Westport Dental Associates, P.C. v. Jeffrey Cooper et al. (2012)

MEMORANDUM OF DECISION RE MOTION TO DISMISS (101.00 )

I. FACTS

In this dispute, the plaintiff, Westport Dental Associates, P.C., seeks reimbursement from its employee, Anne Sabo, and her agents under General Statutes § 31–293 for workers' compensation payments that the plaintiff made to Sabo for injuries she sustained as a result of the alleged negligence of third party tortfeasors Amalgamated Realty Company, LLC and Hanley's Excavating, LLC. On March 31, 2010, the plaintiff filed a motion to intervene, pursuant to § 31–293(a), in Sabo's suit against Amalgamated Realty and Hanley's Excavating,¹ and Judge Cocco granted the motion on April 20, 2010.   The plaintiff subsequently withdrew from that action on April 1, 2011.   Then, on October 7, 2011, the plaintiff filed a four-count complaint against the defendants, Anne Sabo;  Zeldes, Needle & Cooper, P.C., the law firm representing Sabo in the underlying suit;  and Jeffrey Cooper, a member of Zeldes, Needle & Cooper and Sabo's attorney in the underlying matter.

In the first count, the plaintiff seeks a declaratory judgment and makes the following allegations.   On or about February 23, 2008, Sabo arrived for work and while walking through the courtyard in the direction of the parking lot and in the vicinity of the staircase, she slipped and fell on an accumulation of ice, causing her to fall down the steps and resulting in various physical injuries.   The injuries arose out of and in the course of Sabo's employment with the plaintiff.   As a result of this incident, the plaintiff paid Sabo for her medical care and compensation in the amount of $52,814.46, and it may be obligated to expend further amounts in the future.   Sabo brought a liability claim against Amalgamated Realty, which operated, controlled and maintained the property on which the plaintiff is located, and Hanley's Excavating, which was responsible for the maintenance of that property.   Cooper and Zeldes, Needle & Cooper represented Sabo in this matter.   In April 2011, Sabo settled its claims against Amalgamated Realty and Hanley's Excavating for $77,500, which was fully satisfied through payments issued by insurance carriers on behalf of Amalgamated Realty and Hanley's Excavating and paid directly to Zeldes, Needle & Cooper and/or Cooper.   Prior to the settlement, the plaintiff served written notice on Amalgamated Realty and Hanley's Excavating of its workers' compensation lien of $52,814.46 under § 31–293.   Despite such notice and allegedly in violation of § 31–293, the defendants have received and/or distributed the settlement proceeds and are holding the plaintiffs lien in escrow, refusing to reimburse the plaintiff for its lien.

The plaintiffs second, third and fourth counts sound in conversion against Cooper;  Zeldes, Needle & Cooper;  and Sabo, respectively, and allege the following facts.   The defendants had possession of and exercised control over all or a portion of the settlement proceeds.   Moreover, they had notice of the plaintiff's lien and have yet to release the proceeds to the plaintiff or to reimburse the plaintiff for its lien, even though the plaintiff is entitled to such reimbursement.   The defendants are alleged to have converted such proceeds to their own use.

On November 23, 2011, the defendants filed a motion to dismiss the plaintiff's complaint on the grounds that:  (1) the plaintiff lacks standing in that § 31–293 does not grant the plaintiff authority to bring suit against the employee or her representing attorney;  and (2) the court lacks subject matter jurisdiction in that the plaintiff's claims of conversion are dependent on adjudication of its declaratory judgment.   The defendants filed a memorandum of law in support of its motion.   The plaintiff filed a memorandum of law in opposition, to which the defendants filed a reply memorandum.   The matter was heard at the short calendar on March 5, 2012.

II. DISCUSSION

“A motion to dismiss ․ properly attacks the jurisdiction of the court, essentially asserting that the plaintiff cannot as a matter of law and fact state a cause of action that should be heard by the court ․” (Internal quotation marks omitted.)  Bacon Construction Co. v. Dept. of Public Works, 294 Conn. 695, 706, 987 A.2d 348 (2010).  “The motion to dismiss ․ admits all facts which are well pleaded, invokes the existing record and must be decided upon that alone ․ Where, however ․ the motion is accompanied by supporting affidavits containing undisputed facts, the court may look to their content for determination of the jurisdictional issue and need not conclusively presume the validity of the allegations of the complaint.”  (Internal quotation marks omitted.)  Ferreira v. Pringle, 255 Conn. 330, 346–47, 766 A.2d 400 (2001).  “Subject matter jurisdiction involves the authority of the court to adjudicate the type of controversy presented by the action before it ․ [A] court lacks discretion to consider the merits of a case over which it is without jurisdiction ․” (Internal quotation marks omitted.)  Burton v. Commissioner of Environmental Protection, 291 Conn. 789, 802, 970 A.2d 640 (2009).  “[T]he plaintiff bears the burden of proving subject matter jurisdiction, whenever and however raised.”  (Internal quotation marks omitted.)  Fort Trumbull Conservancy, LLC v. New London, 265 Conn. 423, 430 n.12, 829 A.2d 801 (2003).

The defendants argue that § 31–293 contains no authorization for a suit against an employee, its agents or any entity other than a third party tortfeasor and, therefore, as a matter of law, the plaintiff cannot state a cause of action against the defendants under that statute.   The defendants further contend that under § 31–293, the plaintiff may choose only one remedy—either to intervene in Sabo's tort action or to enforce its lien on Sabo's settlement—and that by choosing to intervene in Sabo's suit, the plaintiff forfeited its right to collect on its lien.   Because the plaintiff lacks standing to seek a declaratory judgment under § 31–293, the defendants argue, the plaintiff has no legal right or possessory interest at issue to assert a conversion claim against the defendants.   In opposition to the motion, the plaintiff argues that it was not a party to Sabo's suit against the tortfeasor at the time the case settled.   Therefore, the plaintiff contends, it was unable to pursue directly the tortfeasor and is classically and statutorily aggrieved because it has a lien under § 31–293 for which the plaintiff is entitled to reimbursement and which it perfected by providing written notice to the tortfeasors prior to their settlement with Sabo. As to its conversion counts, the plaintiff asserts that its right to lien reimbursement is a property interest and that its conversion claims are the only way that the plaintiff can enforce its lien.

“Section 31–293 is a detailed scheme governing the parties' rights in third party workers' compensation scenarios.   Its primary effect is to provide a mechanism for an injured employee to assert a claim against the party allegedly liable for his injury, notwithstanding the employee's statutory claim for workers' compensation.   The statute also allows an employer who is obligated to pay workers' compensation benefits either to intervene in the employee's action or, in the event that the employee fails to prosecute his claim, to bring an independent action against the alleged tortfeasor.”  Soracco v. Williams Scotsman, Inc., 292 Conn. 86, 92–93, 971 A.2d 1 (2009).  Section 31–293(a) was amended in 1993 to provide employers or carriers with a lien on a judgment or settlement received by the employee from a third party, provided the employer or carrier gives written notice of the lien to the third party.   Public Acts 1993;  No. 93–228, § 7.² “If the employer chooses not to intervene in an action brought by the employee, it still may recover a share of any damages in its capacity as a lienor.   In any event, the employer's recovery is limited to the amount of workers' compensation benefits that it has paid or has become obligated to pay as a result of the tortfeasor's alleged negligence or malfeasance.”  Soracco v. Williams Scotsman, Inc., supra, 292 Conn. 93–94.

“[R]esolution of the factual question of assent to the settlement is critical to the determination of an employer's rights under § 31–293(a), and, specifically here, whether the [employer] may pursue its own independent action against the [tortfeasors] ․ [A]ssent to the settlement operates as a ‘voluntary relinquishment’ of the employer's rights, namely, the right to impose a lien on any judgment or settlement, up to the amount of its workers' compensation liability, and the right to bring an independent cause of action against the defendant through which it can recover workers' compensation payments that it has paid or has become obligated to pay as a result of the defendant's alleged negligence.”  (Internal quotation marks omitted.)   Southbury v. Gonyea, 301 Conn. 405, 412–13, 21 A.3d 444 (2011).   Conversely, an employer who does not assent to a settlement between a tortfeasor and an employee to whom the employer has paid workers' compensation may still enforce its lien or pursue an independent action against the tortfeasor.  “[T]he rights of each party are protected by the following critical provision:  ‘No compromise with the [alleged tortfeasor] by either the employer or the employee shall be binding upon or affect the rights of the other, unless assented to by him.’  General Statutes § 31–293(a).   This provision protects each party, whether the intervening employer or the real party in interest, i.e., the injured employee, by permitting the non-settling or non-assenting party to retain all of its rights under the statute despite any unilateral settlement by the other party with the alleged tortfeasor.   In other words, if the employee chooses to settle his personal injury claim against the tortfeasor without the assent of the employer, the employer's right to recover on its lien and to pursue an independent action against the tortfeasor to recover any deficiency on that lien is unaffected.   This means, of course, that when the employee and the tortfeasor settle the matter for less than the amount of the lien, the tortfeasor must weigh the risk of further litigation and exposure to greater liability that may result from a settlement reached without the intervening employer's assent.   Significantly, however, the statute does not provide a mechanism for the non-assenting party to challenge a settlement between the other party and the tortfeasor.”  (Emphasis added.)  Soracco v. Williams Scotsman, Inc., supra, 292 Conn. 94.   In Soracco, the employer challenged the allocation of settlement between the tortfeasor and the plaintiffs after it asserted a workers' compensation lien.   The court held that “ § 31–293(a) does not confer standing on an employer seeking to challenge the allocation of the proceeds of a settlement reached between its injured employee and the tortfeasor.”  Id., 96.   In reaching this conclusion, the court reasoned that “the statute protects employers from unilateral settlement agreements by preserving their rights in the face of such agreements and by providing that they cannot be bound by them absent their assent.  Section 31–293 does not, however, allow an employer to interfere with a settlement reached between its employee and the tortfeasor, nor does it provide courts with the authority to dictate the appropriate terms of such a settlement.”  Id., 96–97.   The court concluded that the employer's rights under § 31–293—namely “the right to impose a lien on any judgment or settlement, up to the amount of its workers' compensation liability, and the right to bring an independent cause of action against the [tortfeasor] through which it can recover workers' compensation payments that it has paid or has become obligated to pay as a result of the defendant's alleged negligence”—were unaffected by a settlement to which it did not consent and that, accordingly, the employer could not have been aggrieved.  Id., 97.

This case presents very different circumstances from those in Soracco.   In the present case, the plaintiff is not challenging the allocation of the settlement proceeds between Sabo and the tortfeasor but rather is ultimately seeking reimbursement from the defendants for workers' compensation payments that it made to Sabo. Contrary to the defendants' arguments, the fact that the defendant initially intervened in Sabo's suit and then withdrew from that action does not deprive the plaintiff of standing to assert its lien on the settlement proceeds up to the amount of workers' compensation that it paid to Sabo. The plaintiff's standing in this context would be implicated only to the extent that it was challenging the allocation of the settlement proceeds between Sabo and the tortfeasors, and, as mentioned above, the plaintiff is not making any such challenge.   See Soracco v. Williams Scotsman, Inc., supra, 292 Conn. 96–98.   The dispositive point is that the plaintiff did not assent to the settlement between Sabo and the tortfeasors.   Indeed, the plaintiff withdrew from Sabo's suit against the tortfeasors before they settled, and it did not assent to the subsequent settlement.   Even the defendants state in their reply memorandum that “[t]here is no dispute that the plaintiff did not assent to this settlement.”   Defendants' Reply Memorandum, p. 4. Accordingly, the plaintiff has not relinquished its statutory right to assert its lien on the defendants' settlement proceeds.

The defendants argue, nevertheless, that once the plaintiff intervened in Sabo's suit against the tortfeasors, it relinquished its lien.   The defendants reason that the lien provision of § 31–293(a) takes effect only to the extent that the plaintiff chose not to intervene in the employee's tort action.   In support of this argument, the defendants cite to the following sentence from Soracco:  “If the employer chooses not to intervene in an action brought by the employee, it still may recover a share of any damages in its capacity as a lienor.”  (Emphasis added.)  Id., 93.   While it is plausible to interpret this statement as providing that an employer's recovery on a lien is conditioned on the employer not pursuing any other remedy under § 31–293(a), the sentence lends itself to more than one interpretation.   In any event, this court deems it necessary to find more explicit language on this issue before dismissing the plaintiff's suit on the ground that it cannot seek a declaration of its rights to pursue a statutory lien on Sabo's settlement.   See Wilcox v. Webster Ins. Co., 294 Conn. 206, 214, 982 A.2d 1053 (2009) ( “It is well established that, in determining whether a court has subject matter jurisdiction, every presumption favoring jurisdiction should be indulged.”)   (Internal quotation marks omitted.).   The defendants further cite to Valley Forge Ins. Co. v. Terribile, Superior Court, judicial district of Hartford at New Britain, Docket No. CV 92 0451158 (December 10, 1992, Langenbach, J.) [8 Conn. L. Rptr. 143] (8 C.S.C.R. 121), for the proposition that an employer cannot sue its employee for apportionment of a settlement to which it did not assent.   Nevertheless, this case is inapposite because it was decided prior to the 1993 amendment to § 31–293(a) and, therefore, does not discuss the employer's remedies in light of the statutory lien provision.

The inquiry thus becomes whether an employer's lien on an employee's judgment or settlement with a third party is a distinct and non-exclusive right, aside from the employer's remedies of intervention in the employee's suit or a direct action against the third party.   In Thomas v. Department of Developmental Services, the Supreme Court analyzed the scope of the statutory lien provision contained in § 31–293(a).   Specifically, the issue in that case was “whether the statutory lien provision contained in ․ § 31–293(a) entitles an employer to a credit for unknown, future workers' compensation benefits that it may become obligated to pay to an injured employee in the amount of the net proceeds that the injured employee has received from a judgment against or settlement with a third party tortfeasor.”  Thomas v. Department of Developmental Services, 297 Conn. 391, 392, 999 A.2d 682 (2010).   In construing the mechanics of § 31–293(a), the court held:  “Section 31–293(a) ․ provides various procedures by which an employer, who has paid or by award has become obligated to pay workers' compensation benefits, may seek reimbursement of such benefits.   The statutory lien provision ․ is one such procedure ․ Prior to P.A. 93–228, § 7, § 31–293(a) provided only two ways in which an employer could recover workers' compensation benefits payable to an employee;  the employer either could intervene in the employee's action against the third party tortfeasor or could bring its own action directly against that tortfeasor.”  (Emphasis added.)  Id., 400–01.   The court thus has interpreted § 31–293(a) as providing employers who pay workers' compensation with three diserete and independent remedies.   This construction of § 31–293(a) is further evidenced by the court's comments on its interpretation of the lien provision:  “[O]ur interpretation of the lien provision as providing coextensive rights of recovery with those provided by the vehicles of intervention and direct action, reduces costs and promotes efficiency by ensuring that an employer will not have to file its own action—and thereby incur unnecessary costs and burden the judicial system—in order to protect its right to recover unknown, future benefits.”  (Emphasis added.)  Id., 405.   Therefore, the court again has treated the lien provision as providing a distinct remedy and one that may be used by employers as an alternative to the options of intervention and a direct action, while providing rights that are “coextensive” with those of intervention and a direct action.

The court in Soracco provided perhaps the clearest explanation of the mechanics of an employer's workers' compensation lien under § 31–293(a).   “[T]he employee's right to recover damages from the tortfeasor is not limited by the statute but is subject to a judgment lien that can be asserted by the employer to recover any amount that he has paid or has become obligated to pay as compensation to the injured employee as a result of the tortfeasor's negligence.”  (Emphasis added;  internal quotation marks omitted.)  Soracco v. Williams Scotsman, Inc., supra, 292 Conn. 95.   Thus, it is clear that an employer's lien is an independent remedy that employers can assert against any judgment or settlement received by an employee from a third party, regardless of whether the employer chose to pursue any other remedy under § 31–293(a).   Accordingly, the plaintiff did not forfeit its right under § 31–293(a) to pursue its lien on Sabo's settlement simply because it initially intervened in Sabo's case and withdrew before the parties reached a settlement.

The defendants further argue that under § 31–293(a), an employer is prohibited from bringing suit against an employee or its agents.   Nevertheless, the case law on which the defendants rely for this proposition pre-dates the 1993 amendment to § 31–293(a) and, therefore, fails to take into account the implications of the ability of employers, under the express language of that amendment, to impose a lien upon any judgment or settlement received by the employee.   In accordance with Soracco v. Williams Scotsman, Inc., supra, 292 Conn. 86, this court holds that pursuant to § 31–293(a), an employer may assert a lien against an employee on that employee's settlement or judgment against third party tortfeasors up to the amount of workers' compensation benefits that the employer made to the employee, even if the employer initially intervened in the employee's case against the tortfeasors and subsequently withdrew its appearance before the parties reached a settlement.

The court's holding comports with the legislative intent behind § 31–293 to prevent double recovery by employees.   See Gurliacci v. Mayer, 218 Conn. 531, 576, 590 A.2d 914 (1991).   Moreover, under this approach there is no risk that an employer may receive a windfall at the expense of the employee or third party tortfeasor to the extent that the employer initiates multiple remedies.   No matter which—and how many—avenues an employer attempts under § 31–293(a), in the context of that statute an employer can never recover more than the amount of workers' compensation benefits that it has paid or is obligated to pay to an employee.

Because the plaintiff has a basis to assert its statutory lien against the defendants, the court finds that the defendants' arguments challenging the plaintiff's conversion claims also lack merit.   For the foregoing reasons, the court denies the defendants' motion to dismiss.

TAGGART D. ADAMS

JUDGE TRIAL REFEREE

FOOTNOTES

FN1. See Sabo v. Amalgamated Realty Company, LLC, Superior Court, judicial district of Fairfield, Docket No. FBT CV 09 5026419..  FN1. See Sabo v. Amalgamated Realty Company, LLC, Superior Court, judicial district of Fairfield, Docket No. FBT CV 09 5026419.

FN2. Specifically, the amendment added, inter alia, the following language to § 31–293(a):  “Notwithstanding the provisions of this subsection, when any injury for which compensation is payable under the provisions of this chapter has been sustained under circumstances creating in a third person other than the employer a legal liability to pay damages for the injury and the injured employee has received compensation for the injury from his employer or its workers' compensation insurance carrier pursuant to the provisions of this chapter, the employer or insurance carrier shall have a lien upon any judgment received by the employee against the third party or any settlement received by the employee from the third party, provided the employer or insurance carrier shall give written notice of the lien to the third party prior to such judgment or settlement.”   Public Acts 1993, No. 93–228, § 7..  FN2. Specifically, the amendment added, inter alia, the following language to § 31–293(a):  “Notwithstanding the provisions of this subsection, when any injury for which compensation is payable under the provisions of this chapter has been sustained under circumstances creating in a third person other than the employer a legal liability to pay damages for the injury and the injured employee has received compensation for the injury from his employer or its workers' compensation insurance carrier pursuant to the provisions of this chapter, the employer or insurance carrier shall have a lien upon any judgment received by the employee against the third party or any settlement received by the employee from the third party, provided the employer or insurance carrier shall give written notice of the lien to the third party prior to such judgment or settlement.”   Public Acts 1993, No. 93–228, § 7.

Adams, Taggart D., J.T.R.