                   COURT OF APPEALS OF VIRGINIA


Present: Judges Baker, Bray and Overton
Argued at Norfolk, Virginia


OVERHEAD DOOR COMPANY OF NORFOLK
and
HARTFORD FIRE INSURANCE COMPANY              OPINION BY
                                       JUDGE JOSEPH E. BAKER
v.        Record No. 1524-95-1             APRIL 9, 1996

DANIEL LEE LEWIS


       FROM THE VIRGINIA WORKERS' COMPENSATION COMMISSION
          Matthew J. Ide (Mary Louise Kramer; Cecil H.
          Creasey, Jr.; Sands, Anderson, Marks &
          Miller, on briefs), for appellants.

          William L. Perkins, III (Price, Perkins &
          Larkin, on brief), for appellee.



     In this appeal from a decision of the Workers' Compensation

Commission (commission), the dominant question presented by

Overhead Door Company of Norfolk and Hartford Fire Insurance

Company (jointly referred to herein as employer) is that assuming

the attorney employed by Daniel Lee Lewis (claimant) negligently

caused claimant's third-party action to be dismissed with

prejudice to employer's subrogation rights, does that result

constitute a bar to claimant's right to compensation benefits for

injuries claimant received in the same accident.

     On February 6, 1990, claimant sustained injuries in an

automobile accident near Kill Devil Hills, North Carolina.     The

injuries arose in the course of and within the scope of

claimant's employment.   Claimant filed a claim for workers'

compensation benefits.
     On December 12, 1990, the commission awarded claimant wage

compensation benefits in the amount of $223.52 per week.

Following the entry of that award, claimant employed an attorney

(Riggins) to pursue a common law personal injury action against

Michael L. Kenney and his employer, Carpet Transport,

Incorporated (third parties), who claimant alleged caused the

accident.   In a timely fashion, Riggins filed suit against the

third parties in Dare County, North Carolina.    Employer was aware

that this suit had been filed against the third parties and

advised Riggins orally and in writing that they relied upon

Riggins to protect their right of subrogation.
     Because Riggins failed to comply with North Carolina's Rules

of Civil Procedure, claimant's suit was dismissed with prejudice

by the North Carolina court before it could be heard on its

merits.   Employer asserts that Riggins' failure to comply with

procedure impaired its right to recover against the third

parties, and that because claimant had employed Riggins, an

agency was created whereby Riggins' omission constituted an

omission of claimant.   Therefore, employer contends that as a

matter of law, claimant impaired its right of subrogation against

the third parties.

     Based upon that premise, employer filed an application for

hearing with the commission, asking that claimant's benefits be

terminated.   Employer's application was summarily dismissed by a

claims examiner, and the full commission, upon review, upheld the




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examiner's rejection of employer's application.

     Upon the facts presented in this appeal, for the reasons

stated herein, we affirm the decision of the commission.

     Employer relies upon the provisions of Code §§ 65.2-309 and

65.2-812 and several cases decided under those sections.    Without

those statutory provisions, neither employer nor its insurance

company would have any right of action against a third party or

the right to share in the proceeds of any recovery claimant might

obtain.    Therefore, if employer has any right of subrogation, it

must be expressed in the Code.     See Noblin v. Randolph Corp., 180

Va. 345, 358, 23 S.E.2d 209, 214 (1942).

     In relevant part, Code § 65.2-309(A) provides:
            A claim against an employer under this
          title for injury or death benefits shall
          operate as an assignment to the employer of
          any right to recover damages which the
          injured employee, his personal representative
          or other person may have against any other
          party for such injury or death, and such
          employer shall be subrogated to any such
          right and may enforce, in his own name or in
          the name of the injured employee or his
          personal representative, the legal liability
          of such other party.


Code § 65.2-812 merely gives these rights to the insurance

carrier that pays or is liable to pay the workers' compensation

claim.    Nothing in those statutes prohibits one who claims

compensation benefits from pursuing his or her common law right

to sue the third party who caused the injury.

     In the exercise of its right to pursue a third-party claim,

the employee must not prejudice the employer's right of


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subrogation given by Code §§ 65.2-309 and 65.2-812.   The penalty

for impairing the employer's right may be loss of the employee's

right to compensation benefits.   But, where impairment is

claimed, to successfully be relieved of its liability to pay

compensation benefits, the burden is upon the employer to show

that the employee prejudiced the employer's right.    In the

absence of Code §§ 65.2-309 and 65.2-812, the employer would have

no common law right to be subrogated to any extent in the

employee's claim against a third party.   The employer's rights

are limited to those given by the Virginia Workers' Compensation

Act (Act).   If the agency principles espoused by employer here

are not expressed in the Act, they are not relevant to the issue

we must decide.
     We have reviewed the Act and find no statute that authorizes

the commission to terminate an employee's benefits when the

omissions of his or her attorney in the course of a third-party

action resulted in the loss of an employer's subrogation rights.

Mere proof of unauthorized acts or omissions on the part of an

attorney relied upon by both the employee and the employer to

protect their respective rights cannot be charged against either

and will not support the employer's request to be relieved of

paying further compensation benefits.

     It is apparent that both employer and claimant equally

elected to rely upon Riggins to protect their interests, and

individually, neither did any act to impair the rights of the




                               - 4 -
other.   Because employer has not demonstrated that the Act

requires that the acts or omissions of claimant's third-party

attorney will be deemed acts or omissions of claimant, and

because employer clearly relied upon claimant's attorney to

protect its subrogation rights, we hold that employer is not

entitled to the relief requested in its application for a

hearing.

     Accordingly, the decision of the commission is affirmed.

                                                        Affirmed.




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