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Wood v. Weldon10/21/2003
PUBLISHED
Defendant Interstate Insurance Company/Harbor Specialty Insurance Company appeals from an order reducing its workers' compensation lien on the proceeds of a settlement received by plaintiff Donna W. Wood as damages for the wrongful death of her husband, Timothy Joe Wood. Plaintiff cross-appeals, contending the trial court should have extinguished defendant's lien altogether. The record discloses that Timothy Joe Wood, a tow truck operator employed by Bowles Automotive, Inc. ("Bowles"), was struck and killed by a vehicle driven by Monique Nicole Weldon on 1 April 1999 while he was providing assistance to a disabled vehicle in the course of his employment. Defendant was the workers' compensation insurance carrier for Bowles. Following Wood's death, defendant paid plaintiff and her son, Wood's only child, workers' compensation benefits and funeral expenses. Mrs. Wood received an uncommuted lump sum settlement and her son received ongoing weekly benefits.
Weldon was prosecuted and pled guilty to involuntary manslaughter, driving while intoxicated, and hit and run. In June 2000, plaintiff initiated a civil action for wrongful death against Weldon. Weldon, who was uninsured, failed to answer the complaint or otherwise appear in the matter and her default was entered by the Clerk of Superior Court on 22 October 2001. Thereafter, plaintiff reached a settlement with Bowles' uninsured motorist insurance carriers for $305,000. As a condition of the settlement, a portion of the settlement proceeds, $78,955, was placed in escrow pending a resolution of defendant's claimed workers' compensation lien.
Plaintiff then moved for default judgment against Weldon and for an order pursuant to G.S. § 97-10.2(j) extinguishing or reducing defendant's claimed workers' compensation lien on the proceeds of the settlement. On 25 March 2002, the trial court entered a default judgment against Weldon in the amount of $1,500,000 in compensatory damages and $200,000 in punitive damages. The court also entered an order in which it found that (1) the total amount of workers' compensation benefits, accrued and prospective, to which plaintiff and her son would be entitled to receive from defendant is $118,432, minus costs and attorneys' fees; (2) the amount of the settlement between plaintiff and the uninsured motorist insurance carriers was $305,000, of which she received $121,259.93 after payment of costs and attorneys' fees; (3) that a condition of such settlement required that $78,955 be placed in escrow pending the court's consideration of plaintiff's motion for extinguishment or reduction of the workers' compensation lien; (4) the sums paid by defendant and the uninsured motorist carriers are the only sums available to compensate plaintiff and her son for Wood's death; and (5) these sums combined would be substantially less than the amount plaintiff is entitled to recover of Weldon pursuant to the default judgment. The court reduced defendant's workers' compensation lien from $78,955 to $20,000. Both parties appeal.
I. Defendant's Appeal
Defendant contends the trial court exceeded its authority in reducing the lien because G.S. § 97-10.2 as it existed at the time of Timothy Wood's death in April 1999, provided that a superior court judge could reduce the workers' compensation lien granted by the statute upon the proceeds of a third party payment to the injured employee, only when the judgment obtained against the third party is insufficient to compensate the carrier's subrogation interest. Defendant acknowledges that G.S. § 97-10.2(j) was amended in June 1999 to grant the superior court discretion to determine the amount of the workers' compensation carrier's lien without a
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