In a case decided late last year the Pennsylvania Supreme Court visited an old and persistently nagging question. Are personal injury settlements marital property where the injury occurred before separation but the trial or settlement of the claim occurred afterward?
In Focht v. Focht, the husband was injured at a raceway in Leesport, PA in April, 1999. He and his wife retained counsel shortly after the injury with the wife raising a claim for loss of the consortium of her husband (i.e, his services as a spouse). A divorce action was initiated in early 2004. The personal injury cases ultimately settled later that year for a gross value just over $400,000.
In the divorce proceeding Husband asserted that his “right” to the $400,000 did not exist until the case was settled with the defendant. Since that came long after the separation he relied upon the statute stating that court has jurisdiction over property acquired during the marriage. Wife asserted that the property right accrued the moment he was injured and that all he did later was to exchange his right to sue for a sum of money representing the loss he sustained in April, 1999 when he was injured.
This seems to be a relatively simple question but there had been case authority suggesting that Husband was correct and that view was sustained by the Pennsylvania Superior Court. 990 A.2d 59 (2009). The case that created the confusion was a 2002 case Pudlish v. Pudlish, where the Superior Court held that a worker’s compensation claim settled after separation was not marital because the employer had denied worker’s compensation up until a time after husband and wife had separated. 796 A.2d 346. The Supreme Court, in Focht decided that Pudlish had been wrongly decided. In so doing it followed the sound reasoning referenced above; the occurrence of an injury is when a right accrues, not when the case is resolved. To do otherwise would actually encourage separation and divorce as the injured spouse might not wish to share any resulting settlement with a spouse who may or may not have been part of the trauma itself or the process of recovery. This also made matters exceedingly complex for the lawyer who represented husband and wife at the outset. In most instances, a case is settled in one piece and defendants care little about how the settlement is allocated between injured party and spouse. Where the two are contentedly married there is really very little to fight over, but in this case, because the separation was well underway the personal injury lawyer had to grapple with a husband and wife wrangling over the value of the actual injury versus the derivative consortium claim.
We are commonly asked how cases like this are managed where the settlement or award is a large portion of the marital estate and yet one party has had the traumatic injury and the other party has suffered for however long cohabiting with the consequences. It is not uncommon for people who have suffered traumatic injury to become depressed or require intense care for weeks, months or years at a time. Thus, the answer to the question is quite fact specific. In equitable distribution all of these facts must be weighed. But the single greatest factor remains to what degree the “injured” spouse continues to have either pain or economic loss after the injury occurs. In cases where a person loses the use of a part of the body or is afflicted with chronic health issues by the injury, the award or settlement will go in large percentages toward that person. But that may not be the case where a traumatic injury yields to an otherwise full recovery. These are tough cases to value in equitable distribution but at least it is now clear that the case itself is marital property if the injury occurs before the parties separate.
Focht v. Focht 32 A.3d 668 (Pa. Supreme, 11/23/2011)