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Pile v. Rischitelli

Superior Court of Delaware

June 14, 2019

THE ROCK PILE, Employer/Appellant,
v.
JOHN RISCHITELLI Claimant/Appellee. [1]

          Submitted: May 6, 2019

          On Appeal from the Industrial Accident Board.

          Nicholas E. Bittner, Esquire, and William D. Rinner, Esquire, Heckler & Fabrizio, Wilmington, Delaware, Attorneys for Appellant The Rock Pile.

          Walt F. Schmittinger, Esquire, Schmittinger & Rodriquez, P.A., Dover, Delaware, Attorney for Appellee Renee Rischitelli.

          MEMORANDUM OPINION

          RICHARD R. COOCH, R.J.

         I. INTRODUCTION

         This is The Rock Pile's ("Employer")[2] appeal from a September 27, 2018, decision of the Industrial Accident Board ("Board") which held that Employer was not entitled to apply the amount of John Rischitelli's Underinsured Motorist ("UIM") recovery as a credit against future workers' compensation benefits paid to Mr. Rischitelli's surviving spouse Renee Rischitelli. Mr. Rischitelli was killed in a motor vehicle accident with a third-party tortfeasor. The UTM coverage became available once Renee Rischitelli had exhausted the third-party tortfeasor's policy limits. Employer argues that the Board erred as a matter of law by denying Employer a credit for UTM benefits, that New Jersey law should apply, and that the Board's decision is not supported by substantial evidence.

         After review of the parties' contentions and the record, the Court concludes that the Board's decision was supported by substantial evidence and that the Board otherwise committed no error of law. Accordingly, the decision of the Board is affirmed.

         II. FACTS AND PROCEDURAL HISTORY[3]

         John Rischitelli, the Claimant-Below/Appellee, died in an automobile accident in New Jersey on August 7, 2014, while driving a tractor trailer owned and insured by Employer. In prior proceedings before the IAB, the parties litigated the compensability of a claim brought by Mr. Rischitelli's surviving spouse, Renee Rischitelli, for workers' compensation death benefits pursuant to 19 Del. C. § 2330. The Industrial Accident Board issued a decision dated June 12, 2017, holding that Mr. Rischitelli was an employee at the time of the accident, and Mrs. Rischitelli was owed death benefits. Mrs. Rischitelli has been receiving ongoing death benefits at the rate of $333.35 per week since that time. Mrs. Rischitelli also filed a lawsuit in New Jersey against the third-party tortfeasor in relation to the motor vehicle accident that killed Mr. Rischitelli. That litigation settled in October 2017 with a policy limits recovery from the tortfeasor's insurance coverage in the amount of $15, 000.00.

         At the time of the settlement of the New Jersey tort claim, the Employer had paid Mrs. Rischitelli $55, 382.77 in benefits and was continuing to pay the ongoing death benefits. Mrs. Rischitelli pursued an underinsured motorist ("UTM") claim against the carrier insuring the vehicle Mr. Rischitelli was operating at the time of his death. The UIM policy had been paid for by Employer. Mrs. Rischitelli recovered the UIM policy limit of $300, 000. Mrs. Rischitelli conceded that Employer was entitled to proportionate reimbursement of death benefits from the third-party recovery of $15, 000.00 in the amount of $9, 474.74 pursuant to 19 Del. C. § 2363(e). Employer later sought a credit against Mrs. Rischitelli's UTM recovery of $300, 000.00 to apply to future death benefits, the issue now before this Court.

         Employer argued to the Board that when an employer has paid for a UIM policy the employer is entitled to a credit/setoff in the amount of the UIM recovery against any future worker's compensation payouts. Claimant contended that 19 Del. C. § 2363(e) states that there can be no workers' compensation lien against UIM policies, and the statute had been specifically amended in 1993 to exclude UIM recoveries from the lien provisions of § 2363. Claimant also contended that the Employer's insurance carrier and counsel waived any interest in the UIM policy, on the basis that the Employer's counsel permitted counsel for Claimant to escrow the $15, 000.00 liability insurance payout alone.

         The Board issued its written decision on September 27, 2018, in which it agreed with Claimant and thus denied Employer any credit or lien in connection with the UTM recovery. The Board found that the General Assembly made it clear through amendments to Title 19, Chapter 23 that UTM benefits are to be treated differently from other types of non-workers' compensation recoveries by injured workers. The Board noted that "the Supreme Court has recognized [that] the 'General Assembly has eliminated the ability of a worker's compensation insurer to assert a lien against the UTM payments made pursuant to the employer's UTM policy.'"[4] The Board further rejected Employer's attempt at distinguishing a reimbursement from a credit under 19 Del. C. § 2363(e), stating that "the difference is only one of timing[, ]"[5] and that Employer's interpretation "conflicts with the clear intent of the General Assembly, as shown by its statutory amendments specifically designed to permit an injured worker to recover UTM benefits from an employer's policy."[6] This appeal followed.

         III. THE PARTIES' CONTENTIONS[7]

         A. Employer's Contentions

         First, Employer contends that the Board erred as a matter of law in denying Employer a credit/offset from Mrs. Rischitelli's recovery under the UIM policy. Employer argues that the Board's decision relied upon an allegedly erroneous conclusion that 19 Del. C § 2363 does not allow employers to derive any benefit from UIM policies purchased by employers themselves. Employer argues that a credit/offset is applicable when the source of the secondary benefits-the UIM Policy-is solely funded by the Employer, allegedly resulting in the Employer funding a double recovery which Employer contends is improper. Employer maintains that a credit is permissible even when a reimbursement is not available.

         Second, Employer contends that the Board erred in failing to address the alternative arguments/grounds for relief set forth by Employer. Specifically, Employer argues that New Jersey law should apply, and that New Jersey law allows a credit/setoff from the Claimant's UIM recovery. Employer alleged that Claimant opened the door to the application of New Jersey law by referencing same in settlement discussions in connection with the lien calculation on the recovery from the tortfeasor. Employer contended that this justified the Employer's reliance upon New Jersey law as to the UIM recovery. Employer maintains that the Board's failure to address this additional ground for relief requires a remand to allow the Board to address the issue directly, assuming that this Court does not find the credit to be available under Delaware law. Lastly, Employer contends that the Board's decision is not supported by substantial evidence.

         B. Claimant's Contentions

         Claimant contends that the Board's decision is properly grounded in the statute and case law, in particular Delaware Supreme Court's 2013 decision in Simendinger v. National Union Fire Ins. Co[8] Claimant argues that Simendinger establishes that a workers' compensation carrier's entitlement to a credit or a reimbursement is limited to recovery against the third-party tortfeasor's liability insurer, and that a carrier may not assert a lien of any kind against UIM benefits. Claimant contends that there is no distinction between a reimbursement under 19 Del. C. § 2363(e) and a credit. Claimant contends that both a reimbursement and a credit emanate from the same statutory language and both constitute a lien, the only difference being one of timing. Claimant asserts that a reimbursement is for benefits previously paid by the compensation carrier, and a credit is for benefits not yet paid by the compensation carrier. Claimant further contends that Delaware law controls this Delaware workers' compensation claim between Delaware parties, brought by the carrier in Delaware pursuant to a Delaware insurance policy that was formed under Delaware law, and where the claimants reside in Delaware.

         IV. STANDARD OF REVIEW

         In reviewing a decision of the Board, "[t]he function [of this] Court is limited to determining whether substantial evidence supports the Board's decision regarding findings of fact and conclusions of law and is free from legal error."[9] Substantial evidence is such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.[10] This Court does not sit as trier of fact, nor should this Court replace its judgment for that of the Board.[11] "The Court, when factual determinations are at issue, shall take due account of the experience and specialized competence of the agency and of the purposes of the basic law under which the agency has acted."[12]Further, where the issues raised involve only questions of law, the Court's review is de novo[13] If the Board's decision is free from legal error and supported by substantial evidence, this Court must sustain the Board's decision even if this Court might have decided the case differently if it had come before it in the first instance.[14] "The burden of persuasion is on the party seeking to overturn a decision of the Board to show that the decision was arbitrary and unreasonable."[15] In this process, "the Court will consider the record in the light most favorable to the prevailing party below."[16]

         V. DISCUSSION

         A. Delaware law applies.

         The balance of factors here weighs heavily in favor of the application of Delaware law. The balance is so skewed that it would be a purely academic exercise to remand this case for the Board to restate the analysis. When undertaking a choice of law analysis, Delaware courts follow the "most significant relationship" test as articulated in the Restatement (Second) of Conflict of Laws. Section 145(1) of the Restatement provides that the law of the state with the most significant relationship to the occurrence and the parties under the principles stated in Restatement ...


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