§ 8.01-424.1.Settlement of third-party action; deemed consent by employer.

Under the workers’ compensation subrogation statute, an employer that has paid benefits has a stake in whatever an employee recovers from a third party responsible for the injury, and the employer’s consent normally matters to a settlement. This section handles the standoff that happens when the employer will not consent to a settlement the employee wants to accept: the employee, personal representative, or other claimant can petition the court where the action is pending — or, if none is pending, any circuit court where venue would lie under § 8.01-262 — for approval of the settlement anyway.

The petition has to lay out the compromise, its terms, and the reasons for it, and the court has to bring the interested parties together, either in person or through a representative. Twenty-one days’ notice, served through the methods in §§ 8.01-296, 8.01-299, 8.01-300, or 8.01-301, or under Rule 1:12, counts as convening the parties; an insured employer’s workers’ compensation carrier gets notice through its registered agent or counsel. During that notice period, the person offering the settlement has to make themselves available to answer sworn questions about their finances.

If the court finds the settlement fair and just to the interested parties, it approves it — but the court can never reduce or otherwise compromise the employer’s subrogation interest itself. An aggrieved employer can appeal; if the appeal fails, the employer owes interest at the judgment rate on the full settlement amount (discounted to present value for periodic payments) running until the denial. And once the decision becomes final and every appeal is exhausted, the approval is deemed the employer’s consent, since its subrogation interest was never compromised.