An insurance company that paid workers’ compensation benefits to an injured plaintiff is not entitled to full reimbursement from a settlement of a third-party liability suit, a U.S. District Court judge in Rhode Island has determined.
The plaintiff argued that he owed the insurer less than the entire settlement amount because the settlement included money for things such as his extensive pain and suffering that were not compensated by the insurer.
Judge John J. McConnell Jr. agreed.
“[T]he workers’ compensation carrier is not entitled to reimbursement for money paid to [the plaintiff] for which it did not make a corresponding workers’ compensation payment,” the judge wrote.
The eight-page decision is Vellucci v. Miller, et al.
John A. Baglini of Providence, R.I., represented the plaintiff. The insurance company was defended by Lauren Motola-Davis of Providence.
On Sept. 18, 2004, while employed by Aspen Aerogels, Inc., plaintiff Frank A. Vellucci was injured in an accident. He received workers’ compensation from Ohio Casualty Insurance Co., the workers’ compensation carrier of Aspen’s parent corporation.
Ohio Casualty paid the plaintiff a total of $763,762.45, comprised of $497,848.07 for medical payments and $265,914.38 for indemnity benefits (lost wages).
The plaintiff elected to accept the workers’ compensation award from the insurer and file a lawsuit against parties other than his employer.
Two of those parties offered to settle with the plaintiff for $150,000. That amount was deposited in the Rhode Island Superior Court Registry pending the outcome of the dispute with the insurance company, which claimed a lien on any third-party recovery obtained by the plaintiff. The insurer claimed to be owed the full amount of the settlement.
The plaintiff’s position was that the insurance company was entitled to reimbursement only for the portion of the settlement that corresponded with the compensation paid by the insurer. Thus, his argument went, Ohio Casualty was not entitled to reimbursement for the portion of the third-party settlement attributed to pain and suffering because Ohio Casualty did not compensate him for pain and suffering.
“[T]his Court agrees with Mr. Vellucci’s interpretation of the state statute and the legal basis for his complaint,” said McConnell, whose resolution of the parties’ dispute was based on the statutory language.
“Under R.I. Gen. Laws § 28-35-58, Mr. Vellucci must ‘reimburse’ the workers’ compensation carrier ‘to the extent of the compensation paid,’” he said.
“Here, the word ‘reimburse’ is defined by Black’s Law Dictionary as ‘[t]o pay back, to make restoration, to repay that expended; to indemnify, or make whole,’” the judge noted. “Reimbursement therefore is limited to what has been expended or paid. One cannot be reimbursed for something that it did not pay.”
Vellucci’s third-party recovery included compensation to him for pain and suffering resulting from his injury as well as “‘un-reimbursed lost wages beyond the 66 2/3 Mr. Vellucci received as weekly indemnity benefits,’” McConnell said. “His compensation from the workers’ compensation insurer did not include those damages; therefore, under the plain language of §28-35-58, Ohio Casualty is not entitled to reimbursement of 100% of the $150,000 recovery Mr. Vellucci received in settlement from two of the third-party defendants.”
The judge pointed out that the Massachusetts Appeals Court ruled likewise in Curry v. Great American Insurance Company in 2011. In Rhode Island, as in Massachusetts, pain and suffering is not compensable under the state workers’ compensation law.
“The case before this Court has an analogous set of facts involving a similar state statute,” he stated.
McConnell cautioned, however, that Ohio Casualty was entitled under the statute to some portion of the third-party settlement amount because the settlement did include compensation for “medical bills and indemnity benefits.”
Thus, he said, a trier of fact must determine the appropriate apportionment if the parties cannot otherwise agree.