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Levasseur v. Lowery8/1/2000
nuary 1999, the trial court ordered that (1) Beam's workers' compensation lien did not attach to the proceeds from plaintiff's agreement with Travelers; and alternatively, (2) the trial court extinguished the lien in its discretion in the event it was later determined that Beam did have a lien on the plaintiff's settlement proceeds.
Recently, in Liberty Mut. Ins. Co. v. Ditillo, 348 N.C. 247, 253, 499 S.E.2d 764, 768 (1998), our Supreme Court specifically declined to decide whether a workers' compensation carrier has a right under N.C. Gen. Stat. § 97-10.2 to a lien on uninsured motorist (UM) benefits paid to an employee in a case where the UM coverage limits exceed the amount of workers' compensation benefits. We are now presented with a case where the UIM benefits paid to an employee exceed the amount of workers' compensation benefits.
Beam first argues that the trial court lacked jurisdiction to determine the amount of the workers' compensation lien and distribute the third party recovery under N.C. Gen. Stat. § 97-10.2(j).
To determine whether the trial court had jurisdiction under N.C. Gen. Stat. § 97-10.2(j), we first consider whether Travelers is a "third party" within the meaning of N.C. Gen. Stat. § 97-10.2. Under the statute, "third party" is defined as follows:
The right to compensation and other benefits ... shall not be affected by the fact that the injury ... was caused under circumstances creating a liability in some person other than the employer to pay damages therefor, such person hereinafter being referred to as the "third party." N.C. Gen. Stat. § 97-10.2(a)(Cum. Supp. 1998)(emphasis added).
In Creed v. R.G. Swaim and Son, Inc., 123 N.C. App. 124, 128-29, 472 S.E.2d 213, 216 (1996), this Court held that, under N.C. Gen. Stat. § 97-10.2, payments made by the UIM carrier as well as the tort-feasor are from a "third party," and that the workers' compensation carrier "has a lien on the proceeds of plaintiff's underinsured motorist policy" under the statute.
Here, the policy states that Travelers will pay all sums the plaintiff is "legally entitled to recover as damages from" the underinsured motorist. This Court has held that an action under a UIM policy is based on the tort of the other motorist and that UIM coverage is a type of liability coverage. See Ensley v. Nationwide Mut. Ins. Co., 80 N.C. App. 512, 515, 342 S.E.2d 567, 569, cert. denied, 318 N.C. 414, 349 S.E.2d 594 (1986)(stating the UIM carrier "assumed ... the liability of the uninsured motorist for damages which the plaintiff is legally entitled to recover from the uninsured motorist"). Traveler's liability to plaintiff, while derivative, exists by reason of defendant Lowery's negligence. See Baxley v. Nationwide Mutual Ins. Co., 104 N.C. App. 419, 424, 410 S.E.2d 12, 15 (1991), affirmed, 334 N.C. 1, 430 S.E.2d 895 (1993)(holding that an action under a UIM policy is "actually one for the tort allegedly committed by the [underinsured] motorist") (citations omitted). Therefore, Travelers is a "third party" in that plaintiff's injury was "caused under circumstances creating a liability in some person ... to pay damages therefor." N.C. Gen. Stat. § 97-10.2(a).
N.C. Gen. Stat. § 97-10.2(j) establishes when the superior court is given jurisdiction. The statute, as in effect at the time of the present case, provides in part:
Notwithstanding any other subsection in this section, in the event that a judgment is obtained which is insufficient to compensate the subrogation claim of the Workers' Compensation Insurance Carrier, or in the event that a settlement has been agreed upon by the employee and the third party, either party may apply to the
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