Opinion
CASE NO. 378 CRD-7-85
NOVEMBER 10, 1988
The claimant was represented by John M. Creane, Esq.
The respondent-insurer, Liberty Mutual Insurance Company was represented by Scott Wilson Williams, Esq., Law Office of Kevin J. Maher.
This Petition for Review from the January 7, 1985 Finding and Award of the Commissioner for the Seventh District was heard February 27, 1987 and March 25, 1988 before the Compensation Review Division panel consisting of Commissioners Rhoda Loeb, Robin Waller and A. Thomas White, Jr.
FINDING AND AWARD
The Finding and Award of the Seventh District Commissioner is affirmed and adopted as the Finding and Award of this Division.
OPINION
Claimant sustained a compensable injury on March 22, 1979 in which he incurred a 100% loss of use of the right hand. He was paid compensation for temporary total disability as well as a specific indemnity For complete loss of use of the hand; medical benefits including that for reconstructive surgery were paid by the respondents.
As a result of the compensable injury claimant instituted a third party action in the Superior Court against Wise Industries, Inc.: respondent intervened in that suit in accordance with the requirements set forth in Section 31-293, C.G.S..
Sec. 31-293. Liability for third persons to employer and employee. When any injury for which compensation is payable under the provisions of this chapter has been sustained under circumstances creating in some other person than the employer a legal liability to pay damages in respect thereto, the injured employee may claim compensation under the provisions of this chapter, but the payment or award of compensation shall not affect the claim or right of action of such injured employee against such other person, but such injured employee may proceed at law against such person to recover damages for such injury; and any employer having paid, or having become obligated to pay, compensation under the provisions of this chapter may bring an action against such other person to recover an amount that he has paid or has become obligated to pay as compensation to such injured employee. If either such employee or such employer brings such action against such third person, he shall forthwith notify the other, in writing, by personal presentation or by registered or certified mail, of such fact and of the name of the court to which the writ is returnable, and such other may join as a party plaintiff in such action within thirty days after such notification, and, if such other fails to join as a party plaintiff, his right of action against such third person shall abate. In any case in which an employee brings an action against a third party in accordance with the provisions of this section and the employer is a party defendant in such action, the employer may join as a party plaintiff in such action. The bringing of any such action against an employer shall not constitute notice to such employer within the meaning of this section. If such employer and employee join as parties plaintiff in such action and any damages are recovered, such damages shall be so apportioned that the claim of the employer, as defined in this section shall take precedence over that of the injured employee in the proceeds of such recovery, after the deduction of reasonable and necessary expenditures, including attorneys' fees, incurred by the employee in effecting such recovery. The rendition of a judgment in favor of the employer against such party shall not terminate the employer's obligation to make further compensation, including medical expenses, which the compensation commissioner deems payable to such an injured employee. If the damages, after deducting the employee's expenses as provided above, are more than sufficient to reimburse the employer, damages shall be assessed in his favor in a sum sufficient to reimburse him for his claim, and the excess shall be assessed in favor of the injured employee. No compromise with such third person by either employer or employee shall be binding upon or affect the rights of the other, unless assented to by him. For the purposes of this section the employer's claim shall consist of (1) the amount of any compensation which he has paid on account of the injury which is the subject of the suit and (2) an amount equal to the present worth of any probable future payments which he had by award become obligated to pay on account of such injury. The word "compensation", as used in this section, shall be construed to include not only incapacity payments to an injured employee and payments to the dependents of a deceased employee, but also sums paid out for surgical, medical and hospital services to an injured employee, the one-thousand-dollar burial fee provided by law and payments made under the provisions of sections 31-312 and 31-313.
In January 1982 the third party suit was settled by a stipulated judgment for the plaintiff in the amount of $250,000. After fees and cost of suit were paid $166,666.67 remained. At the time litigation was terminated respondents were reimbursed $48,011.92 from the remaining sum. Thereafter respondents expended an additional $1,990.24 on behalf of the claimant as a result of the compensable injury.
Citing Section 31-293, C.G.S., respondents then sought an order of the Commissioner for the Seventh District directing claimant to reimburse them for the additional sums expended. In addition they sought an order granting them a credit in the amount of $116,664.51, the balance of the net settlement which claimant received as a result of the third party suit. In a Finding and Order dated January 7, 1985 the Commissioner ordered claimant to repay the sum of $1,990.24. As part of the Order respondents were granted a credit in the amount they claimed, relieving them of liability to pay compensation or medical expenses until the claimant had expended the balance of the net proceeds of the litigation he had received, $116,664.51.
Claimant contends that the Commissioner erred in entering such orders in that Section 31-293 only provides for reimbursement of amounts which respondents have actually expended on the date litigation was terminated. There is no wording in the statute which provides for a credit against proceeds recovered in a third party suit against compensation liabilities arising after the conclusion of litigation. This is so because part of claimant's recovery is a payment for pain and suffering. Since Workers' Compensation does not indemnify accident victims for this element of damages, it is unfair to give respondents credit against amounts paid for pain and suffering.
Furthermore, claimant contends that the wording of the statute precludes such a credit because it merely states that damages shall be assessed in favor of the respondents sufficient to reimburse them for their claim. It then mandates that the excess be paid to the injured employee.
At the very most, claimant contends that the statute provides that the employer would be entitled to "an amount equal to the present worth of any probable future payment which he has by award become obligated to pay on account of the injury". However, they are now barred from such a recovery since the Court made no apportionment of the settlement at the time of judgment. Furthermore, since respondents failed to assert the claim for credit at the time of settlement they have waived their right to assert it later before the Workers' Compensation Commissioner. The Commissioner, the claimant contends, is therefore without any jurisdiction to grant such a credit to the respondents.
Claimant further contends that he would not have settled the third party case had he known respondents would make a claim for credit against the settlement proceeds. Therefore, respondents knowingly waived any future credit by agreeing to the settlement and accepting $48,011.92. Respondents categorically deny any such waiver on their part. They assert that the record of the stipulated judgment specifically reflects their intention to claim a credit against the proceeds, for any future compensation liability.
Respondents contend that Section 31-293 does not require an employer to take credit for any future liability at the time a third party case is settled. To the contrary, the statute does not preclude the taking of a credit at a later time. The statute merely mentions the value of the employer's claim which can be asserted at any time.
By specifically mentioning the value of the employer's claim, the legislature intended, that, absent a specific apportionment by the Court pursuant to a verdict and judgment thereon, to grant the employer the right of reimbursement for past and future payments.
In support of their position respondents cite local custom and precedent as well as a recognized workers' compensation authority, Professor Arthur Larson. His opinions are set forth in a treatise, a section of which deals with subrogation and lien rights of an employer against third party tort feasors whose negligence caused a compensable injury. Larson points out how difficult it is to determine the amount of an employer's liability for future workers' compensation payments at the time when third party litigation is terminated. Some states such as New York provide a specific mechanism for dealing with the problem of future benefits. For laws which lack such a mechanism, Larson states that the granting of a credit is the proper statutory interpretation, explaining as follows:
"If the statute does not take pains to deal explicitly with the problem of future benefits but merely credits the carrier for compensation paid, or compensation for which the carrier is liable, the correct holding is still that the excess of third party recovery over past compensation actually paid stands as a credit against future liability of the carrier.", 2a Larson, Workmen's Compensation Law, Sec. 74. 31(e) (1988).
If the statute is silent on the credit issue direction from the Courts is equally absent. However, there is a decision of this Division which deals with the issue, Conrad v. Haggerty Pool Service, 3 Conn. Workers' Comp. Rev. Op. 96, 174 CRD-7-82 (1986). There claimant suffered a compensable back injury which caused multiple surgeries. As a result of the second surgery the surgeon failed to remove a sponge and claimant instituted a medical malpractice suit against him and the hospital. The case was settled for $50,000 of which Trial Commissioner in Conrad, supra, found that there was a credit due the respondents because of the recovery in the malpractice action. All parties in the Conrad case appeared to view the credit issue as being one of settled law. The claimant in Conrad only contended that respondents were precluded from a credit, not because the statute made no such provision, but because the funds from which the claimed credit would be paid flowed from a tort occurring after the compensable injury.
The C.R.D. disagreed, and in affirming the Trial Commissioner's decision confirmed the award of a credit against the amount of the third party settlement. We find that the disposition in that case dictates the affirmation of the Finding and Award of the Trial Commissioner in this case.
Commissioners Rhoda Loeb and A. Thomas White, Jr. concur.