Following the verdict, State Farm paid out its per person policy limit of $50,000, plus costs, on Kirkpatrick's behalf. Following this payment, Brown sent a check for $236,000 pursuant to Brown's underinsured motorist coverage.

In a letter accompanying the check, USAA asked Brown to ask the circuit court to mark the matter as paid and satisfied. However, Brown refused, responding that he believed he was entitled to pursue recovery against Kirkpatrick in light of USAA's waiver of its right to subrogation, according to the opinion.

In response to Brown's refusal, Kirkpatrick filed a motion under Code Section 8.01-455, requesting that the circuit court enter an order marking the judgment as satisfied. He argued that USAA had indicated that it would satisfy their share post-verdict and waive subrogation against Kirkpatrick if he appeared for the trial.

Kirkpatrick further argued that USAA's waiver of its right to pursue Kirkpatrick didn't mean that Brown regained the right to pursue him.

The circuit court had agreed with Kirkpatrick, granting his motion to mark judgment satisfied after Brown's insurance carrier USAA tendering its underinsured motorist (UIM) coverage obligations to Brown.

On appeal, Brown argued that the logic of the Virginia Supreme Court's 2019 decision in Llewellyn v. White, in which the court held that an insurance company's agreement with the plaintiff to waive its right of subrogation didn't relieve the tortfeasor's judgment, applied with equal force to a situation where the insurance company has agreed with the defendant to waive its subrogation rights.

The majority first noted that Code Section 8.01-455 only entitled Kirkpatrick to have the judgment marked as satisfied when there was proof provided that the judgment had been paid off or discharged, and it was undisputed that the judgment hadn't been paid in full, with Kirkpatrick not paying any amount of the judgment following State Farm's payment of $50,000, the opinion said.

"Additionally, Llewellyn is clear that payments to a plaintiff by a UIM carrier are collateral to the defendant and implicate the collateral source rule such that USAA's payments to Brown cannot lead to the judgment being 'paid off,'" Humphreys said.

Kirkpatrick contented that Llewellyn was inapposite on this point, because the insurer's subrogation rights with the defendant were waived, while in Llewellyn, the insurer's subrogation rights were waived waived as part of its settlement agreement with the plaintiff, the opinion said.

According to Kirkpatrick, USAA waived its subrogation rights regarding himself, but it still retained some enforceable subrogation rights against Brown.

The majority determined Kirkpatrick's argument misconceived the nature of the subrogation right, with the state's supreme court having distinguished subrogation from reimbursement.

In its 1978 decision in Reynolds Metals Co. v. Smith, the Virginia Supreme Court held "that a group accident and health insurance 'non-duplication of benefits' provision did not violate the anti-subrogation statute then found in Code § 38.1-342.2 (codified as amended at Code § 38.2-3405)," and that the "statute prohibited subrogation provisions in medical expenses paid from health insurance plans."

"The Court reasoned that subrogation, by definition, requires that the subrogee obtain the right to proceed against a third party and that the non-duplication provision provided no such right. Accordingly, the reimbursement provision was not prohibited by statute," wrote Humphreys. "For purposes of this case, Reynolds Metals Co. contradicts Kirkpatrick's argument that USAA retains some subrogation right against Brown. Reynolds Metals Co. directly states that an insurer's right to reimbursement from its insured is not equivalent to their right of subrogation against the defendant."

According to the majority, while Brown's insurance policy may require him to reimburse USAA for recovery he obtains from Kirkpatrick, this didn't mean that Kirkpatrick was free from his tort liability.

Further, the majority found the record didn't support a finding that the judgment was discharged as the record didn't establish that USAA had truly "settled" its subrogation claim against Kirkpatrick, with the waiver of the right to pursue a recovery of another's, claim on its own, lacking the ability to extinguish the underlying claim.

"Based on the record before us, USAA's subrogation right was the only mechanism that permitted it to interfere with Brown's right to recover his judgment against Kirkpatrick. By waiving its right to subrogation, USAA effectively disclaimed any interest in the judgment itself," said Humphreys.

Kirkpatrick's further attempted to argue he was entitled to be released from liability, citing nonbinding dicta in Llewellyn, which he argued should apply to the case.

He asserted that because USAA had agreed not to pursue recovery it was entitled to seek through the carrier's subrogation rights, he was entitled to credit against any judgment the plaintiff received, including up to the amount the UIM insurer was owed pursuant to its subrogation rights.

"The hypothetical counterfactual raised by the Llewellyn Court of a UIM carrier agreeing with a defendant to forgo recovery was not essential to its holding that payments by a UIM carrier were a collateral source and not subject to set-off under Code § 8.01-35.1; accordingly, it does not bind us," wrote Humphreys. "The Llewellyn Court provided no rationale for why the mere agreement to forgo the subrogee's recovery would entitle the tortfeasor to credits against the underlying judgment."

Lastly, according to the majority, Kirkpatrick's argument that allowing Brown "a double recovery at the expense of USAA" would be against public policy, was a misunderstanding the consequences of applying the collateral source rule.

"USAA could have recovered from Kirkpatrick and prevented a double recovery, but it chose not to. Allowing Brown to recover against Kirkpatrick does not come at USAA's expense, but Kirkpatrick's. This result is perfectly in line with the result dictated by the collateral source rule and the rationale, if not the dicta, of Llewellyn," concluded the majority. "Because Kirkpatrick's judgment debt has neither been paid off nor discharged, he was not entitled to relief under Code § 8.01-455, and the circuit court erred by granting his motion to mark the judgment as paid and satisfied."

In his dissent, Huff argued that adopting Brown's view would grant him double recovery, with him recovering from his UIM insurer pursuant to his UIM policy, and then directly from the defendant directly for the same amount paid out under the policy.

And while the collateral-source rule doesn't justify the receiving of double recovery, he further asserted that the collateral source rule was irrelevant to the case at hand as UIM coverage isn't collateral to the tortfeasor's liability, but instead depends directly on the tortfeasor's liability.

Huff also claimed that Llewellyn didn't demand the application of the collateral-source rule to the case.

Further Huff asserted that, differing from Llewellyn, the case before the court concerned "an agreement between the tortfeasor and USAA, the UIM-insurance carrier, where USAA agreed with the tortfeasor to waive its subrogation right in exchange for the tortfeasor's liability carrier defending the case."

This agreement didn't eliminate USAA's obligation to provide UIM-insurance coverage for Brown, with coverage under such circumstances not collateral to the tortfeasor's liability, unlike the one in Llewellyn, alleged Huff.

"The insured plaintiff is made whole—for any excess beyond the coverage amount of the tortfeasor—through plaintiff's UIM policy and by recovering any remainder of his judgment directly from the underinsured tortfeasor. By granting the subrogation right exclusively to the UIM carrier, Code § 38.2-2206 ensures that the UIM policy remains as an additional source of funds to make the insured plaintiff whole even if the carrier waives its subrogation right against the tortfeasor," claimed Huff. "Appellant's approach, on the other hand, will only enable double recovery and undermine the purpose of UIM insurance."

Brown's attorney, Steven L. Lauer of the Joel Bieber Firm, in Richmond, and Kirkpatrick's attorney, John D. McGavin of McGavin, Boyce, Bardot, Thorsen & Katz, in Fairfax, did not immediately respond to requests for comment.