On December 19, 2023, the Court of Appeals of Virginia reversed the original panel of the court which addressed the issue of waiver of subrogation pre-trial. The case arose from a motor vehicle accident and a jury award in April, 2022 to Michael Brown. Mr. Brown had sued Timothy Kirkpatrick who was insured with State Farm. State Farm had a policy of $50,000. USAA had underinsurance. As the case came up for trial, USAA agreed to waive subrogation so long as State Farm provided the defense and took the case through to trial. The jury returned a verdict of $286,000, well in excess of State Farm’s policy. USAA paid the underinsurance and then moved to mark the judgment as paid and satisfied.
The plaintiff objected, arguing that the waiver of subrogation by USAA caused the right of subrogation to essentially revert back to the plaintiff. The trial court disagreed and ruled that the judgment should be marked as paid and satisfied. Plaintiff Brown appealed and the Court of Appeals in a 2-1 decision ruled that the waiver extinguished the right of subrogation and allowed Mr. Brown to have the right to seek a double recovery and recover from Kirkpatrick the $236,000 that State Farm did not satisfy. Essentially, plaintiff sought a double recovery. In that original panel decision, the court held that the waiver reverted the right back to the plaintiff for subrogation. The court also held that the payment by USAA was a collateral source which could not be considered in regard to mark the judgment as paid and satisfied.
This firm represented the interests of Timothy Kirkpatrick on appeal. We were asked to take over the appeal after the original verdict. After receipt of the panel Opinion, we filed a Petition for Rehearing which was granted. Then, the case was heard en banc before the entire panel of judges of the Court of Appeals. The Opinion was entered on December 19, 2023 and reversed the original panel and affirmed the decision of the trial court. Judge Huff wrote the Opinion for the court. He determined that the subrogation right remains with USAA and their agreement with State Farm did not constitute a reversion or assignment of any right to the plaintiff. Instead, he ruled that USAA still owns that right but has elected not to pursue it as was the agreement that was reached. The court dismissed the collateral source argument on the grounds that collateral source is most typically applicable in circumstances where such evidence is being offered at trial. In other words, it is an evidentiary standard more than anything else.
This is a significant Opinion and will be a published Opinion and much discussed.
John McGavin was the lead attorney on the appeal and presented oral argument before the original panel and then before the full en banc panel. Mr. McGavin is available to discuss the Opinion and/or explain the legal analysis at your convenience.