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Canal Ins. Co. v. Liberty Mut. Ins. Co.

A worker's compensation insurer could not prove that the injured employee was fully and completely compensated when he settled his third-party tort action because the insurer did not intervene in that suit or otherwise seek court protection of its derivative subrogation right.

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This is an appeal from cross-motions for summary judgment in a workers’ compensation subrogation suit brought by Canal Insurance Company c/o O’Steen Adjusting Services, the workers’ comp. insurer, who did not intervene in the employee’s tort suit against Liberty Mutual Insurance Company, the third party tortfeasor’s insurer, although it was on notice. Liberty Mut. settled the tort suit with the injured employee for a recovery for pain and suffering damages only, and there were substantial economic damages for lost wages and medical expenses remaining uncompensated in excess of the benefits paid by Canal. The trial court denied Canal’s motion and granted Liberty Mut.’s motion, because Canal’s derivative claim was lost when the employee’s suit was dismissed with prejudice. Absent intervention in such tort suit to protect its subrogation right, Canal could never carry its burden to prove that the employee had been fully compensated for his injuries and damages, thus barring any right of subrogation. We affirm.

On July 2, 1997, Robert E. Wilson, an employee of Thomas Trucking Company, sustained personal injuries arising out of the scope of his employment through the negligence of Harry’s Farmers Market, Inc. and sued Harry’s. Liberty Mutual insured Harry’s and entered a defense for its insured to the suit. Canal paid Wilson’s medical expenses and comp. benefits for the injuries arising from the occurrence.

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