Clerk

                   1
                   The guidelines for filing electronic briefs and appendices can be found at
            www.courts.state.va.us/online/vaces/resources/guidelines.pdf.
                                            COURT OF APPEALS OF VIRGINIA
PUBLISHED

            Present: Judges Humphreys, Huff and Lorish
            Argued by videoconference

            MICHAEL BROWN
                                                                                  OPINION BY
            v.     Record No. 1100-22-1                                    JUDGE ROBERT J. HUMPHREYS
                                                                                   JULY 5, 2023
            TIMOTHY L. KIRKPATRICK

                           FROM THE CIRCUIT COURT OF THE CITY OF NEWPORT NEWS
                                             David F. Pugh, Judge

                             Steven L. Lauer (S. Geoffrey Glick; The Joel Bieber Firm, on briefs),
                             for appellant.

                             John D. McGavin (Kara A. Schmidt; McGavin, Boyce, Bardot,
                             Thorsen & Katz, PC, on brief), for appellee.

                   Michael Brown appeals from a ruling of the Newport News Circuit Court granting

            appellee Timothy Kirkpatrick’s motion to mark judgment satisfied following Brown’s insurance

            carrier USAA tendering its underinsured motorist (UIM) coverage obligations to Brown. Brown

            contends that Kirkpatrick should not have been entitled to any credit or offset for payments made

            by USAA to Brown.

                                                       BACKGROUND

                   On April 20, 2022, a Newport News jury awarded Michael Brown a judgment of

            $286,000 against Timothy L. Kirkpatrick for damages arising out of a motor vehicle accident.1

            Prior to trial, USAA, Brown’s insurance company (involved in the case as an underinsured

            motorist carrier), informed Kirkpatrick that “USAA is willing to waive subrogation against

            [Kirkpatrick] if State Farm [Kirkpatrick’s insurer] continues the defense . . . through the trial of

                   1
                       The underlying facts of the tort suit are not relevant for this appeal.
this matter.”2 USAA’s right to subrogation was derived from Code § 38.2-2206(G) which

provides that “[a]ny insurer paying [an underinsured motorist claim] shall be subrogated to the

rights of the insured to whom the claim was paid against the person causing the . . . damage and

that person’s insurer.”

       Following the verdict, State Farm paid out its per person policy limit of $50,000, plus

costs, on behalf of Kirkpatrick. After the State Farm payment, USAA sent Brown a check for

$236,000 pursuant to Brown’s underinsured motorist coverage. In the letter accompanying that

check, USAA requested that Brown ask that the circuit court “mark this matter as ‘paid and

satisfied.’” Brown responded that he believed that he was entitled to pursue recovery against

Kirkpatrick in light of USAA’s waiver of its right to subrogation.

       Following Brown’s refusal, Kirkpatrick filed a motion under Code § 8.01-455 requesting

that the circuit court enter an order marking the judgment as satisfied.3 At the hearing on the

motion Kirkpatrick argued that “USAA indicated that they would satisfy their share post-verdict

and waive subrogation against Mr. Kirkpatrick if he appeared for trial.” However, Kirkpatrick

argued that the waiver of USAA’s right to pursue Kirkpatrick did not mean that Brown regained

the right to pursue Kirkpatrick. Furthermore, Kirkpatrick asserted that USAA joined in its

motion to have the judgment marked paid and satisfied. USAA’s attorney was present at the

hearing and confirmed that USAA had not “formally joined in the motion, but [Kirkpatrick’s

assertion] was correct” and that “there was a waiver of subrogation in exchange with [sic] the

understanding that [State Farm] weren’t [sic] going to tender and do the defense of the case.”

Brown argued that the UIM payment was a collateral source and that Kirkpatrick’s obligation to

       2
         Kirkpatrick notes that this promise to waive subrogation was intended to entice
Kirkpatrick to attend the trial and “undertake [his] best effort” in his defense.

       Code § 8.01-455 allows a “defendant in any judgment” to move the court to mark the
       3

judgment satisfied “upon proof that the judgment has been paid off or discharged.”
                                             -2-
pay the judgment was not extinguished simply because USAA waived its right to pursue him in

Brown’s place.

        The circuit court agreed with Kirkpatrick “for the reasons enunciated again by counsel for

the defense.” Brown now appeals.

                                             ANALYSIS

        The question raised by this case is whether an insurer’s waiver of its right to subrogation

against a tortfeasor precludes the insured-plaintiff from recovering on a judgment against the

tortfeasor. This is a question of law that we review de novo. For the reasons that follow, we

hold that the mere waiver of the insurer’s right to subrogation does not discharge the underlying

tort liability.

        “Subrogation is merely the ‘substitution of one person in the place of another with

reference to a lawful claim, demand or right so that he who is substituted succeeds to the rights

of the other in relation to the debt or claim, and its rights, remedies, or securities.’” Llewellyn v.

White, 297 Va. 588, 599 (2019) (quoting Subrogation, Black’s Law Dictionary (4th ed. 1957)).

In the insurance context, an insurer who has paid a loss becomes a subrogee to the rights of their

insured against the responsible party with respect to any loss covered by the policy. Id. The

insurer’s right of subrogation is wholly derivative of the subrogor’s rights; in other words, “a

subrogated insurer stands in shoes of an insured, and has no greater rights than the insured, for

one cannot acquire by subrogation what another, whose rights he or she claims, did not have.”

Couch on Insurance § 222:5 (3d ed. 2022) (footnotes omitted).

        Virginia has codified a requirement that all contracts for automobile insurance must

include an under- or uninsured motorist coverage provision. Code § 38.2-2206(A). The UIM

coverage requires the insurance company to pay its insured for damages caused by a driver

                                                 -3-
whose own insurance coverage is insufficient to cover the insured’s damages. Code

§ 38.2-2206(B). The statute provides that,

               Any insurer paying a claim under the endorsement or provisions
               required by subsection A [UIM coverage] shall be subrogated to
               the rights of the insured to whom the claim was paid against the
               person causing the injury, death, or damage and that person’s
               insurer, although it may deny coverage for any reason, to the
               extent that payment was made.

Code § 38.2-2206(G) (emphasis added).

       In Llewellyn v. White, the Virginia Supreme Court held that an insurance company’s

agreement with the plaintiff to waive its right of subrogation did not relieve the tortfeasor’s

judgment debt. The plaintiff settled her UIM claim with her insurer pre-trial for $750,000. 297

Va. at 593. As part of that settlement the UIM insurer agreed with the plaintiff that it would

waive its rights to be subrogated to the rights the plaintiff had against the defendant. Id. at 594.

The case proceeded to trial, and the plaintiff was awarded $1.5 million in damages. Id. The

defendant filed a motion to have her judgment reduced by the $750,000 paid by plaintiff’s UIM

carrier pursuant to Code § 8.01-35.1.4 Id. The Supreme Court held that the UIM insurer was not

a joint tortfeasor and that the payment to the plaintiff was a collateral source; therefore, the

defendant remained liable for the full amount of the judgment. Id. at 602.

       The collateral source rule, as applied in Llewellyn, establishes that “a person who is

negligent and injures another owes to the latter full compensation for the injury inflicted[,] . . .

and payment for such injury from a collateral source in no way relieves the wrongdoer of [the]

obligation.” Id. at 601 (alterations in original) (quoting Acuar v. Letourneau, 260 Va. 180, 189

(2000)). Specific to the insurance context, the collateral source rule is that “damages,

recoverable of personal injuries inflicted through the negligence of another are not to be reduced

       4
         Code § 8.01-35.1 provides that a release of one joint tortfeasor allows for a set-off for
the other joint tortfeasor(s) by the amount settled by the released tortfeasor.
                                                 -4-
by reason of the fact that the injured party had been partly compensated for his loss by insurance

which he has procured and for which he has paid.” Id. The collateral source rule and the

principle that an injured party should not be entitled to a double recovery are fundamentally at

odds. Id. at 600. The Virginia Supreme Court determined that in resolving this tension “the

better option is to allow plaintiff to retain the ‘windfall’ that results from his foresight in

voluntarily electing to purchase [UIM] coverage rather than allowing defendant . . . to be the

ultimate beneficiary of plaintiff’s decision to procure additional insurance coverage.” Id. at 602

(quoting Hairston v. Howard, 821 S.E.2d 384, 393 (N.C. 2018)).

        On appeal, Brown argues that the logic of Llewellyn applies with equal force to a

situation where the insurance company has agreed with the defendant to waive its subrogation

rights. We agree.

        First, we note that Code § 8.01-455 only entitles Kirkpatrick to have the judgment

marked as satisfied upon proof that the judgment has been “paid off or discharged.” It is

undisputed that the judgment has not been “paid off.” Following State Farm’s payment of

$50,000, Kirkpatrick has not paid any amount of the judgment. Additionally, Llewellyn is clear

that payments to a plaintiff by a UIM carrier are collateral to the defendant and implicate the

collateral source rule such that USAA’s payments to Brown cannot lead to the judgment being

“paid off.”

        Kirkpatrick contends that Llewellyn is inapposite on this point because, in this case, the

insurer waived its subrogation rights with the defendant, whereas in Llewellyn, the insurer

waived its subrogation rights as part of its settlement agreement with the plaintiff. Kirkpatrick

contends that while USAA has waived its subrogation rights as to Kirkpatrick, it retains some

enforceable subrogation rights against Brown. This argument misconceives the nature of the

subrogation right.

                                                  -5-
       Our Supreme Court has distinguished subrogation from reimbursement. In Reynolds

Metals Co. v. Smith, 218 Va. 881, 884 (1978), the Court ruled that a group accident and health

insurance “non-duplication of benefits” provision did not violate the anti-subrogation statute then

found in Code § 38.1-342.2 (codified as amended at Code § 38.2-3405). The statute prohibited

subrogation provisions in medical expenses paid from health insurance plans. Id. The policy

required payees under the plan to reimburse the insurer for any amount received from a third

party in compensation for their injuries. Id. The Court reasoned that subrogation, by definition,

requires that the subrogee obtain the right to proceed against a third party and that the

non-duplication provision provided no such right. Id. at 883. Accordingly, the reimbursement

provision was not prohibited by statute. Id. at 884.

       For purposes of this case, Reynolds Metals Co. contradicts Kirkpatrick’s argument that

USAA retains some subrogation right against Brown. Reynolds Metals Co. directly states that an

insurer’s right to reimbursement from its insured is not equivalent to their right of subrogation

against the defendant. Id. Brown’s insurance policy may require him to reimburse USAA for

any recovery that he obtains from Kirkpatrick, but that fact does not mean that Kirkpatrick is

allowed to escape his tort liability. Kirkpatrick has failed to articulate what USAA’s subrogation

right against Brown would allow it to do. USAA has waived its right to pursue Kirkpatrick for

the money it paid to Brown. That does not mean that Kirkpatrick’s obligation has been paid off.

See Llewellyn, 297 Va. at 599 (“Payment by the plaintiff’s UIM carrier to its insured does not

entitle an underinsured tortfeasor to an offset or credit on the judgment against her. It merely

                                                -6-
allows the UIM carrier to substitute itself for its insured in seeking to enforce any judgment

against her.” (emphasis added)).5

       Additionally, the record before this Court does not support a finding that the judgment

was discharged. Assuming, without deciding, that a subrogee has the authority to settle its

subrogation claim to the detriment of the subrogor, the record does not establish that USAA truly

“settled” its subrogation claim against Kirkpatrick.6 The record shows that USAA agreed with

Kirkpatrick that it was “willing to waive subrogation against [Kirkpatrick] if State Farm

continues the defense on behalf of Defendant, Timothy Kirkpatrick, through the trial of this

matter.” The waiver of the right to pursue recovery that is derivative of the insured’s right is

conceptually distinct from a settlement, release, or discharge of the underlying debt. The

subrogation right is the right to pursue a third party for a loss caused by that third party.

“Discharge” is “[a]ny method by which a legal duty is extinguished; esp., the payment of a debt

or satisfaction of some other obligation.” Discharge, Black’s Law Dictionary (11th ed. 2019).

The waiver of the right to pursue a recovery of another’s claim, standing alone, does not

extinguish the underlying claim.

       5
         Kirkpatrick also argues that USAA’s waiver of its subrogation rights does not mean that
Brown automatically regained the right to pursue Kirkpatrick. This argument is refuted by the
derivative nature of the subrogation right as well as by Llewellyn, 297 Va. at 600 (“Erie agreed
with [plaintiff] not to interfere with [her] right to collect from [defendant] any amounts
[defendant] was found to owe [plaintiff].” (emphasis added)).
       6
         Virginia courts have not decided whether a subrogee has the authority to settle a
subrogation claim to the detriment of the subrogor and at least two of our sister state courts have
reached different conclusions on the question. Compare Ferrelgas, Inc. v. Yeiser, 247 P.3d
1022, 1027-28 (Colo. 2011) (holding that an insurance company’s settlement of a nearly
$200,000 subrogation claim for $175,000 with the tortfeasor reduced the insured subrogor’s tort
judgment by the full $200,000), with Sunnyland Farms, Inc. v. Cent. N.M. Elec. Coop., Inc., 301
P.3d 387 (N.M. 2013) (holding that a defendant may not obtain a subrogation lien against the
recovery a plaintiff would obtain from that same defendant). Because we hold that USAA
simply waived its right to subrogation as opposed to settling its subrogation claim, we need not
reach whether a subrogee may settle its subrogation claim pretrial to the detriment of the
subrogor.
                                               -7-
           Based on the record before us, USAA’s subrogation right was the only mechanism that

permitted it to interfere with Brown’s right to recover his judgment against Kirkpatrick. By

waiving its right to subrogation, USAA effectively disclaimed any interest in the judgment

itself.7

           Kirkpatrick points to nonbinding dicta in Llewellyn to contend that he is entitled to be

released from his liability. The Llewellyn Court wrote that:

                  By statute, the right of subrogation belongs to the UIM carrier.
                  Code § 38.2-2206(G). It can exercise or waive that right as it
                  pleases. If it desires to do so, the UIM carrier can make an
                  agreement with a defendant not to pursue the recovery that the
                  carrier’s subrogation rights entitle it to seek from the defendant. In
                  such an instance, if there is an agreement between the UIM carrier
                  and the defendant, the defendant may be entitled to credit against
                  any judgment received by the plaintiff, up to the amount owed to
                  the UIM insurer pursuant to its subrogation rights. However, no
                  such agreement was struck in this case. In this instance, [the UIM
                  carrier] sought no consideration from and made no agreement with
                  Llewellyn, [the defendant,] to forgive any of the amount that [the
                  UIM carrier] had the statutory right to seek from Llewellyn.
                  Instead, [the UIM carrier] agreed with White, [the plaintiff,] not to
                  interfere with White’s right to collect from Llewellyn any amounts
                  Llewellyn was found to owe White. Llewellyn is not entitled to
                  any credit for money she owes pursuant to a judgment against her
                  that she has not paid.

Llewellyn, 297 Va. at 600. Kirkpatrick argues that the dicta should apply to this case and that

because USAA agreed “not to pursue the recovery that the carrier’s subrogation rights entitle[d]

it to seek,” he is “entitled to credit against any judgment received by the plaintiff, up to the

amount owed to the UIM insurer pursuant to its subrogation rights.” Id.

           We find the dicta unpersuasive. “Dicta cannot ‘serve as a source of binding authority in

American jurisprudence.’” Newman v. Newman, 42 Va. App. 557, 566 (2004) (en banc)

           7
        As noted, USAA may have a right to reimbursement from Brown pursuant to its policy;
however, the policy is not in the record and this case does not require us to determine whether
USAA’s contract with Brown would entitle it to any proceeds that Brown ultimately recovers
from Kirkpatrick.
                                                -8-
(quoting United States v. Pasquantino, 336 F.3d 321, 329 (4th Cir. 2003) (en banc)). “Dicta in a

prior decision generally refers to that portion of an opinion ‘not essential’ to the disposition in

the case.” Id. (quoting Cent. Green Co. v. United States, 531 U.S. 425, 431 (2001)). The

hypothetical counterfactual raised by the Llewellyn Court of a UIM carrier agreeing with a

defendant to forgo recovery was not essential to its holding that payments by a UIM carrier were

a collateral source and not subject to set-off under Code § 8.01-35.1; accordingly, it does not

bind us.

       The Llewellyn Court provided no rationale for why the mere agreement to forgo the

subrogee’s recovery would entitle the tortfeasor to credits against the underlying judgment.

Indeed, the result suggested by the dicta runs contrary to the rationale of the actual holding of

Llewellyn. When a plaintiff has been compensated by a third party for damages caused by a

tortfeasor, a windfall is inevitable. Either the plaintiff secures a double recovery, or the

tortfeasor escapes responsibility for damages caused. The collateral source rule requires that the

defendant does not receive that windfall. When subrogation rights exist, however, neither the

plaintiff nor the defendant receive a windfall. Where the subrogee waives those rights to

recover, then the public policy balancing of the collateral source rule comes back into play.

Indeed, that was the basis of the Llewellyn decision: the Court acknowledged that the waiver of

subrogation could lead to a double recovery but noted that the “‘law contains no rigid rule

against overcompensation,’ and ‘making tortfeasors pay for the damage they cause can be more

important than preventing overcompensation.’” Llewellyn, 297 Va. at 601 (quoting McDermott,

Inc. v. AmClyde, 511 U.S. 202, 219 (1994)).

       Additionally, the North Carolina case on which the Llewellyn Court chiefly relied,

involved a situation where the subrogee “waived its subrogation rights against defendant.”

Hairston, 821 S.E.2d at 387. The Hairston court saw “no reason why defendant should be

                                                 -9-
entitled to different treatment simply because [the insurer] elected to waive its statutory

subrogation rights rather than attempting to enforce them.” Id. at 395. USAA bargained away

its right to pursue recovery from Kirkpatrick in exchange for his appearance and participation at

trial. Kirkpatrick received the benefit of that bargain because USAA no longer has the right to

recover against him. That agreement has no impact on Brown’s right to recover against

Kirkpatrick. We see no reason why Kirkpatrick should be able to escape his tort liability

because USAA declined to pursue its subrogation rights.

        Finally, Kirkpatrick argues that it “would be against public policy to allow [Brown] a

double recovery at the expense of USAA.” This misunderstands the consequences of applying

the collateral source rule. USAA could have recovered from Kirkpatrick and prevented a double

recovery, but it chose not to. Allowing Brown to recover against Kirkpatrick does not come at

USAA’s expense, but Kirkpatrick’s. This result is perfectly in line with the result dictated by the

collateral source rule and the rationale, if not the dicta, of Llewellyn.

                                           CONCLUSION

        Because Kirkpatrick’s judgment debt has neither been paid off nor discharged, he was not

entitled to relief under Code § 8.01-455, and the circuit court erred by granting his motion to

mark the judgment as paid and satisfied. Accordingly, we reverse the ruling of the circuit court

and remand for further proceedings consistent with this opinion.

                                                                            Reversed and remanded.

                                                 - 10 -
Huff, J., dissenting.

        Code § 38.2-2206 governs uninsured/underinsured motorist insurance (“UIM”) coverage,

such as the policy appellant had with USAA. Subsection G of that statute states, in relevant part,

that “[a]ny insurer . . . shall be subrogated to the rights of the insured to whom the claim was

paid against the person causing the injury[] . . . and that person’s insurer.” Code § 38.2-2206(G).

In the insurance context, the principle of subrogation dictates that “an insurer that has paid a loss

under an insurance policy is entitled to all the rights and remedies belonging to the insured

against a third party with respect to any loss covered by the policy.” Subrogation, Black’s Law

Dictionary (11th ed. 2019). Thus, by statute, when an uninsured or underinsured driver causes

an accident with an UIM-insured driver, and the insured driver obtains a judgment against the

underinsured driver, the UIM insurer enjoys the statutory right to enforce that judgment against

the underinsured driver to recoup its costs from paying pursuant to the UIM policy.

        The parties all agree USAA waived its subrogation right against appellee. Yet they differ

on the effect of that waiver. Appellant argues USAA’s waiver means all rights to pursue the

recovery essentially revert to him, so he can claim the remainder of the judgment from appellee,

despite the UIM-policy payment. The majority agrees.

        Appellee counters that the right belongs exclusively to the UIM carrier. Thus, when

waived by the carrier, that right is extinguished and any payment from a UIM policy is credited

toward satisfaction of the judgment; the insured plaintiff may seek to enforce his judgment

against the tortfeasor only to the extent of any remainder. Because I agree with appellee, I

respectfully dissent.

        The Virginia Supreme Court in Llewellyn v. White, 297 Va. 588, 600 (2019), described

the nature of a UIM insurer’s statutory subrogation right under Code § 38.2-2206(G). That right,

the Court wrote, “belongs to the UIM carrier. It can exercise or waive that right as it pleases.”

                                                - 11 -
Id. Accordingly, “the UIM carrier can make an agreement with the [underinsured] defendant not

to pursue the recovery that the carrier’s subrogation rights entitle it to seek from the defendant.”

Id. Under such an agreement, “the defendant may be entitled to credit against any judgment

received by the plaintiff, up to the amount owed to the UIM insurer pursuant to its subrogation

rights.” Id.8

       That is what happened here. Consistent with Llewellyn, USAA—through its waiver—

agreed with appellee that it would not enforce the judgment against him to recoup the cost of the

UIM-policy payment. Accordingly, appellee was “entitled to credit against any judgment

received by [appellant], up to the amount owed to [USAA] pursuant to its subrogation rights.”

See id. The UIM statute grants the UIM carrier the subrogation right, and nothing in the statute

says that right then reverts to the insured when his carrier waives its subrogation rights.

       The purpose of UIM coverage is to provide resources equal to the policyholder’s limits

from which to satisfy a judgment for personal injuries or property damage caused by an

underinsured tortfeasor.9 USAA paid appellant $236,000 to satisfy the balance owed for the

judgment against Kirkpatrick, pursuant to its UIM obligation.10 Therefore, appellant was already

       8
         The majority dismisses this portion of Llewellyn as dicta. Yet the majority relies on
Llewellyn’s application of the collateral-source rule. That portion of Llewellyn, too, is dicta
because it was not essential to the disposition of the question at issue: whether an unrelated
statutory offset provision applied to the circumstances at issue. Llewellyn, 297 Va. at 596-98
(holding the statutory offset in Code § 8.01-35.1, invoked by the defendant Llewellyn, did not
apply to the case).
       9
         See Trisvan v. Agway Ins. Co., 254 Va. 416, 418 (1997) (“Since 1982, [Code]
§ 38.2-2206 has required that automobile liability insurance policies issued in Virginia include
an endorsement which obligates the insurer to pay the insured for damages caused by the
operation or use of an underinsured motor vehicle.”).
       10
          While I agree with the majority that “waiver of the insurer’s right to subrogation does
not discharge the underlying tort liability,” supra at 3, payment of the remaining judgment does.
The only reason USAA paid Brown the $286,000 was to satisfy the balance of the owed
judgment. See Code § 38.2-2206(G) (“Any [UIM] insurer paying a claim . . . shall be subrogated

                                                - 12 -
made whole through his UIM insurance policy. Adopting appellant’s view will allow him to

recover double—first from his UIM insurer pursuant to his UIM policy, and then from the

defendant directly for the same amount paid out under the policy (on top of any remainder of the

judgment). That result undercuts “the default rule against double recoveries.” See Dominion

Res., Inc. v. Alstom Power, Inc., 297 Va. 262, 270-71 (2019).

       The collateral-source rule does not justify that double recovery. That doctrine instructs

that “compensation or indemnity received by a tort victim from a source collateral to the

tortfeasor may not be applied as a credit against the quantum of damages the tortfeasor owes.”

Acordia of Va. Ins. Agency, Inc. v. Genito Glenn, L.P., 263 Va. 377, 387 (2002) (quoting

Schickling v. Aspinall, 235 Va. 472, 474 (1988)). It acts only as “a narrow exception to both the

default rule against double recoveries and the principle that compensatory damages cannot leave

a plaintiff better off than before the injury.” Dominion Res., Inc., 297 Va. at 270-71 (emphasis

added); see also Code § 8.01-56 (“[T]here shall be but one recovery for the same injury.”); cf.

Llewellyn, 297 Va. at 601.

       Monies paid from sources collateral to the tortfeasor typically include things like medical

payment coverage or health-insurance-coverage payments for medical care. Those are payments

made regardless of the liability of the tortfeasor.

       UIM insurance, however, is not collateral to the tortfeasor’s liability. Indeed, its very

purpose is to provide additional monies to satisfy the risk and exposure of the tortfeasor. In

to the rights of the insured to whom the claim was paid against the person causing the injury,
death, or damage and that person’s insurer, although it may deny coverage for any reason, to the
extent that payment was made.”).
         For the same reason, the provision of Code § 8.01-455 that requires a judgment to be
marked “satisfied” when full payment has been made fully supports the decision of the trial court
in the instant action. USAA’s payment under the UIM policy satisfied the remaining liability
“for bodily injury or property damage caused by the operation or use of an underinsured motor
vehicle to the extent the vehicle is underinsured.” Code § 38.2-2206(A).
                                                - 13 -
effect, it ensures there is a pot of money from which the insured plaintiff will receive

compensation via his insurance when the defendant-tortfeasor has insufficient coverage. UIM

coverage, therefore, is not collateral to the tortfeasor’s liability, but rather depends directly on the

tortfeasor’s liability. Accordingly, the collateral source rule is irrelevant here.

        Nor does Llewellyn demand the application of the collateral-source rule to this case.

Although the Court in Llewellyn deemed the UIM carrier’s payment in that case a collateral

source, the Court there faced a different set of circumstances. 297 Va. 588. Llewellyn involved

a settlement between the plaintiff and her UIM-insurance carrier. Id. at 594. Before trial, the

UIM carrier paid a flat settlement amount to its insured (the plaintiff White) and thereby avoided

paying any other amount under the UIM policy that it otherwise would have been required to

cover of the tortfeasor’s adjudicated liability. Id. Such a side deal renders the settlement

payment a collateral source independent of the tortfeasor’s liability. In other words, the carrier

in Llewellyn never made a payment in satisfaction (or partial satisfaction) of the judgment for the

tortfeasor’s liability because White essentially sold her UIM coverage in exchange for a fixed

sum as a settlement of her own insurance policy rights. The money White received from that

pre-trial settlement with her UIM carrier was therefore collateral to the tortfeasor’s liability.

        In contrast, this case concerns an agreement between the tortfeasor and USAA, the

UIM-insurance carrier,11 in which USAA agreed with the tortfeasor to waive its subrogation

right in exchange for the tortfeasor’s liability carrier defending the case. That agreement, unlike

the one in Llewellyn, did not eliminate USAA’s obligation to provide UIM-insurance coverage

        11
           The UIM-insurance context typically involves multiple parties with various interests—
the plaintiff, the plaintiff’s insurer(s), the defendant, and the defendant’s insurer(s). Those
parties can contract with one another throughout that process. For example, the UIM statute
specifically spells out how an “injured person may settle a claim with (i) a liability insurer [(i.e.,
the defendant’s insurer)] . . . and (ii) the liability insurer’s insured [(i.e., the defendant)] for the
available limits of the liability insurer’s coverage” without precluding the injured person from
receiving a payout from her own UIM policy. Code § 38.2-2206(K).
                                                    - 14 -
for Brown, the policyholder. And as previously explained, such coverage under these

circumstances is not collateral to the tortfeasor’s liability.

        The insured plaintiff is made whole—for any excess beyond the coverage amount of the

tortfeasor—through plaintiff’s UIM policy and by recovering any remainder of his judgment

directly from the underinsured tortfeasor. By granting the subrogation right exclusively to the

UIM carrier, Code § 38.2-2206 ensures that the UIM policy remains as an additional source of

funds to make the insured plaintiff whole even if the carrier waives its subrogation right against

the tortfeasor. Appellant’s approach, on the other hand, will only enable double recovery and

undermine the purpose of UIM insurance.12 For those reasons, I respectfully dissent.

        12
           As an aside, I note some additional consequences of appellant’s approach adopted by
the majority. As a practical matter, UIM carriers sometimes contract away their subrogation
rights against tortfeasors. A UIM carrier, for example, may want to avoid having an insurance
company named in the lawsuit. Alternatively, the UIM carrier may want to ensure that the legal
costs of a defense are handled by the tortfeasor’s insurance carrier and incentivize the defendant
to defend the case in exchange for not exercising its subrogation rights in later proceedings. And
defendant’s insurer, acting in accordance with its fiduciary duty to its insured, will likely take
that deal.
        But appellant’s approach, adopted by the majority, guts the subrogation waiver’s value as
a bargaining tool for facilitating settlements. Now if the UIM carrier waives subrogation, the
UIM payment is not credited against the judgment, and the plaintiff can pursue that amount from
the defendant despite the waiver. The UIM carrier then cannot make any guarantees to
defendant or the defendant’s insurer. The majority’s approach therefore renders the waiver
worthless, making settlements less likely and litigation more contentious and complicated. See
Mansfield v. Bernabei, 284 Va. 116, 124 (2012) (“The importance of encouraging compromise
and settlement is unquestioned in our jurisprudence.”).
                                                - 15 -