Key Risk Ins. Co. v. PeckÂ
252 N.C. App. 127
N.C. Ct. App.2017Background
- Judith Holliday, a CarolinaEast employee, was injured in a 2013 collision when an ambulance driven by Mark McGuire (with Holliday as passenger) was struck by Chad Peck. Key Risk insured CarolinaEast and paid Holliday workers’ compensation benefits totaling about $63,965.58.
- Peck settled property and bodily-injury releases with payment to Peck; Holliday received extensive medical care and Key Risk filed appropriate Industrial Commission forms admitting liability for Holliday’s medical treatment.
- Key Risk filed suit (Dec. 3, 2015) in its own name against Peck seeking subrogation/recovery of workers’ compensation payments; Peck answered and filed a third-party complaint against McGuire.
- Peck moved to dismiss for lack of standing under Rules 12(b)(1) and 12(b)(6). Key Risk then moved to substitute Holliday as plaintiff under N.C. Gen. Stat. § 97-10.2 and alternatively Rule 17(a).
- The trial court granted Peck’s motion to dismiss and denied Key Risk’s motion to substitute; Key Risk appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether an insurance carrier (Key Risk) has statutory standing under N.C. Gen. Stat. § 97-10.2 to bring a direct action against a third-party tortfeasor | § 97-10.2(g) subrogates insurer to all rights/liabilities of the employer, so insurer may sue in its own name to recover workers’ compensation payments | The statute grants the employer (and, under limited circumstances, the employee) the right to proceed; the insurer is subrogated to employer rights but is not given independent statutory standing to sue in its own name | Court: Insurer lacks statutory standing to sue in its own name under § 97-10.2; dismissal affirmed |
| Whether the trial court abused its discretion by denying Key Risk’s motion to substitute Holliday under § 97-10.2(d) | Even if Key Risk lacked standing, court should order Holliday substituted as plaintiff under § 97-10.2(d) because substitution is authorized when employee refuses to cooperate | § 97-10.2(d) permits substitution only when an action is brought in the employer’s name and the employee refuses to cooperate; here action was in insurer’s name and there was no refusal to cooperate | Court: No abuse of discretion; substitution under § 97-10.2(d) was not available |
| Whether substitution should have been allowed under Rule 17(a) (real party in interest) | Rule 17(a) allows joinder/substitution of the real party in interest and a reasonable time to ratify; court should allow Holliday to be substituted | Key Risk did not follow the statutory procedures, failed to secure Holliday’s consent before filing, and waited until after the statute of limitations had run; trial court may exercise discretion to deny substitution | Court: No abuse of discretion in denying substitution under Rule 17(a); facts showed lack of timely compliance and “last-minute” filing |
Key Cases Cited
- Slaughter v. Swicegood, 162 N.C. App. 457 (discussing standing challenge as akin to a Rule 12(b)(6) motion)
- Radzisz v. Harley Davidson of Metrolina, Inc., 346 N.C. 84 (principles of statutory interpretation and construction of § 97-10.2)
- Lemons v. Old Hickory Council, 322 N.C. 271 (when statute language is unambiguous, courts apply plain meaning)
- Revolutionary Concepts, Inc. v. Clements Walker PLLC, 227 N.C. App. 102 (review of trial court denial of substitution is for abuse of discretion)
- Mark Grp. Int’l., Inc. v. Still, 151 N.C. App. 565 (definition of abuse-of-discretion standard)