Automobile Insurance SubrogationAutomobile Total Loss ThresholdsDeductible ReimbursementDiminution of ValueFuneral Procession Traffic LawsImputing Contributory Negligence of Driver to Vehicle OwnerLaws Regarding Using Cell Phones/Headphones/Texting While DrivingLoss Of UseMed Pay/PIP SubrogationOwner Liability For Stolen VehiclesPayment of Sales Tax After Vehicle Total LossPedestrian and Crosswalk LawsRental Car Company Physical Damage and Loss of Use ClaimsRental Car Company’s Liability Insurance Primary or ExcessSlower Traffic Keep RightSudden Medical Emergencies While DrivingSuspension of Drivers’ LicensesUse of Non-Original Equipment Manufacturer (OEM) Aftermarket Crash Parts in Repair of Damaged Vehicles
Federal , State, and Local Governmental EntitiesMunicipal/County/Local Governmental Immunity and Tort LiabilityState Sovereign Immunity And Tort Liability
General Tort Laws/StatutesAnti-Indemnity StatutesContribution ActionsContributory Negligence/Comparative FaultDog Bite LawsEconomic Loss DoctrineParental ResponsibilitySpoliationStatute of LimitationsStatute of Limitations Exceptions
Health Insurance SubrogationHealth and Disability Insurance
InvestigationAdmissibility of Expert TestimonyPre-Suit Disclosure of Liability Policy Limits in Third-Party ClaimsRecording Conversations
Product Liability SubrogationProduct Liability Law
Property Subrogation“Matching Regulations” And Laws Affecting Homeowners Property ClaimsCondominium/Co-Op Waiver of Subrogation LawsDamage to Property Without Market ValueGeneral Contractor Overhead And Profit Payments In First-Party ACV Property Damage ClaimsLandlord/Tenant Subrogation
Subrogation GenerallyAnti-Subrogation RuleCriminal RestitutionMade Whole DoctrineMedical Expenses, Insurance Write-Offs, and The Collateral Source Rule
Workers’ CompensationEmployee Leasing LawsHospital Lien LawsOCIP/CCIP Subrogation In Workers’ Compensation Construction CasesRecovery Of Increased Workers’ Compensation Premiums By EmployerWhich Workers’ Compensation “Benefits” Can Be Subrogated?Workers’ Compensation Subrogation Waiver EndorsementsWorkers’ CompensationWorkers’ Compensation Claims by Undocumented Employees
Automobile Insurance Subrogation
Automobile Total Loss Thresholds
Percentage of Value: 75%
Cost to repair late model vehicle exceeds 75% of ACV prior to vehicle being damaged, then vehicle is issued a non-repairable certificate or a salvage certificate. Va. Code Ann. § 46.2-1602.1.
Automobile and Property: Pro-Rata. 14 Va. Admin. Code § 5-400-80 provides: “Insurers shall, upon claimant’s request, include first-party claimant’s deductible, if any, in subrogation demands. Subrogation recoveries shall be shared on proportionate basis with first-party claimant, unless deductible amount has been otherwise recovered. No deduction for expenses can be made from deductible recovery unless outside attorney is retained to collect such recovery. The deduction may then be for only pro-rata share of allocated loss adjustment expense.”
Deductible must be included in any collision subrogation demand upon claimant’s request.
Diminution of Value
First Party: The Virginia Supreme Court has refused to compensate an insured for the loss of his new car warranty where the policy did not make such an agreement and the diminution in value was not recoverable under the policy. Bickel v. Nationwide Mut. Ins. Co., 143 S.E.2d 903 (Va. 1965).
Third Party: Where an auto has been damaged but not totally destroyed and it is reasonably susceptible of repairs, the measure of damages is the cost of repairs and any diminution of the auto’s market value which results from the car having been injured after the repairs; that is, the cost of repairs plus any amount of depreciation in value of the vehicle as repaired. Averett v. Shircliff, 237 S.E.2d 92 (Va. 1977).
Funeral Procession Traffic Laws
Virginia law gives a funeral procession a general right-of-way on any street through which it passes if it is traveling under a police or sheriff’s escort. It is not explicit with respect to the issue of traffic signals or signs. It authorizes localities to provide police escort service and impose reasonable fees to defray costs. No vehicle may join, pass through, or interfere with the funeral procession. Va. Code Ann. § 46.2-828.
Imputing Contributory Negligence of Driver to Vehicle Owner
Imputed Contributory Negligence Law: Contributory negligence of driver will not be imputed to an owner in owner’s action against third party for full value of damaged vehicle operated by permissive user, unless they are in joint venture. Carroll v. Hutchinson, 200 S.E.2d 644 (Va. 1939).
Vicarious Liability/Family Purpose Doctrine: The Supreme Court in Virginia has specifically rejected the Family Purpose Doctrine. Hackley v. Robey, 195 S.E2d 689 (Va. 1938).
Sponsor Liability for Minor’s Driving: No sponsorship liability statute. However, under Va. Code Ann. § 8.01-64, a parent or adult allows that allows a minor under the age of 16 to drive a vehicle, will be jointly and severally liable for damages resulting from that minor’s negligence.
Laws Regarding Using Cell Phones/Headphones/Texting While Driving
Cell Phone/Texting: No person may operate a vehicle while using a hand-held personal communication device to write, send, or read any text message or email. Exceptions include when vehicle is parked or in emergency situations. Va. St. § 46.2-1078.1-A.
Provisional license holders may not operate a vehicle with any cell phone, even if it is hands-free, unless the vehicle is parked or for emergency situations. Va. St. § 46.2-334.01.
Other Prohibitions: It is unlawful for anyone to operate a motor vehicle while using earphones on or in both ears. Exceptions include devices to aid hard of hearing, earphones in helmets for communication and “non-prosthetics, closed-ear, open back, electronic noise-cancellation devices for persons operating vehicles in high noise areas.” Va. St. § 46.2-1078.
Loss Of Use
Loss of Use: Yes. Va. Stat. § 8.01-66 outlines that recovery of damages for loss of use are allowed and may be calculated by the reasonable cost actually incurred in hiring a comparable substitute vehicle for the time in which the individual is deprived of the use of the motor vehicle. Virginia standard jury instructions for determining damages in negligence actions include the loss of use statute as support for calculation of damages to the vehicle damaged in order to fully and fairly compensate the individuals for the damages sustained. VAPRAC JI §23.1. There is no support that loss of use can be recovered if a rental vehicle is not actually obtained, as the statute provides that the damages are calculated by the cost actually incurred.
Lost Profits: Potentially. Loss of future profits is recoverable when caused by wrongful conduct, which results in the interruption or destruction of an established business, provided the lost profits are capable of reasonable ascertainment and are not uncertain, speculative, or remote. United Constr. Workers v. Laburnum Constr. Corp., 75 S.E.2d 694 (Va. 1953). Plaintiff is not required to prove exact amount of profits lost but must present enough evidence for a jury to rule on a reasonable estimate of the damages. Goldstein v. Kaestner, 413 S.E.2d 347 (Va. 1992).
Comments: Two years of annual profits found to be insufficient evidence in support of lost profit damages. United Const. Workers v. Laburnum Const. Corp., supra.
Med Pay/PIP Subrogation
Med Pay: No. Virginia law prohibits inclusion of bodily injury subrogation clauses in auto insurance policies. Va. St. § 38.2-2209. Therefore, Med Pay cannot be subrogated. The two (2) year personal injury statute of limitations runs from the date of the insured’s accident. Va. St. § 8.01243(A) (1987).
PIP: No. PIP medical benefits may not be subrogated. Va. St. § 38.2-2209. PIP wage loss benefits can be subrogated.
“Add-On” PIP State. No limitations on tort claims. Note that Va. St. § 38.2-2231 requiring arbitration of claims between insurers deals only with disputed claims made for auto physical damage between them, not PIP and/or Med Pay subrogation.
Owner Liability For Stolen Vehicles
Key In The Ignition Statutes: Va. Stat. § 46.2-1071. (Does not require removal of keys but does require engine to be turned off).
Common Law Rule: No case exactly on point, but in Interim Pers. of Cent. Va., Inc. v. Messer, 559 S.E.2d 704 (Va. 2002), an employee stole a truck from the employer, went out drinking, and subsequently injured a third party in an accident. The court primarily focused on issues of negligent hiring and foreseeability. The court ruled that the company had no reason to suspect that employee had a DUI history and that it was not foreseeable that he would steal a company vehicle to go out drinking.
Payment of Sales Tax After Vehicle Total Loss
First-Party Claims: Insurer may (1) offer a replacement vehicle including all applicable taxes, license fees, or other fees, or (2) offer a cash settlement based on the actual cost of a comparable vehicle including all applicable taxes, license fees, or other fees. Insurance Order No. 11607. Insurers have been cited for not promptly reimbursing sales tax, license fees, and title fees under Va. Code Ann. § 38.2-510. https://www.scc.virginia.gov/boi/adminords/11607.pdf.
Third-Party Claims: “Insurers are only required to reimburse for sales tax, title fees, and transfer fees in third-party claims if the policy so requires.” E-mail from Virginia Bureau of Insurance. However, no other applicable statute, case law, or regulation governing recovery of sales tax besides Insurance Order No. 11607. Insurers have been cited for not reimbursing sales tax to a third-party total loss claim under Va. Code Ann. § 38.2-510. https://www.scc.virginia.gov/boi/adminords/11607.pdf.
Pedestrian and Crosswalk Laws
Va. St. § 46.2-924: Driver of vehicle must yield to pedestrian crossing in crosswalk, any regular pedestrian crossing, any intersection where the speed limit is less than 35 mph. Pedestrians may not enter traffic without regard for oncoming vehicles.
Va. St. § 46.2-923: Pedestrians may not enter or cross an intersection in disregard of approaching traffic. Pedestrians may not carelessly or maliciously interfere with the orderly passage of vehicles when crossing highways. Pedestrians must cross at marked crosswalks or intersections whenever possible.
Summary: Pedestrian must exercise reasonable care in crossing street even where they have the right-of-way. McManama v. Wilhelm, 281 S.E.2d 813, 222 Va. 335 (1981). If a pedestrian has a duty to look and fails to do so, he is guilty of negligence as a matter of law. Hopson v. Goolsby, 86 S.E.2d 149, 196 Va. 832 (1955).
Rental Car Company Physical Damage and Loss of Use Claims
Recovery From Renter: Recovery of physical damage and loss of use are not prohibited or otherwise regulated. Terms of rental agreement control. Collision Damage Waivers regulated by statute. Va. Code § 59.1-207.31.
Recovery From Third-Party: Recovery of damages for loss of use are allowed and may be calculated by the reasonable cost actually incurred in hiring a comparable substitute vehicle for the time in which the individual is deprived of the use of the motor vehicle. Va. Stat. § 8.01-66. There is no support that loss of use can be recovered if a rental vehicle is not actually obtained, as the statute provides that the damages are calculated by the cost actually incurred.
Rental Car Company’s Liability Insurance Primary or Excess
Summary: Car rental companies are required to provide primary liability coverage to renters. USAA Cas. Ins. Co. v. Hertz Corp., 578 S.E.2d 775 (Va. 2003).
Slower Traffic Keep Right
Statute: Va. St. § 46.2-802, Va. St. § 46.2-804, Va. St. § 46.2-842, Va. St. § 46.2-803.1 and Va. St. § 46.2-842.1.
Summary: Drivers must drive in the right lane unless passing another vehicle or if impracticable to travel on that side of the highway. Slower traffic must keep right. Commercial motor vehicles, except buses, school buses, or vehicles performing maintenance or construction work on interstate highway, unless exiting to the left, may not drive in the left lane of any interstate highway with more than two lanes where posted speed limit is at least 65 MPH may not drive in left lane on interstate highway within Eighth Planning District or Interstate Route 81 regardless of speed limit. Must drive in right lane of interstate highway with no more than two lanes when driving 15 MPH or more below speed limit. Even when traffic in left lane is speeding you must yield to faster traffic. Drivers proceeding slower than the normal speed of traffic must drive in the right. Slower moving vehicles traveling in the left lane must yield to faster traffic. The driver of an overtaken vehicle shall give way to the right in favor of the overtaking vehicle on audible.
Sudden Medical Emergencies While Driving
Sudden Medical Emergency Defense. Where the driver of an automobile is suddenly stricken by an illness, which he has no reason to anticipate and which renders it impossible for him to control the car, he is not chargeable with negligence. Brinser v. Young, 158 S.E.2d 759 (Va. 1968).
Court refuses to give the Unavoidable Accident Instruction since it merely repeats the law of negligence. But, the Sudden Medical Emergency Instruction adds new considerations to the negligence equation. Hancock-Underwood v. Knight, 670 S.E.2d 720 (Va. 2009).
Suspension of Drivers’ Licenses
Administrative Suspension: Any person involved in an accident resulting in injury, death or property damage, must stop and report the accident to the police. Failure to do so will result in suspension of the driver’s license. Va. St. § 46.2-894; Va. St. § 46.2-901. License will be suspended for a time period not to exceed six months. Va. St. § 46.2-901.
Judgment: The Commissioner will suspend the license of a judgment debtor, upon application of the judgment creditor, if the debtor has failed to satisfy any judgment within thirty (30) days following the entry of a judgment. Va. St. §§ 46.2- 417 and 418. Suspension will stay until the judgment is satisfied. Va. St. §46.2-427.
Contact Information: Commonwealth of Virginia, Department of Motor Vehicles, P.O. Box 27412, Richmond, VA 23269, (804) 497-7100, https://www.dmv.virginia.gov/#/.
Use of Non-Original Equipment Manufacturer (OEM) Aftermarket Crash Parts in Repair of Damaged Vehicles
Authority: Va. Stat. § 38.2-510(c).
Summary: The insurer must give the insured written notification if they intend to use non-OEM parts. Any non-OEM parts must be of equal quality and kind to their OEM equivalent. The insured must also be informed that the non-OEM parts are warranted by their manufacturer, not the auto’s manufacturer.
Federal , State, and Local Governmental Entities
Municipal/County/Local Governmental Immunity and Tort Liability
Legal Authority: Doctrine of sovereign immunity has not lost its vitality in Virginia. Va. St. § 8.01-195.3; Messina v. Burden, 321 S.E.2d 657 (Va. 1984).
Notice Deadlines: Notice of claim must be given within six (6) months of accrual. Va. St. § 8.01-195.3.
Claims/Actions Allowed: Municipal corporations are immune from liability when performing governmental functions, but are not when exercising proprietary functions. Niese v. City of Alexandria, 564 S.E.2d 127 (Va. 2002); T Jean Moreau & Assocs. v. Health Ctr. Comm’n, 720 S.E.2d 105 (Va. 2012). Liable only for gross negligence in operation of pols, parks, playgrounds. Va. St. § 15.2-1809.
Comments/Exceptions: Counties viewed as “political subdivisions” of Commonwealth and entitled to same immunity. Mann v. Arlington County Bd., 98 S.E.2d 515 (Va. 1957) (no governmental-proprietary distinction). Cities receive reduced immunity. May be liable if proprietary function, immune if governmental function. Hoggard v. City of Richmond, 200 S.E. 610 (Va. 1939).
Damage Caps: No caps for local government. Va. St. § 8.01-195.3.
State Sovereign Immunity And Tort Liability
Tort Claims Act: Virginia Tort Claims Act. Va. St. § 8.01-195.1 to 195.9 (1981).
Provides a limited right to sue State employee when a private entity or individual would be liable, provided the State employee is acting in course and scope.Only partial waiver of sovereign immunity.
Commonwealth is immune from tort liability for acts of employees, unless an express statutory or constitutional provision waives that immunity. Immunity of judges, attorneys, and public officers of Commonwealth is preserved.
Notice Deadlines: Notice must be given within one year of when claim accrued. Va. St. § 8.01-195.6. Claim filed with Director of the Division of Risk management or the Attorney General. Must contain nature of claim, time and place, name of agency at fault. Must sue within 18 months of filing notice. Va. St. § 8.01-195.7.
Claims/Actions Allowed: Commonwealth employee is immune if act ministerial (follows statute or established rules), but not discretionary (use of judgment). Messina v. Burden, 321 S.E.2d 657 (Va. 1984). Claims allowed include:
Maintenance: Failure to correct hazardous roadway conditions within reasonable time.
General Hazards: Hazards created by design, construction, and maintenance problems (e.g., poor signing, low shoulders).
Work Zones: Hazardous construction and work zones (involving motor vehicles).
Operations: Hazards created by general operations and work zone activity that do not involve motorists.
Operating Motor Vehicle: Is ministerial act.
Heider v. Clemons, 400 S.E.2d 190 (Va. 1991).
Comments/Exceptions: Exceptions to waiver of immunity are listed in Va. St. § 8.01-195.3.
(1) Tax assessment;
(2) Judicial Proceeding; and
(3) Execution of Court Order.
Claims against Commonwealth for medical negligence subject to Chapter 21.1 (Va. St. § 8.01-581.1, et seq.). Recovery in medical malpractice shall not exceed the limits imposed by Va. St. § 8.01-195.3. Immunity waived only for ministerial acts (obedience to authority without regard to or the exercise of his or her own judgment) but not for discretionary acts, which have the following characteristics:
(1) an authorized individual or agency was given the power and duty to make a decision;
(2) the decision was made from a set of valid alternatives; and
(3) the individual or agency exercised independent judgment in making the selection.
No exception for intentional acts. No immunity if intentional tort or actions outside scope of employment. Bailey v. Lewis, 2012 WL 9735223 (Va. Cir. Ct. 2012); Messina v. Burden, 321 S.E.2d 657 (Va. 1984).
Damage Caps: Immunity is waived up to $100,000 or the amount of the State’s insurance coverage, whichever is greater, exclusive of interest and costs. Va. St. § 8.01-195.3.
General Tort Laws/Statutes
Prohibits Broad Indemnity. Applies to Construction Contracts. Va. Code § 11-4.1.
Not applicable to validity of insurance contract or workers’ compensation issue.
Pure Joint and Several Liability. Joint and several liability for all tortfeasors. Va. St. § 8.01-443; Cox v. Geary, 624 S.E.2d 16 (Va. 2006).
Joint tortfeasors have a right to contribution in cases of negligence with no moral turpitude. A joint tortfeasor who settles is not subject to contribution from the others, and is not entitled to contribution unless the settlement specifically discharges or extinguishes all joint tortfeasors from liability. Va. St. § 8.01-34; Sullivan v. Robertson Drug Co., 639 S.E.2d 250 (Va. 2007).
Contribution plaintiff not entitled to contribution unless the settlement specifically discharges all joint tortfeasors from liability. Va. St. § 8.01-35.1.
Right of contribution arises when one tortfeasor has paid claims for which another wrongdoer is also liable. Insurer making settlement of claim against its insured is subrogated to his right of contribution. Nationwide Mutual Ins. Co. v. Minnifield, 196 S.E.2d 75 (Va. 1973).
Insurance company that has both subrogation and contribution rights arising out of same accident may assert these rights separately. Nationwide Mut. v. Jewel Tea Co., 202 Va. 527, 118 S.E.2d 646.
The three (3) year statute of limitations is from the date of payment of judgment or settlement. Va. St. § 8.01-246(4) (Implied Contract); Gemco-Ware, Inc. v. Rongene Mold, 360 S.E.2d 342 (Va. 1987).
Contributory Negligence/Comparative Fault
Pure Contributory Negligence: Damaged parties cannot recover any damages if it is even 1% at fault. If plaintiff contributes to his damages, he will be barred from all recovery. Baskett v. Banks, 45 S.E.2d 173 (Va. 1947).
Dog Bite Laws
Recognizes common law duty of exercising ordinary care to protect other persons from injuries that might be inflicted by his dog and the dog owner was subject to civil liability for breach of that duty. Dog owner must have prior knowledge of dog’s dangerous propensity, unless owner negligent or broke the law. Butler v. Frieden, 158 S.E.2d 121 (Va. 1967).
Economic Loss Doctrine
Minority Rule. In Virginia, the ELD must be used hand-in-hand with the “Source-of Duty” Rule to determine whether economic loss can be recovered in tort. A party cannot sue under Virginia law for economic losses without establishing privity of contract. Kaltman v. All Am. Pest Control, Inc., 706 S.E.2d 864 (Va. 2011). Another case and its progeny ruled that a plaintiff cannot sue in tort for a duty assumed solely by contract. Richmond Metro. Auth. v. McDevitt St. Bovis, Inc., 507 S.E.2d 344 (Va. 1998). The ELD does apply to real property and home sales/construction. Sensenbrenner v. Rust, Orling & Neale, Architects, Inc., 374 S.E.2d 55 (Va. 1988). It also applies to negligent performance of a contract. Gerald M. Moore & Son, Inc. v. Drewry, 467 S.E.2d 811 (Va. 1996). However, despite sweeping language in early ELD cases, the Doctrine applies with significant limitations: (1) It appears that a plaintiff may sue in tort for economic damages where the plaintiff and defendant are in contractual privity; (2) It applies only to negligence and construction (negligent or innocent) fraud; and (3) It is limited to claims for purely economic loss.
In other words, in Virginia, a plaintiff may not recover purely economic damages in a tort action unless it has a contract with the defendant. Blake Constr. Co., Inc. v. Alley, 353 S.E.2d 724 (Va. 1987). When a plaintiff suffers only disappointing economic expectations assumed by agreement, contract, rather than tort law, applies. However, Virginia also has another rule, called the “Source of Duty Rule” which it applies to determine whether tort or contract law applies. Richmond Metro. Auth., supra. To determine whether an action sounds in contract or tort, the court must determine the source of the duty owed. To recover in tort, the duty breached must be a common law duty, not one existing between the parties solely by virtue of the contract. The Source of Duty Rule is related to the ELD in that both rules reflect the Supreme Court’s often-stated interest in maintaining the wall between tort and contract principles. The ELD addresses non-privity situations, while the “Source of Duty Rule” addresses situations where the plaintiff and defendant are in contractual privity. “Together, the two rules may be evolving into a more comprehensive rule simply requiring that claims arising out of agreements be resolved pursuant to contract rather than tort law. Such a rule might be called the ‘Contract Loss Rule’ and would apply whether the controlling agreement is between the plaintiff and defendant or between the plaintiff and another party.” Nicholas, The Economic-Loss and Source-Of-Duty Rules, 59 Virginia Lawyer 42 (October 2010). Damage to a product itself constitutes “economic loss” because, although damages to a product itself have certain attributes of a product liability claim, the injury suffered (failure of the product to perform properly) is the essence of a warranty action through which a contracting party can seek to recoup the benefit of its bargain. Burner v. Ford Motor Co., 2000 WL 33259938 (Va. Cir. Ct. 2000).
Damage to Public and Private Property. Liability imposed on parents when child willfully or maliciously damages or destroys public or private property. Va. Stat. § 8.0143 and § 8.01-44.
Minor’s Driving. If a parent or adult allows a minor under the age of 16 to drive a vehicle, they will be jointly and severally liable for damages resulting from that minor’s negligence. Va. Code Ann. § 8.01-64.
The limit of liability is $2,500.00. Child must be under 18-years-old.
Adverse Inference: Virginia law recognizes spoliation or missing evidence inference, which provides that “[w]here one party has within his control material evidence and does not offer it, there is [an inference] that the evidence, if it had been offered, would have been unfavorable to that party.” Charles E. Friend, The Law of Evidence in Virginia § 10-17, at 338 (5th Ed. 1999); Jacobs v. Jacobs, 218 Va. 264, 269, 237 S.E.2d 124, 127 (Va. 1977) (holding principle is an inference rather than a presumption). Further, Virginia acknowledges that spoliation issues also arise when evidence is lost, altered, or cannot be produced. Wolfe v. Virginia Birth-Related Neurological Injury Comp. Program, 40 Va. App. 565, 580-583, 580 S.E.2d 467, 475-476 (Va. App. 2003). A spoliation inference may be applied in an existing action if, at the time the evidence was lost or destroyed, “a reasonable person in the defendant’s position should have foreseen that the evidence was material to a potential civil action.”
In a third-party spoliation context, an employer has no duty to preserve evidence on behalf of an employee who seeks to bring a third-party claim. Austin v. Consolidation Coal Co., 501 S.E.2d 161, 163 (Va. 1998). Under the Virginia Workers Compensation Act there is no duty imposed on an employer to preserve evidence. Id. at 163-64. However, this case applies only to an employer’s duty to preserve evidence.
In Emerald Point, LLC, et al. v. Hawkins, et al., 808 S.E.2d 384 (Va. 2017), the Supreme Court of Virginia considered whether a trial judge’s adverse inference instruction regarding the spoliation of evidence was warranted when there was no indication that the defendant destroyed the evidence at issue with the deliberate intent to deprive the plaintiff of a fair opportunity to use it in pending or reasonably foreseeable litigation between the parties. The Court held that a spoliation instruction is only warranted when there is proof of the intentional destruction of evidence based on a desire to deprive the opposing party of the opportunity to use it in litigation. The Emerald Point case reminds us that we cannot assume that any party will receive an adverse inference instruction at trial simply because the opposing party destroyed evidence. As in many other jurisdictions, to receive an adverse inference instruction in Virginia, the party requesting the instruction must show that the destruction of the missing evidence was intentional.
In Nautilus Insurance Co. v. Appalachian Power Co., Case No. 7:19-cv-00380 (W.D. Va.), Nautilus pursued subrogation against the power company for fire damage to their insured’s building. Nautilus’ fire investigator conducted an inspection and told Nautilus to preserve the fire scene so the power company could inspect it too. Nautilus later told the fire investigator to close his file and told the insured it was okay to demolish the building and begin rebuilding. Some time later, Nautilus notified the power company of a claim against it, but the building had been demolished and the power company could not inspect it. The court ruled that because of this spoliation of evidence, the case would be dismissed. It should be noted that Nautilus advised its insured the fire scene could be demolished and that a lesser sanction might have been warranted if the insured had done it on their own. The court also disagreed with the argument that the power company had actual notice due to its status as utility provider. In dismissing this argument, the court drew a distinction between a subrogation target being aware of a loss and being specifically informed that a potential claim may be made against it.
Admission (Party or Against Interest): In general, a party’s conduct, so far as it indicates his own belief in the weakness of his cause, may be used against him as an admission, subject of course to any explanations he may be able to make removing that significance from his conduct… “conduct showing the concealment or destruction of evidential material is…admissible; in particular the destruction (spoliation) of documents as evidence of an admission that their contents are as alleged by the opponents.” 1 Greenleaf Ev. (16 Ed.), § 195, at 325; Neece v. Neece, 104 Va. 343, 348, 51 S.E. 739, 740-41 (Va. 1905); Wolfe, supra.
Statute of Limitations
Personal Property5 YearsVa. St. § 8.01-243(B)
Personal Injury/Death2 YearsVa. St. § 8.01-243(A)
Breach of Contract/Written5 YearsVa. St. § 8.01-246(2)
Breach of Contract/Oral3 YearsVa. St. § 8.01-246(4)
Breach of Contract/Sale of Goods4 YearsVa. St. § 8.2-725
Statute of Repose/ProductsN/AN/A
Statute of Repose/Real Property5 YearsVa. St. § 8.01-250*
Breach of Warranty/U.C.C./Personal Injury2 YearsVa. St. §§ 8.01-243, 8.01-246
Breach of Warranty/U.C.C./Property Damage4 YearsVa. St. § 8.1A-101, et seq., Va. St. § 8.2-725
Workers’ Comp Third Party Case2 YearsVa. Code Ann. § 65.2-309
Strict Product Liability/Personal Injury2 YearsVa. St. § 8.01-243(A)
Strict Product Liability/Property Damage5 YearsVa. St. § 8.01-243(B)**
Statute of Limitations Exceptions
*5 years for improvement to real property for injuries resulting from ordinary building materials. The statute excludes manufacturers or suppliers of equipment or machinery installed in real property. Va. St. § 8.01-250.
**4 years if property subject to contract is damaged. Va. St. § 8.2-725.
Health Insurance Subrogation
Health and Disability Insurance
Statute of Limitations: 2 Years. Va. St. § 8.01-243(A).
Subrogation of Medical Benefits are not allowed. Arguable subrogation of medical benefits is permissible when person who receives benefits was neither a resident of nor employed in Virginia. See Va. St. § 38.2-3405. Subrogation of Disability Benefits are allowed. Whitlinger v. Continental Cas. Co., 129 F.Supp.2d 924 (E.D. Va. 2001). Made Whole Doctrine does not apply. PRC, Inc. v. O’Bryan, 47 Va. Cir. 81, 1998 WL 972277 (Va. Cir. Ct. 1998); Geraldine Simmons Collins v. BlueCross & BlueShield of Va., 193 S.E.2d 782, 784-785 (Va. 1973). Common Fund Doctrine applies. duPont v. Shackelford, 235 Va. 588, 595, 369 S.E.2d 673, 677 (Va. 1988) (applies only where insurer has not retained separate counsel).
Admissibility of Expert Testimony
Admissibility Standards: Other
Case/Statutory Law: Va. Code Ann. § 8.01-401
Comments: Expert testimony generally admissible if it will assist trier of fact in understanding evidence. Admissibility is subject to basic requirements, including requirement that evidence be based on adequate foundation.
Pre-Suit Disclosure of Liability Policy Limits in Third-Party Claims
Duty To Disclose: Yes. Va. Code Ann. § 8.01-417 (Motor Vehicle accident/ Personal Injury) Va. Code Ann. § 8.01-417.01 (Homeowner’s policies)
Comments: A claimant may request the insurer to disclose the limits of any motor vehicle/personal injury policy for claims of at least $12,500. The request must be (1) In writing, (2) Provide the date of the accident, the name and last known address of alleged tortfeasor, a copy of the accident report, and the claim number if available, and (3) must submit claimant’s medical records, medical bills, wage-loss documents. Insurer shall respond in writing within 30 days of receipt of the request.
One-Party Consent: It is not unlawful for an individual who is a party to or has consent from a party of an in-person or electronic communication to record and or disclose the content of said communication. Va. Code Ann. § 19.2-62.
Product Liability Subrogation
Product Liability Law
Statute of Limitations/Repose: 2 years for personal injury and wrongful death. Va. St. § 8.01-243(A). Discovery Rule applies.
Liability Standards: Negligence, Warranty.
Fault Allocations: Pure Contributory.
Non-Economic Caps/Limits On Actual Damages: No.
Punitive Y/N and Limits: Yes (Limits).
Heeding Presumption?: Yes.
Innocent Seller Statute: No.
Joint and Several Liability: Yes. Va. St. § 8.01-443.
Available Defenses: Assumption of Risk; Presumption; Misuse; Alteration; Learned Intermediary; Sophisticated User.
Restatement 2nd or 3rd?: Neither.
“Matching Regulations” And Laws Affecting Homeowners Property Claims
Condominium/Co-Op Waiver of Subrogation Laws
Condo instruments may require association to obtain a master casualty policy and master liability policy. Waiver of subrogation not required. Va. Code Ann. § 55-79.81.
In a recent Supreme Court decision the insurance policy, the residential lease, and the Association’s governing documents all show that the Association did not intend to assume or absolve liability for the negligent acts of a unit owner’s tenants that caused the Association to suffer a loss. It is equally clear that the Association did not intend to subvert Erie’s ability to thereafter recover from a tenant whose purported negligence necessitated the insurer’s payments for that loss. Therefore, the unit owner’s tenant was not an implied insured of the Association. Erie Ins. Exchange v. Alba, 2020 WL 2763588 (Va. 2020).
Damage to Property Without Market Value
Service Value: “We are of the opinion that the full cost of replacement is not the proper measure of damages.” Younger v. Appalachian Power Co., 202 S.E.2d 866 (Va. 1974) (court lays out four part test used to determine damages).
Intrinsic Value: No recovery for “peculiar value” attached to family portraits. C & O Ry. Co. v. May, 92 S.E. 801 (Vt. 1917).
Sentimental Value: Owners of personal property are not entitled to recover “any sentimental value attached to it by the owners or any peculiar value which they may have attached to the property by reason of association or the like.” C & O Ry. Co. v. May, 92 S.E. 801 (Vt. 1917).
General Contractor Overhead And Profit Payments In First-Party ACV Property Damage Claims
Payment And Depreciation Of GCOP/Sales Tax: No applicable case law, statutes, administrative rules, or other guidance with regard to the calculation and/or depreciation of GCOP.
A tenant’s liability to the landlord’s insurer for negligently causing a fire depends on the intent and reasonable expectations of the parties to the lease as ascertained from the lease as a whole. Monterey Corp. v. Hart, 224 S.E.2d 142, 147 (Va. 1976) (subrogation denied because the lease contained “except fire” provision).
Where a plaintiff has contracted to protect the defendant from a loss by procuring insurance, the plaintiff (or his subrogee) may not recover for that loss from the defendant even if the loss is caused by the defendant’s negligence. Walker v. Vanderpool, 302 S.E.2d 669 (Va. 1983). ASR applies to insurers, not self-insurers. Farmers Ins. Exch. v. Enter. Leasing Co., 708 S.E.2d 852 (Va. 2011). However, a self-insurer can be ruled to be an insurer if certain criteria are met. See Group Hospitalization Medical Service, Inc. v. Smith, 372 S.E.2d 159 (Va. 1988).
Under the applicable Virginia statute, an “aggrieved party” may be awarded restitution if they suffered a loss or damages due to the criminal defendant’s conduct, which resulted in a conviction. Va. St. § 19.2‐305. Per the associated case law, if an insurer pays their insured as the “victim” of the criminal conduct, they will qualify as a “victim” for purposes of being awarded restitution. Alger v. Commonwealth of Virginia, 450 S.E.2d 765, 767 (Va. Ct. App. 1994).
Made Whole Doctrine
In P.R.C., Inc. v. O’Bryan, 1998 WL 972277 (Va. Cir. Ct. 1998) (unpublished opinion), P.R.C. sought reimbursement of certain medical and other expenses which it had paid on behalf of O’Bryan, its employee, under P.R.C.’s salary continuation and medical reimbursement Plan, when O’Bryan was injured in an automobile accident. Id. This self-funded Plan operates as a short-term disability policy, and P.R.C. did not purchase insurance in order to satisfy its obligations under the Plan. The Plan provided, in part:
If you … sustain a personal injury caused by a third party and P.R.C. pays for medical treatment related to that injury, then P.R.C. reserves the right to recover the monies it paid for such treatments and any monies paid by the third party responsible for the injury or the third party’s insurance company to compensate you for the injury. Id.
O’Bryan later executed a reimbursement agreement, by which he agreed to pay or caused to be paid to P.R.C. out of any such third-party recovery up to the $32,918 in short term disability benefits and medical expenses which his employer had paid under the Plan. O’Bryan filed suit and asked P.R.C. to participate with him but P.R.C. took no part in the litigation. The suit was settled for $45,000. O’Bryan received $27,435 in net proceeds after payment of attorney’s fees and costs, and did not reimburse P.R.C. for any of the expenses P.R.C. paid pursuant to the Plan. O’Bryan claimed the reimbursement agreement was invalid under § 38.2-3405, but the court found the Virginia Anti-Subrogation Statute was not applicable in this case because the Plan was a self-funded employee benefit Plan that was regulated by ERISA. Id. After determining that the anti-subrogation statute did not apply and P.R.C. could pursue its subrogation and reimbursement rights, O’Bryan claimed the Made Whole Doctrine prevented P.R.C. from subrogating. The court rejected this argument because P.R.C. was seeking reimbursement and not subrogation and the made whole argument because P.R.C.’s express contractual subrogation right to any monies paid to O’Bryan from any third-party tortfeasor overrode the Made Whole Doctrine. The court noted that other cases have held a reference in a subrogation clause that the insurer is subrogated to “any” or “all” rights of recovery overrides the Made Whole Doctrine. Fields v. Farmers Ins. Co., 18 F.3d 831 (10th Cir. 1994). There is authority in the Virginia case law for the proposition that the Made Whole Doctrine may be overridden by specific policy language to the contrary. Geraldine Simmons Collins v. BlueCross & BlueShield of Va., 193 S.E.2d 782, 784-785 (Va. 1973).
Medical Expenses, Insurance Write-Offs, and The Collateral Source Rule
Collateral Source Rule: Common law CSR. Collateral source does not reduce judgment. Schickling v. Aspinall, 369 S.E.2d 172 (Va. 1988). Evidence of collateral sources for payment of medical expenses not admissible. Burks v Webb, 99 S.E.2d 629 (Va. 1957). Loss of income damages not diminished by collateral sources reimbursing plaintiff, and such sources not admissible. Va. Stat. § 8.01-35.
Recovery OF Medical Expenses Rule:
Private Insurance: Write-offs may not be deducted from verdict. Acuar v Letourneau, 531 S.E.2d 316 (Va. 2000). Plaintiff able to recover write-off amounts from HMO even when HMO was defendant. Karsten v. Kaiser Found. Health Plan of Mid-Atlantic States, Inc., 808 F. Supp. 1253 (E.D. Va. 1992) (applying Virginia law).
Medicare/Medicaid: Not specifically addressed. Prior to Acuar, some trial courts held CSR applies to Medicare and Medicaid write-offs just as it does to private insurance. Kelly v. Thomasson, 48 Va. Cir. 100, (Va. Cir. 1999); Perry v. McClure, 47 Va. Cir. 504, 505, (Va. Cir. 1998). Acuar seems to suggest Supreme Court would approve of those holdings.
Related Law/Comments: Argument that evidence of collateral source medical expense payments should be allowed because amounts written off and accepted by medical provider are not damages was accepted by some trial courts, but rejected by Supreme Court. Acuar v Letourneau, 531 S.E.2d 316 (Va. 2000). Another argument that defendant should be allowed to argue to a jury that amount paid is actual proof of “reasonable value of services” was accepted by some trial courts, but rejected by Supreme court. Radvany v Davis, 551 S.E.2d 347 (Va. 2001).
Bankruptcy: CSR might not apply to medical expenses written off in bankruptcy. Payne v. Wyeth Pharms., Inc., 606 F.Supp.2d 613 (E.D. Va. 2008).
Employee Leasing Laws
Both the employee leasing company and the client company are afforded protection by the exclusive remedy provisions of the Virginia Workers’ Compensation Act. Va. St. § 65.2-803.1.6.
Hospital Lien Laws
Statute: Va. Code §§ 8.01-66.2 – 8.01-66.12. Lien for Hospital, Medical and Nursing Services
(1) Written notice stating the name of the hospital or provider and name of injured person must be served on the third-party tortfeasor or to the attorney for the injured person. Actual notice exception.
(2) Third party is then liable for the reasonable charges for services rendered to injured person to extent of the amount paid. (Exception: when State provides services).
(3) If third-party tort suit filed by injured patient, hospital can file petition in the lawsuit instead of proceeding according to §§ 8.01-66.5 to 8.01-66.7.
Comments: Every hospital, nursing home, licensed physician, registered nurse, registered physical therapist, pharmacy, or ambulance service has a lien for services rendered on care to any person injured due to third-party tortfeasor. The lien limited to the just and reasonable charge for the services rendered, not exceeding $2,500 (hospital or nursing home), $750 (physician, nurse, physical therapist, or pharmacy), and $200 (ambulance service). § 8.01-66.2.
Lien inferior to attorneys’ fees. § 8.01-66.3. Any city, corporation, or person who pays the charges for which a lien is provided is subrogated to such lien. § 8.01-66.4.
OCIP/CCIP Subrogation In Workers’ Compensation Construction Cases
OCIP Law: No statute or case law specifically dealing with effect of OCIP/CCIP. OCIPs allowed for public construction contracts over $100 million. V.C.A. § 22-4308.1(C).
Statutory Employer Law: A person or entity that hires a contractor to perform work that is part of the person’s trade, business, or occupation is liable for benefits to any worker injured in the performance of this work. Va. St. § 65.2-307.
Comments: Each party responsible for compensation benefits pursuant to this law becomes a “statutory employer,” and may not be sued, even if they never actually paid compensation benefits. Jones v. Commw. of Va., 591 S.E.2d 72 (Va. 2004); Va. St. § 65.2-303; Slusher v. Paramount Warrior, Inc., 336 F. Supp. 1381 (W.D. Va. 1971).
Recovery Of Increased Workers’ Compensation Premiums By Employer
Recovery For Increased Premiums? Undecided.
Statute/Case Law: None.
Rule Summary: There is no authority or precedent regarding the attempted recovery of damages for increased workers’ compensation insurance premiums by an employer from a third-party tortfeasor.
Which Workers’ Compensation “Benefits” Can Be Subrogated?
Nurse case manager charges, case management services, IME expenses, vocational rehabilitation charges, attorney’s fees, cost containment, record reviews, copying charges, and private investigators’ charges cannot be included in a subrogation lien under § 65.2-309. Charles E. Washington, Claimant, 68 O.I.C. 250 (Va. Workers’ Comp. Comm. 1989); John Neal Lockwood, Claimant, 63 O.I.C. 219 (Va. Workers’ Comp. Comm. 1984).
Many trial lawyers believe that the employer and carrier do not have a right of subrogation for certain expenses, including bill review fees, nurse case manager fees, and vocational rehabilitation counselors. Thus, those expenses need to be deducted from the total lien, before calculating the gross lien. https://fordrichardsonlaw.com/explaining-employer-lien-recovery-in-virginia/
Workers’ Compensation Subrogation Waiver Endorsements
Subrogation Statute: Va. St. § 65.2-309
Waiver Allowed? Employer can waive subrogation when settling workers’ compensation claim. F&S Elec. Motor & Transformer Co. v. O’Hara, 1992 Va. App. LEXIS 472 (July 2, 1996).
Effect Of Waiver Endorsement on Carrier’s Right To Assert A Lien On Claimant’s Recovery: The effect of a waiver of subrogation on the carrier’s rights, including its right to enforce its statutory lien, has not yet been decided.
Other Applicable Law: Employer’s waiver doesn’t mean carrier waives its separate and distinct right of reimbursement of its lien. Reynolds Metals Co. v. Smith, 241 S.E.2d 794 (Va. 1978).
Statute of Limitations: 2 Years. Va. Code Ann. § 65.2-309.
Can Carrier Sue Third Party Directly: Yes.
Recovery from UM/UIM Benefits: Employer’s Policy Only.
Subrogation Against Medical Malpractice: Yes.
Subrogation Against Legal Malpractice: Undecided.
Recovery Allocation/Equitable Limitations: First dollar reimbursed to carrier, less pro-rata fees.
Employer Contribution/Negligence: No.
Attorney’s Fees/Costs: Pro-Rata.
Future Credit: Yes, a carrier is reimbursed attorney’s fees on each payment.
Auto No-Fault: No.
Workers’ Compensation Claims by Undocumented Employees
Statute: The statute expressly mentions and includes aliens. Va. Code Ann. § 65.2-101-1(a).
Case Law: Jose Granados v. Windson Development Corp., 509 S.E.2d 290 (Va. 1999); Rios v. Ryan Inc. Cen., 542 S.E.2d 790 (Va. 2001).
Comments/Explanation/Other: At the time of Granados, the workers’ compensation statute excluded illegal aliens, and thus denied his benefits, but in 2000; the legislature amended the statute to include them. Rios held that because the claimant was an illegal alien at the time he attempted to contract for hire, he presented false papers, thus the employment contracts were void.