Opinion
No. 84-329.
Filed November 8, 1985.
1. Actions: Equity. An action to determine the interests of adverse parties in a fund held by a stakeholder is equitable in nature. 2. Insurance: Workmen's Compensation: Subrogation. A welfare fund which has made payments in the nature of health care benefits to a member on the assumption that the member was not entitled to workmen's compensation is not a subrogee and is not entitled to share in any part of a settlement of a claim made by the member against the employer under the Workmen's Compensation Act.
Appeal from the District Court for Douglas County: JERRY M. GITNICK, Judge. Reversed and remanded with directions.
LeRoy J. Sturgeon of Smith Smith, for appellant.
Bennett G. Hornstein of Taylor, Hornstein, Peters Kluver, for appellees.
KRIVOSHA, C.J., BOSLAUGH, WHITE, HASTINGS, CAPORALE, SHANAHAN and GRANT, JJ.
This is an action in the nature of interpleader and for a declaratory judgment to determine the rights to $6,629.70 which was a part of the proceeds of the settlement of a claim under the Workmen's Compensation Act by Inola H. Smith against Continental Baking Division of International Telephone Telegraph Corporation (Continental) and its insurance carrier.
The action is similar to United Services Automobile Assn. v. Hills, 172 Neb. 128, 109 N.W.2d 174 (1961), in which United commenced an action against Hills and Allstate Insurance Company to determine the rights to a part of the proceeds from the settlement of a claim against a party insured by Allstate arising out of an automobile accident. In that case we said: "The present action is one of interpleader. . . . The right to interplead and have the interests of the adverse parties determined in a fund held by a stakeholder is an equitable proceeding and will be so treated on appeal." Id. at 132, 109 N.W.2d at 177.
Smith was injured in May and June 1982 while employed by Continental as a sanitation employee. Her claim against Continental for workmen's compensation benefits was denied. Smith then made claim against Baker's Local No. 433 Welfare Fund (Fund) under its plan for hospitalization and medical care benefits. The Fund paid Smith $6,629.70 on her claims for health care benefits.
On October 25, 1982, Smith consulted Bennett G. Hornstein, a lawyer practicing in Omaha, Nebraska, concerning her claim against Continental under the compensation law. Hornstein advised Smith that she had a legally arguable claim. She then entered into a contingent fee agreement with Hornstein in which Smith agreed to pay him 33-1/3 percent of any benefits recovered.
On October 27, 1982, Hornstein advised Bernard Clausen, the Fund's managing agent and trustee in Sioux City, Iowa, that a suit was being filed against Continental which would include the Fund's "equitable subrogation claim" for Smith's medical bills which had been paid by the Fund. The petition alleges that Clausen "acquiesced in this action" but made no effort to join or otherwise assist in the litigation.
On January 19, 1983, 2 days before the compensation suit was to go to trial, the parties entered into a settlement which the petition alleges included the Fund's "medical expense subrogation claim" in the full amount of $6,629.70. Hornstein demanded that the Fund pay one-third of that amount to him. The Fund refused and claimed that Smith had secured payment of her medical bills by the Fund "illegally" because she was entitled to workmen's compensation benefits.
On May 3, 1983, Hornstein received a check from Continental's insurance carrier in the amount of $6,629.70 payable to Hornstein, Smith, and the Fund. This action was commenced on November 10, 1983, by Smith and Hornstein against the Fund for a judgment declaring that Hornstein and Smith have no liability to the Fund except for two-thirds of the "subrogated amount" of $6,629.70 after Hornstein retains one-third of the amount as an attorney fee.
The defendant Fund filed an answer and counterclaim alleging that Smith was not entitled to the benefits she had received from the Fund. The plan excludes payment of benefits for any injury or sickness for which a member is entitled to receive workmen's compensation benefits. The defendant further alleged that it had made demand upon Smith for repayment of the benefits she had received from the Fund but that she had refused to make repayment. The defendant denied that it had employed Hornstein or requested any professional service from him. The defendant prayed for judgment against Smith and Hornstein for the $6,629.70 or for judgment against Smith for any part of the $6,629.70 it did not recover from Hornstein.
On March 8, 1984, the plaintiffs filed a motion for summary judgment. The motion was heard on the pleadings and two affidavits filed by the plaintiffs. The plaintiffs' affidavits merely restated the facts alleged in the petition. The defendant filed no affidavits and made no countershowing. The trial court found that Hornstein was entitled to one-third of the $6,629.70, with interest and costs, and that the defendant was entitled to the remaining balance "as its net subrogation recovery." The defendant Fund has appealed.
A party is entitled to summary judgment if the pleadings, depositions, and admissions on file, together with the affidavits, show that there is no genuine issue as to any material fact, that the ultimate inferences to be drawn from those facts are clear, and that the moving party is entitled to judgment as a matter of law. Beatrice Nat. Bank v. Mid-America Dairymen, 220 Neb. 757, 372 N.W.2d 99 (1985).
The record presents no issues of fact at this time, but it does not sustain the judgment entered by the district court. The Fund was not subrogated to any of the proceeds of the settlement of Smith's compensation claim because it did not discharge any debt due Smith under the compensation law. The payments which the Fund made to Smith were in satisfaction of health care benefits it assumed Smith was entitled to as a member of the union. The Fund does not claim otherwise. In its brief the Fund characterizes itself as a creditor of Smith for restitution of a payment made in error.
The money which is the subject of this action is the result of the settlement of a disputed claim. It has never been adjudicated whether Smith was entitled to recover anything from Continental under the compensation law. Also, it has not been adjudicated whether the Fund is entitled to recover any of the payments it made to Smith which it now alleges were made by mistake.
Upon the record now before us, Hornstein is entitled to one-third of the $6,629.70 pursuant to his contract with Smith. The balance of the proceeds of the settlement of the compensation claim belongs to Smith. The Fund has no interest in the proceeds from the settlement of Smith's claim under the compensation law.
The judgment is reversed and the cause remanded with directions to enter a judgment in accordance with this opinion.
REVERSED AND REMANDED WITH DIRECTIONS.