UNITED STATES v. LORENZETTI
Legal provision: Federal Employees' Compensation
ORAL ARGUMENT OF MS. CAROLYN CORWIN, ESQ., ON BEHALF OF THE PETITIONER
Chief Justice Warren E. Burger: We'll hear arguments next in United States against Lorenzetti.
Ms. Corwin, you may proceed whenever you're ready.
Ms Carolyn Corwin: Thank you, Mr. Chief Justice, and may it please the Court:
The question raised in this case concerns the interpretation of 5 U.S.C. 8132, the reimbursement provision of the Federal Employees' Compensation Act.
Under Section 8132, a federal employee who has suffered a work-related injury, who has received FICA benefits on account of that injury, and who sues and recovers from a third party in connection with that injury, must reimburse the federal government out of his third party recovery.
The question here is whether that statutory duty to reimburse exists when state law provides that the third party recovery may not include damages for medical expenses and lost wages.
Respondent is a government employee who was injured in a work-related automobile accident.
He received FICA benefits in the amount of approximately $2,000 which allowed him to pay for his medical expenses and made up for his lost wages.
Respondent then sued the driver of the other car and eventually settled for $8,500.
The Secretary of Labor sought reimbursement for the FICA benefits that had been paid out in the amount of approximately $1,600, which represented the FICA benefits less a reasonable attorney's fee.
Even though Respondent's recovery was more than five times the amount that the Secretary of Labor was seeking to be reimbursed, Respondent took the position that he did not have a duty to reimburse because his settlement did not include amounts that represented medical expenses and lost wages.
That is because the Pennsylvania no-fault insurance statute abolishes tort liability for economic losses, including medical expenses and lost wages, that fall below the ceiling set by the Pennsylvania statute for no-fault coverage.
The district court held nevertheless that the statute Section 8132 did require Respondent to reimburse, citing the Ostrowski case from the Sixth Circuit.
The Third Circuit reversed and explicitly rejected the Ostrowski case.
In the Third Circuit's view, the federal government was to be a model employer and that that was Congress' intent underlying the statute.
For that reason the Third Circuit thought that Section 8132 ought to be interpreted so that a federal employee would be at least as well off as an employee covered by the state workers' compensation system.
Because the Pennsylvania courts had held that under the state workers' compensation law a compensation carrier would not be subrogated to the rights of an employee in a situation like that of respondent, the court concluded that the Section 8132 of the federal statute should not... should be read in an analogous manner to the Pennsylvania law.
Our position in this case is a straightforward one.
First, we think that the language of Section 8132 on its face requires reimbursement from Respondent to the federal government.
Second, we think that contrary to what the court of appeals believed, the result is consistent with the purposes that underlie the reimbursement provision.
Now, the language of Section 8132 seems clearly to require reimbursement from anything that an employee recovers from a third party on account of his work-related injury.
That is how the Secretary of Labor has always read this statute.
Section 8132 refers to money or other property an employee recovers--
Unidentified Justice: What part of 8132 are you reading from?
Ms Carolyn Corwin: --Well, I'm referring to the language that... that talks about money or other property, and that... that comes within the first sentence.
You have to go down several lines.
Unidentified Justice: That's quite a sentence.
Ms Carolyn Corwin: It is a long sentence.
Unidentified Justice: Okay.
It's six lines.
I guess on page 2A of the brief.
Ms Carolyn Corwin: Right.
The money or other property which an employee recovers in satisfaction of the third party's liability.
And there's a reference to legal liability in that liability in--
Unidentified Justice: But it says "in satisfaction of that liability".
And, of course, that language may refer back to just to the FICA liability, which is limited in nature to lost wages and medical benefits.
Ms Carolyn Corwin: --Well, I think the legal liability to which it refers is the liability of the third party.
Now, you can go back to the injury or death for which compensation is payable, but I think in terms of the damages or the money or other property, that refers to the liability of the third party.
Unidentified Justice: Well, it's not clear, in any event.
Ms Carolyn Corwin: Well, I... I--
Unidentified Justice: I think you have to look at something else to determine the meaning of it, don't you?
Ms Carolyn Corwin: --Well, I... I think that certainly on its face the statute does not in any way distinguish among the different sorts of damages you could have.
It... it refers to the liability.
It refers to injury or death for which compensation is payable, but it doesn't--
Unidentified Justice: Well, I guess you wouldn't say that recovery from a third party of property damage is going to be payable over to the United States.
Ms Carolyn Corwin: --No.
And we've said in our reply brief that's never been the position of the Secretary.
And I think if you look at the statute, it refers to this injury or death for which compensation is payable.
Under the FICA system, FICA benefits take the place of damages for personal injury and not for property injury.
If someone... if someone's damages... property is damaged in a work-related situation, there is a separate provision in Title 31, Section 3721, I believe, that allows you to present a claim for your property damage.
But in terms of the compensation scheme we're talking about here, which is the Federal Employees' Compensation Act, those benefits are designed to take the place of what you would ordinarily get for your personal injury as a result of a work-related accident.
Unidentified Justice: Well, lost wages and medical expenses.
Ms Carolyn Corwin: Well, that... that is how the benefits are measured, but in terms of what they are designed to replace or... or represent, that is the employee's exclusive remedy under the statutory scheme; that is, those benefits are designed to... to compensate the employee for any sort of personal injury.
That is... that is typical of a statutory compensation scheme in that respect.
Unidentified Justice: FICA doesn't include pain and suffering.
Ms Carolyn Corwin: Well... well, under FICA you... you receive benefits in place of any other damages you might get.
If... if you are injured and there is no third party tort fees around, you get your FICA benefits and that's all.
They take the place of anything that you would otherwise get in... if you were allowed to bring a tort suit against the United States, for example.
So in that sense, they really... they take the place of any sort of damages within the statutory compensation scheme.
Unidentified Justice: But is FICA set up so that it includes not only elements for lost wages and medical expenses, but also some sort of element for what would be pain and suffering in a jury negligence trial?
Ms Carolyn Corwin: There... no, there is no amount that you receive that is denominated pain and suffering; but when you look to the entire statutory scheme, the FICA benefits that... that are received by an employee in effect take the place of any sort of damages you might' otherwise recover against your employer.
Unidentified Justice: Well, I realize that's the case.
I was trying to find out whether the FICA statute is like I understand many state workmen's compensation statutes to be, kind of giving payment for things other than... than pain and suffering, or whether FICA is... if you took a FICA, the average actuarial value of a FICA, would it look very much like the actuarial value of a jury award in favor of a plaintiff?
Ms Carolyn Corwin: Well, no.
I don't think so.
And I think if you're comparing it to state schemes, it would be similar in the respect you've suggested; that when you're measuring the amount an employee gets, you generally look to the medical expenses incurred; you look to perhaps a payment on a schedule for disability; you look to some percentage of lost wages.
But... but in terms of the balance that's been struck by Congress, you have this... this lower amount of... of benefits compared to what you might recover in a tort situation.
On the other hand, you get it... you get it quickly; you get it without regard to fault; you get it without the need for litigation.
So you strike the same sort of balance that you do in the state systems to which you refer.
Unidentified Justice: Well, nothing is recovered for pain and suffering.
I mean that's clear, isn't it?
Ms Carolyn Corwin: --There is no amount of FICA benefits that is measured according to someone's recovery for pain and suffering.
There is also... there is no indication in the language of either differentiation among different types of damages or any suggestion that the right of reimbursement, the federal governments' right as against the third party recovery of the employee, no suggestion that that depends in any way on the substance or the nature of the employee's cause of action.
The bottom line is when we read 8131 is that anything you recover is then subject to this federal right of reimbursement.
Now, Respondent has suggested that 8132 is merely an adjunct to Section 8131 which provides that the Secretary may require the employee to assign his right of action to the Secretary to the United States.
In fact, we think the two sections create somewhat different kinds of rights.
But even if you do look to Section 8131 for guidance, we think our interpretation ought to prevail.
The Secretary may require an assignment of the right of action, not just the employee's right to recover for medical expenses and lost wages.
The way assignment would work is that the Secretary, if he received an assignment, would recover any available damages, and that would include not only medical expenses and lost wages, but pain and suffering or punitive damages or anything else the employee himself might recover.
Then at that point the Secretary would take away from the recovery the amount that was necessary to compensate the... the fund for all the FICA benefits that had been paid out.
And only after that if there were some excess left over would that amount be paid to the employee.
Now, that's... that's qualified by the one-fifth provision that came in in 1966, but really the principle behind it is that the... really the... the reimbursement of the compensation fund comes first under either 8131 or 8132.
Now, the court skipped over the language of the statute and moved directly to the legislative purposes.
We don't think the court should have dismissed the language so summarily, but again, even if you do look at Congress' purposes, I think again they support our reading of the statute.
I don't think there can be any question that the primary purpose of the provisions for third party actions and for reimbursement under FICA are to shift a part of the cost of the program to negligent third party tort feasors; that is, Congress made the judgment that if there was a negligent third party in the scene whenever there was a work-related accident, it was that tort feasor that ought to bear the costs of those particular compensation benefits as opposed to the taxpayers.
Now, various members of Congress expressed concern about the expense of the program back in 1916.
Unidentified Justice: May I ask a question right there?
As I understand the way this works out, the injured employee bears at least four-fifths of the cost of the lost wages and medical benefits, and the third party just bears the expense of the pain and suffering.
Ms Carolyn Corwin: Well, the... the employee always gets the FICA benefits.
I mean that is a given within the system.
Unidentified Justice: Right.
But he, in effect, has had to pay four-fifths of those benefits to the government out of the recovery he got for pain and suffering, is that right?
Ms Carolyn Corwin: Well, depending on the situation, depending on how the numbers worked out--
Unidentified Justice: Well... well, in this case.
Ms Carolyn Corwin: --No.
Here the employee got more than four-fifths of his own recovery.
Unidentified Justice: No.
But the $8,500 was for pain and suffering, wasn't it?
Ms Carolyn Corwin: That's correct.
Unidentified Justice: And out of that amount he had to reimburse the government for the wages and medical expense.
Ms Carolyn Corwin: That's correct.
Unidentified Justice: So that he is the one who ultimately bore the cost of the wages and medical expense in this case.
Ms Carolyn Corwin: Well, of course... of course, he had received the FICA benefits before and was merely paying them back.
I mean the bottom line is he always gets an amount that's equal to the FICA benefits.
He may or may not--
Unidentified Justice: Well, but--
Ms Carolyn Corwin: --He may or may not get the bonus on top of that.
But as to the statutory compensation scheme, he always receives the FICA benefits.
Unidentified Justice: --Well, somebody had to pay the hospital bill to start with, and I assume he did.
Ms Carolyn Corwin: Well, I think he may have and the government reimbursed him through the FICA benefits.
Unidentified Justice: Right.
And then he reimbursed the government.
So at the bottom line is that he paid them out of his own assets, and one of those assets was his recovery for pain and suffering, isn't that correct?
I just want to be sure I understand it.
I'm not trying to debate whether it's just or fair or anything.
But that's what happened, isn't it?
Ms Carolyn Corwin: Well, in that that $8,500 was denominated pain and suffering and yes, part of that went to recompense the FICA benefits.
That still left him with quite a bit left over.
Unidentified Justice: Does it also include loss of wages and special damages, other special damages... the third party--
Ms Carolyn Corwin: The third party recovery in this case we have agreed represents pain and suffering, and that is because of the unusual situation that's created by the Pennsylvania no-fault statute.
Unidentified Justice: --Well, my question was addressed to the general proposition.
When the recovery is had against the third person, it is for the special damages; that is, medical expenses, loss of wages, pain and suffering.
It's a whole range of things making up his total injury, is it not?
Ms Carolyn Corwin: In many cases that would be so.
Now, the "unfairness" or anomaly that comes in here is created because on top of the federal scheme, the federal statutory compensation scheme, there is overlaid the state no-fault insurance scheme, and within that scheme the state has chosen to abolish tort liability for these medical expenses and lost wages below a certain amount.
For that reason the settlement or a third party recovery in... in the Pennsylvania situation would not include elements like medical expenses and lost wages.
But... but to the extent that there is something unusual or anomalous about that, I think it... it's attributable to what the state has come along and done in the face of the established federal program.
Unidentified Justice: Well, as I said, I wasn't debating the fairness of it; but the net result of it is that he pays his own hospital bill.
Ms Carolyn Corwin: Well, I... it depends on... on--
Unidentified Justice: If he had one.
Ms Carolyn Corwin: --I mean you can... you can shift around the money however you want.
Unidentified Justice: Well, but it isn't shifting around, because the $8,500 I thought you stipulated none of that is attributable to either wages or... or medical expense.
I mean do we accept that or don't we?
Ms Carolyn Corwin: Well, we have accepted that.
Unidentified Justice: And if we accept it, doesn't it follow he paid his own hospital bill?
Ms Carolyn Corwin: One could regard it that way.
One could also say--
Unidentified Justice: Well, one must regard it, don't we?
Ms Carolyn Corwin: --One could also say he came out with... with the medical expenses and the lost wages plus something on top of that as a result of the third party recovery.
Unidentified Justice: Well, but only if you say the $8,500 includes medical expenses and lost wages.
You're assuming there's an element of profit in recovering on pain and suffering.
Ms Carolyn Corwin: Well, I suggest that... that Congress when it was structuring the federal compensation scheme was focusing on what was necessary to be fair to the employee to give him a recovery for a work-related injury, and that amount is measured by the FICA benefits.
Now, if there's a third party tort feasor in the picture, you may also get something, but the condition within the statutory scheme is that you first apply that to compensate the government.
Unidentified Justice: Well, Ms. Corwin, what would be the case if instead of $8,500 it was $1,500?
Ms Carolyn Corwin: Then--
Unidentified Justice: Then what's his obligation to reimburse?
Ms Carolyn Corwin: --His obligation under the plain language of the statute is to reimburse the federal government for the FICA benefits.
Unidentified Justice: Well, the whole $1,500--
Ms Carolyn Corwin: The whole $1,600.
Unidentified Justice: --All right.
The FICA benefits were $1,800 or $1,600, was it?
Ms Carolyn Corwin: Sixteen hundred was the FICA benefits.
Unidentified Justice: Well, then, let me change that from $1,500 to $1,600.
So if it had been... if he'd got... if the $8,500 was $1,600, he'd have to pay it back.
Then Justice Stevens' question would have to be answered yes, he paid his own hospital bills, wouldn't it?
Ms Carolyn Corwin: Well, I don't think so.
I think the government initially--
Unidentified Justice: Well, if he gave it back, he wouldn't have anything, would he?
Ms Carolyn Corwin: --He... well, he would come out with one-fifth, because in 1966 Congress provided that the employee would always get at least one-fifth of some third party recovery.
Unidentified Justice: I see.
Ms Carolyn Corwin: So the bottom line is--
Unidentified Justice: So... so he'd get $300 odd dollars or something.
Ms Carolyn Corwin: --Well, yes.
He... he would get at least one-fifth.
Now, here he got plenty more than one-fifth.
Unidentified Justice: He's paid the $1,600 hospital bill.
Ms Carolyn Corwin: Well, the government initially paid it.
Unidentified Justice: Yes.
And then he got $1,600 from the government.
Now he's giving back $1,300, so he ends up with a net of $300.
And he certainly pays the difference, $1,300 of the hospital bill, doesn't he?
Ms Carolyn Corwin: Well, I think it's a matter of characterization, and I think that one has to start out from the premise that when Congress was setting up this federal compensation scheme that it felt that the... the proper result was that the employee should get FICA benefits.
Those were benefits that took the place of a tort liability system.
He got them quickly, he got them without regard to fault, he got them without litigation.
Now, to the extent that there was a third party in the picture, Congress concluded that that third party as opposed to the taxpayer to be bearing the cost of the compensation benefits paid out.
And I think you have to assume that that is... that is the primary purpose; that is the purpose reflected in the debates on this measure.
Unidentified Justice: Well, if I were the injured employee, I'd still feel I was $1,300 out of pocket.
Ms Carolyn Corwin: Well, I think that--
Unidentified Justice: Well, he has the compensation payments.
He doesn't have to disgorge those.
Ms Carolyn Corwin: --Well, that's right, and that really is the basis of the scheme.
The assumption is that if you're in a work-related injury situation that you get the compensation payments, you get the FICA benefits, and that in itself is the solution under the statutory compensation scheme.
Now... now, as I say, if there's this third party, you may have something on top of that, but that's not necessarily so.
Unidentified Justice: Ms. Corwin, perhaps your opponent can speak with more authority than you can on this, but under the Pennsylvania statute, granted you can only sue for basically pain and suffering, but isn't there some administrative provision or some provision for your own carrier, your own insurance carrier to pay lost wages and specials?
Ms Carolyn Corwin: There... the way the Pennsylvania scheme works would prevent in this situation no-fault being... benefits being paid.
The way it works is that the... any obligation of the no-fault, the first party no-fault insurer, Respondent's own insurer, is reduced by the amount of workers' compensation or other government benefits that the employee receives.
Unidentified Justice: So an employee of a private employer here who couldn't claim workmen's compensation could have claimed something from the first insurer, but because he was covered, this guy was covered by FICA, this person couldn't.
Ms Carolyn Corwin: No.
I don't think there's... there's not a difference in the two situations you suggest.
The individual who's employed in the private system would... would be forced first to get his workers' compensation, and the no-fault carrier wouldn't have to pay anything to the extent the workers' compensation carrier had done so under the state system.
Unidentified Justice: But if it's an injury not arising out of in the course of employment and there is no workmen's compensation, no FICA, then under Pennsylvania law the first liability carrier has to pay specials?
Ms Carolyn Corwin: That is correct.
Then... then you would recover it from your first party insurer, that's correct.
Unidentified Justice: Ms. Corwin, in a... in a state without no-fault or without some system like Pennsylvania's and you sue the third party, you can recover anything you can get out of them.
And if in Justice Brennan's example, if you recovered from a third party only $1,500, and you'd only been paid $1,500, you're going to have to refund the whole thing.
Ms Carolyn Corwin: Well, that... that's correct.
Unidentified Justice: I mean whether that's... whatever the recovery is.
And so this case, just because it involved recovery of pain and suffering, doesn't present any unique problem.
Ms Carolyn Corwin: Well, it's not unique in that you may always end up having to pay everything back.
Unidentified Justice: Yes.
Ms Carolyn Corwin: That's a condition of... of being in the compensation system.
You may also have situations like settling for less than you had claimed.
Unidentified Justice: Yes.
Ms Carolyn Corwin: Or being in a comparative negligence state and having your recovery reduced in which you... you would have the reimbursement really go into the other parts of your damages award.
And that's something I think that Congress was... was clearly aware of.
I mean you didn't have no-fault back in 1916, but you had things like there... there was a specific reference to settlement in the statute, so Congress was clearly aware that you might end up with... with less than... than all of your damages on each element.
There were... in the Senate debates there were references to comparative negligence on several occasions, so they again recognized that that sort of principle might be at work.
But there was... there was no expression of concern about protecting those elements of damages like pain and suffering from this federal right to reimbursement.
Now, there... there was some concern about protecting the damages from any credit against compensation for some future injury.
Congress said well, we don't... we don't want a sword of Damooles, is what they call it, hanging over the employee so that he would have to apply all of his recovery sometime in the future; but he didn't... he didn't know it... it would possibly happen to him some day.
So they... they put in some language that said this right of reimbursement doesn't extend beyond that same injury; but there was no effort to... to protect any of these elements of damages from this... what appears to be an absolute right of recovery.
Now, I'd just like to briefly mention another consideration we think underlies the statute, and that is, Congress' intent to create a... a uniform and manageable system that can be administered on a nationwide basis.
We've pointed out in our brief the administrative difficulties we think the sort of test fashioned by the court of appeals would present.
I don't think that Congress has indicated anywhere that... that it anticipated that the Secretary would be making this sort of state-by-state adjustment of federal rights.
And in the absence of that indication, I don't think it's appropriate to read it into the statute.
Now, the court of appeals thought it was significant that reimbursement was not necessary here in order to prevent double recovery.
I don't dispute that... that Congress may have had this prevention of double recovery in mind as an effect of this reimbursement provision.
That was not the only purpose of the provision, and I don't... it was certainly not the decisive provision.
I think the point was to put the... the loss of the compensation benefits on the tort feasor, not on the compensation system, whenever it was possible.
If Congress had wanted to focus on this double recovery rationale, I think it could have drafted the statute in a much more limited manner.
Now, ultimately the court of appeals and Respondent fall back on their own conceptions of fairness to federal employees and on the... the ideas about parity between federal employees and others.
I think I've pointed out that in our view it is Pennsylvania that has come along and imposed upon the FICA system a different set of adjustments of rights and has created this sort of situation.
It's within Pennsylvania's power to remedy this if they perceive it as unfair.
Their legislature can do it.
We think they could do it by construing their statute in the courts.
But to the extent that Pennsylvania doesn't take care of this, I think that it is the burden of Congress to adjust any rights if it perceives that this is an unfair situation.
Unidentified Justice: Ms. Corwin, may I just ask... I'm not clear in my own mind.
Supposing the injured person here had worked for a Pennsylvania employer and received benefits under their workmen's compensation program precisely equal to this.
What would have happened?
And then later sued and got the same recovery.
Ms Carolyn Corwin: Pennsylvania has construed its own workers' compensation system in the light of the no-fault scheme and has said in that case there... there's only a right of subrogation under the Pennsylvania scheme, not this right of reimbursement as defined in Section 8132.
But as to the subrogation right, the Pennsylvania courts have held that that... construing the two statutes together, the workers' comp and the no-fault, that the workers' compensation carrier is not subrogated to the right, so the employee would get to keep the recovery for pain and suffering.
But here I'd point out you're not in a situation in which you're construing two statutes that have been passed by Congress together in trying to reconcile them in the way that--
Unidentified Justice: You get a federal statute and a state statute.
Ms Carolyn Corwin: --Yeah.
The way the Pennsylvania court was trying to reconcile its two state statutes.
Here you have an existing federal system.
You have something changing from the outside.
I think it's similar to the Morrison-Knudsen situation.
Here the change from the outside is the Pennsylvania no-fault statute; but I think it's up to Congress to readjust rights within the federal system if it chooses to do so.
I'll reserve the remainder of my time.
Chief Justice Warren E. Burger: Very well.
ORAL ARGUMENT OF CHARLES SOVEL, ESQ., ON BEHALF OF THE RESPONDENT
Charles Sovel: Mr. Chief Justice, and may it please the Court:
Under the Pennsylvania no-fault system when a person is injured, he's entitled to collect his basic benefits from his own insurance carrier.
Those basic benefits are medical expenses and a portion of wage loss.
It goes up to 80 percent of the wage loss up to $1,000 a month.
If the person is entitled to workmen's compensation benefits, then he must take those workmen's compensation benefits, and the amount paid by the no-fault carrier is reduced by the amount that the workmen's compensation carrier pays.
In most instances the effect of that is to reduce the figure to zero so that the man receives his workmen's compensation wage loss and his medical expenses from his employer.
The statute specifically provides and the courts of Pennsylvania have so held that the workmen's compensation carrier cannot assert a right of subrogation in the third party action.
The third party action, therefore, is limited to items of damages not covered by the no-fault benefit, and the no-fault benefit in turn is the workmen's compensation benefit.
Now, in effect, you have a new type of recovery for an injured person.
Instead of what formerly was a single right to sue a third party to recover what damages you were entitled to as medical losses, wage losses and pain and suffering, you have a two-pronged recovery: one of no-fault recovery and a separate one for amounts not covered by no-fault against the third party if you can prove it.
The effect of the government's position here is to deny the person that single recovery which is contemplated by state law.
The single recovery contemplated by state law is a no-fault benefit plus a right to sue a third party.
The government is saying out of that single right we're going to reduce that single right of recovery by making you pay back the medical expenses that you have received.
Now, when Congress enacted--
Unidentified Justice: Well, that's what the statute seems to say.
Charles Sovel: --Well, it says that, if Your Honor please, only if you interpret the word "damages" to mean damages for pain... for pain and suffering only.
Unidentified Justice: Well, isn't that what this usually refers to in a tort suit?
Charles Sovel: No.
Unidentified Justice: What do you usually refer to recoveries for pain and suffering?
Charles Sovel: I interpret the word "damages" in the statute.
The statute reads,
"If an injury of death for which compensation is payable under this subchapter is caused under circumstances creating a legal liability in a person other than the United States to pay damages. "
Now, that can mean a whole panoply of damages arising from that incident.
Unidentified Justice: Including damages for pain and suffering.
Charles Sovel: And including property damage.
But no one would suggest that that would be the... a reasonable interpretation of the statute.
And that's why the plain meaning of the language... the language has no plain meaning.
"Damages" could mean any other types of damages that a... the tort of one automobile hitting another might create.
It would include property damage.
And they admit that that would not be a reasonable interpretation of the statute.
Unidentified Justice: Well, but you say the reason why it's not reasonable is a reference to injury and death necessarily limits it to the kinds of injuries or damages you associate with personal injury rather than property damage.
Charles Sovel: I would suggest, Your Honor, that that's not exactly how the statute reads.
It says if the circumstances under which compensation is payable... if an injury or death occurs under circumstances where there's an obligation to pay damages, one could say damages for injury or death; but the statute doesn't say that.
The statute just says damages.
And it could mean damages, any damages recoverable under that particular incident.
But I... I think more important is to try to get a plain meaning for a statute that has been enacted and reenacted over the years when a no-fault program and the changes in no-fault were not contemplated.
To try to read a plain meaning into that type of a statute would be unreasonable in terms of what Congress might have intended in this situation or did intend.
Congress certainly, in enacting the statute, did not attempt to prescribe the circumstances under which a third party recovery would be made.
Unidentified Justice: Well, suppose this had come... come in a state without a no-fault, and he sued the third party, and he sued him for lost wages, medical expenses, pain and suffering.
He had a special verdict, and the jury came back and said nothing for... no specials, no wages, no nothing except pain and suffering, and $10,000 for pain and suffering.
Now, would you be making the same argument here?
Charles Sovel: I would be making the same point I made in my brief, Your Honor, in that his third party recovery, whatever the jury found, that was his third party recovery, and that's his single recovery that he's entitled to the benefit of.
He's not... he wouldn't have... his third party recovery reduced by what he has to pay back would still be the same amount for the third party recovery.
It does... there's no saying that a jury has to award a lot for pain and... for pain and suffering, or it might find that a different amount of--
Unidentified Justice: Well, what's the answer to my question?
Would you be making the same argument here today if... if this had come up in a... in a... not... in another state without no-fault and the jury--
Charles Sovel: --No.
Unidentified Justice: --Just happened to award--
Charles Sovel: No.
Unidentified Justice: --Damages only for pain and suffering.
Charles Sovel: --I would not be making the same argument.
Unidentified Justice: Why not?
Charles Sovel: He would be obligated to pay.
Unidentified Justice: Why would he?
Charles Sovel: Because his third party recovery for damages included the right to prove in that third party action his medical expenses and wage loss.
Unidentified Justice: Yes.
Charles Sovel: The fact that the jury didn't award--
Unidentified Justice: The only thing is... the only thing is he didn't prove any.
Charles Sovel: --Well, the jury didn't find... might have found other reasons why not.
We don't... you never know what goes on in the jury's mind in awarding it.
But nonetheless, you're not going to start impeaching a jury's verdict and trying to find out what they consider.
Unidentified Justice: You're not impeaching it at all.
You're just... you're just... he just says well, look, all you ever reimbursed me for was for my loss of wages and medical expenses.
Why should I have to repay you out of my damages for pain and suffering?
Charles Sovel: Your Honor, I think that the purpose of the right of action that is brought which results in a man receiving a third party recovery--
Unidentified Justice: So you think these... these cases ought to come out completely differently if they come out of Pennsylvania or other states with no-fault and states that don't have no-fault.
Charles Sovel: --Well, Your Honor, I think that Congress decided to rest on state law, and we're not going to prohibit the states from experimenting with different types of recovery.
If one states wants to have comparative negligence and another wants to have contributory negligence, the result may well be different.
There might be a... if a state had contributed--
Unidentified Justice: Well, not in terms of the obligation to repay the government.
Charles Sovel: --Well, there might be no recovery in a given case because--
Unidentified Justice: Well, maybe... that may well be, but... but in terms of his obligation to pay, I don't know... I don't see why you wouldn't--
Charles Sovel: --Because it results in him getting less than whatever the single recovery was that the state law contemplated that he would receive.
There's no indication that Congress intended to treat the federal employee any different than any other state employee injured under the same circumstances.
If that was his third party recovery, that's what he's supposed to receive.
It's not to be reduced by a benefit that he did not receive in terms of having to pay back the medical expenses or the wage losses.
In the third party action a man may recover a given amount for pain and suffering.
He may recover less.
He may recover his medical expenses, and he may not.
But he was allowed to prove them, and they were part of his third party damage action.
In this case he was barred from proving his medical expenses in the third party action.
He was barred from proving his wage losses.
And it is on that basis that he shouldn't have to pay back something that he was barred from being entitled to recover under the law.
It was the Pennsylvania legislature's intention that he get those benefits as a matter of right; that they not be covered by his third party action.
The government doesn't want to follow state law in this area, although it seems to be satisfied to follow state law in every other area.
Unidentified Justice: --Mr. Sovel, can I ask you a question I just don't quite understand?
Supposing the... your client had been unemployed, say, and he had a $1,500 hospital bill.
Charles Sovel: Right.
Unidentified Justice: And he... I take it he would have had that paid out by the no-fault insurance carrier.
Charles Sovel: Correct.
Unidentified Justice: Because he was not paid by any compensation program.
Why can't your client now get that hospital paid in that manner because the government is not paying it?
Charles Sovel: I didn't follow your last part.
He can't bring the third party action for it.
Unidentified Justice: He brings the third party action and gets the $8,500 for pain and suffering.
Charles Sovel: Right.
Unidentified Justice: And he goes to his no-fault carrier and says I had to give part of that money back to the government, so I did not have it paid by the government.
They gave me the money and took it back.
So why can't I get it from my no-fault carrier?
Charles Sovel: Because in this situation there is no no-fault carrier.
It's all the government.
Unidentified Justice: There is no no-fault carrier?
Charles Sovel: He was driving a government vehicle.
Now, you see, in this situation his no-fault carrier... let's suppose he had a vehicle, and under Pennsylvania law, if he had his own automobile and he... he would go to his own carrier for coverage, in that situation the employer... the carrier would not be subrogated.
They'd have to pay it, and he'd have no right--
Unidentified Justice: The no-fault insurance is paid by the driver himself.
Charles Sovel: --Yes.
Unidentified Justice: He pays his own premium.
Charles Sovel: Right.
Unidentified Justice: What if he was from Maryland?
I just... I'm--
Charles Sovel: Well, I'm not so sure I follow you question.
Unidentified Justice: --Well, supposing he was not... not... does... say an out-of-state person, must he carry his own no-fault insurance, or he just has no right at all, is that it?
Charles Sovel: Well, he would have his rights under what his policy would be, and if he received no no-fault benefits--
Unidentified Justice: He's just out of luck.
Charles Sovel: --Then no.
Then he's not barred from suing it in the third party action under Pennsylvania law.
Unidentified Justice: Well, then, why can't he now say I did not get any no-fault... I'm not getting... the net result of my arrangement with the government is I get nothing for my hospital bill, so I want to sue the third party.
Charles Sovel: Because the no-fault carrier is entitled to say to him, in turn, you received compensation benefits, and we're entitled to the credit for that under Pennsylvania law.
Unidentified Justice: But I received them, but I couldn't keep them.
Charles Sovel: Well, but that--
Unidentified Justice: I just wonder.
I must say I'm puzzled.
Charles Sovel: --Well, that... that would really put you right around in a circle.
The Pennsylvania legislature made a judgment as to what elements it was going to include in the fund that insurance premiums were to pay for.
Unidentified Justice: Well, as I understand your explanation of Pennsylvania law, it says that the third party has to pay the hospital bill when the plaintiff has to pay it himself.
And the net result of your analysis is he's paying his own hospital bill.
Charles Sovel: That's right.
Unidentified Justice: So I would think he ought to be able to get it from the third party.
In other words, I think that maybe there was a mistake of state law created... well, that's out of this.
Charles Sovel: Well, I... I think that for him to go back to his own carrier now, I don't see how he could do it in these circumstances, because the carrier would also have the right to say we're entitled to get the benefit of workmen's compensation, and therefore, there is no no-fault liability, and the state court would turn around and say that's a correct interpretation of our statute.
It really comes down to, I think, the... the government... the federal government always would seem to be satisfied to accept state law in this area.
It's not intending to define the circumstances under which a third party recovery may be made.
Pennsylvania theoretically could totally abolish third party recovery and say we're not going to allow any third party recovery.
You're only right is to receive workmen's compensation.
The government would be out its compensation benefits, but under this statute it couldn't complain of that.
Now, that would be a different rule for one state than in another state.
But it seems that you're dealing with a state... a federal statute that is incorporating by state law... incorporating state law and should be bound by the rights that that state law creates for the individual.
This is essentially a subrogation provision.
I do not accept the argument that there's some sort of separate right against the employee.
8132 just is another element of interpreting the right of subrogation that is started 8131.
It says if the man makes recovery, he has to pay it back.
And I think that that would be the proper interpretation.
It treats all employees fairly and equally within the state and treats all federal employees equally as compared to the various states in which they are employed.
Chief Justice Warren E. Burger: Do you have anything further, Ms. Corwin?
ORAL ARGUMENT OF MS. CAROLYN CORWIN, ESQ., ON BEHALF OF THE PETITIONER -- REBUTTAL
Ms Carolyn Corwin: Just one brief point.
I'd like to follow up with Justice Stevens' question.
This is... this is something that can be solved through a construction of state law.
The Court hasn't done it.
Now it's open to them to do it.
We've suggested in our brief at page 39, note 25, that there are ways that the courts could do this in Pennsylvania if they're not willing to do it now, and they can solve this problem if they perceive it to be one.
Chief Justice Warren E. Burger: Thank you, counsel.
The case is submitted.
Unidentified Justice: The Honorable Court is now adjourned until tomorrow at 10:00.