Administrative: Settlement reduces VCU’s obligation to injured employee

Where the injured employee obtained a settlement from a third-party tortfeasor that exceeded the amount of the compensation lien, the employer was obligated to pay the employee only for reimbursement for recovery costs (i.e., attorney’s fees and costs for procuring the third-party recovery), rather than continuing disability payments.

Background

Fawn Goode appeals a third-party order entered by the Workers’ Compensation Commission involving a settlement that she received from the third-party tortfeasor who injured her. She contends that the Commission erred by entering a third-party order that suspended her initial award order. She also argues that the Commission erred in finding that Code § 65.2-313 cannot be harmonized with the rights and duties of the parties under an award of temporary total disability.

Analysis

“An employee injured in the course of employment by a negligent third party may pursue a common law remedy against the tort-feasor and a claim for compensation benefits under the . . . Act, but may obtain only one full recovery for the injury.” Code § 65.2-313 “contemplates those circumstances where a third party recovery is obtained that exceeds the amount of the employer’s compensation lien.”

Here, Goode’s third-party recovery exceeded the amount of VCU’s workers’ compensation lien. As such, pursuant to Code § 65.2-313, VCU was entitled to a credit against its liability for additional entitlements, but, while exhausting this credit, remained liable for the recovery costs, that is, Goode’s attorney’s fees and costs for procuring the third-party recovery.

The parties do not dispute the foregoing conclusions. Goode challenges only the method in which the Commission structured the payment of additional entitlements under Code § 65.2-313. Although she frames it as three separate assignments of error, the disagreement between the parties can be stated as a single question—whether the Commission erred in suspending the initial award order.

Rather than suspending the initial award order, Goode argues, the Commission should have “issu[ed] a third-party order that d[id] not terminate or suspend the [initial award order], but instead, state[d] that [VCU] is entitled to a credit pursuant to . . . Code § 65.2-313 against its liability for additional workers’ compensation payments and medical expenses.” The court disagrees.

Once the third-party recovery occurred, VCU’s obligation to pay Goode was in the form of payment for reimbursement for recovery costs when submitted to it by Goode, rather than continuing disability payments. This approach—the suspension of an award order when a third-party recovery is obtained that exceeds the amount of the employer’s workers’ compensation lien—is also supported by this court’s prior case law.

Here, the Commission suspended Goode’s initial award order granting her total disability and medical benefits, and entered a final third-party order that provided that VCU was “entitled to an offset in the amount of $268,880.20 against its liability for additional entitlements” and that “[a]s to each post [recovery] entitlement . . . upon submission by [Goode] . . . [VCU] shall pay the claimant a sum equal to 41.58% of each entitlement,” such “reimbursements [to] continue until the post-settlement entitlements equal $268,880.20.”

This procedure follows the requirements set forth in Code § 65.2-313—during the period where the employer is entitled to an offset, the statute requires the employer to pay the claimant only for reimbursement for litigation costs upon submission by the claimant, rather than continued disability payments. Thus the Commission did not err in its entry of the final third-party order.

Affirmed.

Goode v. Virginia Commonwealth University, Record No. 0290-24-2, May 13, 2025. CAV (unpublished opinion) (Malveaux). From the Virginia Workers’ Compensation Commission. Richard H. Talbot (Geoff McDonald and Associates, on brief), for appellant. Jacqueline C. Hedblom, Senior Assistant Attorney General/Section Chief (Jason S. Miyares, Attorney General; Steven G. Popps, Deputy Attorney General; Scott John Fitzgerald, Senior Assistant Attorney General, on brief), for appellees. VLW 025-7-116. 11 pp.