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Classification of Personal Injury Proceeds
© 2003 National Legal Research Group, Inc.
PENNSYLVANIA: Diament v. Diament, 816 A.2d 256 (Pa. Super. Ct. 2003).
The wife's malpractice cause of action against her mental health provider accrued when the wife first knew or should have known of the provider's negligence. Since that time occurred after separation, the proceeds of the cause of action were not marital property. The husband's payment of the wife's medical expenses was support, not a predistribution of marital assets.
The husband appealed several portions of a decree of divorce granted by the common pleas court, including the characterization and distribution of a lump-sum medical malpractice award to the wife. The trial court allotted 90% of the proceeds to the wife. Both parties appealed.
The parties separated in August 1993, and the wife filed a complaint for divorce in February 1996. The wife sued her former psychologists for injuries relating to the treatment she received in therapy sessions. She began the counseling in June 1989, which was prior to her separation. In July or August 1993, she was told by her counselors that it was necessary to leave her family for the sake of their safety. She separated from her husband in August 1993 and suffered a breakdown and was hospitalized in 1994, although she continued to have counseling sessions. In 1995, when she was told by her counselors that she should not see her children until they were adults, she came to believe and understand that the counseling that she had been provided was unethical and that she had been profoundly harmed by it. She filed suit in 1996 and received settlement proceeds in December 1997.
On appeal, the husband asserted that the entire amount of the settlement proceeds should have been characterized as marital assets and divided equally between his wife and himself. He argued that the treatment which gave rise to the cause of action was commenced during the marriage and that her cause of action accrued during the marriage. The Pennsylvania Superior Court held that the key question was when the wife's malpractice action accrued. It pointed out that neither the Judicial Code, 42 Pa. Cons. Stat. Ann. 101, nor the Divorce Code, 23 Pa. C.S.A. 3501(8), defined the term "accrue." To find out whether an award is marital property under 3501(8), the court must evaluate when the right to receive the payment arose. Because the wife's case involved a psychological injury, as opposed to a physical injury, the court admitted that it was difficult to determine when the harm occurred and when the wife became aware of the facts that gave rise to the cause of action. Looking to Pennsylvania case law in general, the court noted that the courts have consistently held that a cause of action "accrues" when the defendant's negligent conduct becomes known or should have been known to the plaintiff. In the case before it, the court was persuaded that the harm incurred by the wife as a result of her counseling and therapy was the destruction of her family and her relationship with her children. According to the court, the earliest time this harm could have been incurred was at the time she moved out of the marital residence in August 1993 and, at the latest, in 1995 when she came to realize that she had been maltreated and that she had suffered resulting harm. By either reckoning, the cause of action accrued post-separation and was not marital property subject to equitable distribution. An enforceable right to an award for personal injury does not arise at the time of the injury but reaches fruition only upon the entry of a verdict or settlement. Here, both the wife's injury and her settlement occurred subsequent to the parties' separation and, therefore, under no circumstances could the enforceable right to the settlement proceeds be subject to equitable distribution.
The husband also complained that the trial court had committed reversible error in not characterizing the payment of his wife's medical bills as a predistribution of marital assets since at the time these expenses were covered by the husband no support order was in place. The court disagreed. While a support order cannot be made retroactive, it does not necessarily follow that payments made for the support of a spouse in the absence of such an order cannot be in the nature of support rather than a predistribution of marital assets. Under Pennsylvania law, married persons are liable for the support of each other according to their respective abilities to provide support as provided by the law. 42 Pa. C.S.A. 4321(1). The support rules were expressly designed to allow proceedings to be brought to enforce, as opposed to create, a duty of support. Pa. R. Civ. P. 1901.1. The duty is created by the marriage relationship itself, and the fact that the extent or nature of the support was not quantified until a later date was of no moment.
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