Opinion
24A-CT-167
09-23-2024
Alabama Trucking Association Workers' Compensation Self Insurance Funds, Inc., Appellant-Defendant v. Christopher Chadwick, Appellee-Plaintiff
ATTORNEY FOR APPELLANT Jeffrey E. Kehl Downey & Lenkov LLC Chicago, Illinois ATTORNEY FOR APPELLEE Donald W. Wruck Wruck Paupore PC Dyer, Indiana
Pursuant to Ind. Appellate Rule 65(D), this Memorandum Decision is not binding precedent for any court and may be cited only for persuasive value or to establish res judicata, collateral estoppel, or law of the case.
Appeal from the Lake Superior Court The Honorable Bruce D. Parent, Judge Trial Court Cause No. 45D11-1809-CT-563
ATTORNEY FOR APPELLANT Jeffrey E. Kehl Downey & Lenkov LLC Chicago, Illinois
ATTORNEY FOR APPELLEE Donald W. Wruck Wruck Paupore PC Dyer, Indiana
MEMORANDUM DECISION
WEISSMANN, JUDGE.
[¶1] While working for an Alabama trucking company, Christopher Chadwick was severely injured in Indiana while hauling a load of heavy steel bars belonging to Niagara LaSalle Corporation (Niagara). Chadwick later sought worker's compensation benefits from his employer, Bama Truck Lines, LLC (Bama), which carried such coverage through the Alabama Trucking Association Workers' Compensation Self Insurance Funds, Inc. (the Fund). Chadwick also filed an Indiana lawsuit against Niagara, seeking damages for the injuries he sustained in the accident.
[¶2] Eventually, Chadwick and Niagara tentatively settled the lawsuit for far less than Chadwick's actual damages. The Fund then claimed that, under Alabama law, it was entitled to a lien on part of the settlement proceeds because it had already paid Chadwick $889,958.05 in worker's compensation benefits. But Chadwick and the Fund disagreed over the amount of the lien and whether the Fund was entitled to a credit for its expected payments for Chadwick's future medical expenses.
[¶3] The trial court determined that the Fund could recover only a fraction of the lien it sought, given Chadwick's reduced recovery in the Niagara lawsuit. Finding that the trial court erroneously concluded that the lien amounted to only $83,044.57, we reverse this portion of the judgment. But we affirm the trial court's ruling that it could not determine the future medical expense credit from the evidence presented.
Facts
[¶4] In 2016, Chadwick was working for Bama when he picked up a load of steel bars and began hauling them to a facility operated by Niagara. En route, while Chadwick was stopped in Indiana, two of the bars rolled off Chadwick's truck and fell onto his legs. As a result, Chadwick suffered severe injuries that required, among other things, amputation of his legs. Chadwick filed a worker's compensation claim against Bama in Alabama, where the company was headquartered. Bama's worker's compensation obligations were paid through the Fund.
[¶5] Besides seeking worker's compensation benefits in Alabama, Chadwick filed a negligence suit against Niagara in Indiana. Chadwick and Niagara ultimately reached a confidential, tentative settlement. Chadwick then asked the Indiana trial court presiding over the negligence case to establish a procedure for determining the extent of any liens that would apply to the proposed settlement proceeds. The Fund intervened in the lawsuit and asserted its worker's compensation lien on Chadwick's settlement funds.
Due to the confidential nature of the settlement, we have omitted specific figures used in the lien calculations that would reveal the amount of the settlement.
[¶6] The trial court determined that the Fund made payments to and for Chadwick totaling $889,958.05. The court subtracted the Fund's pro rata share of Chadwick's attorney fees and expenses in the Niagara litigation. It then reduced this figure to account for the difference in the value of Chadwick's claim from the amount he was recovering from Niagara, resulting in a final lien figure of $83,044.57. Citing Alabama law, the trial court also declined to give the Fund any credit for the future medical expenses the Fund would have to pay on Chadwick's behalf. Chadwick and Niagara later filed their stipulation of dismissal as to all remaining claims in the negligence case. The Fund appealed, challenging the trial court's $83,044.57 lien determination and denial of the future medical expenses credit.
Discussion and Decision
[¶7] The Fund contends the court misapplied Alabama law by relying on the wrong formula for calculating the lien. According to the Fund, Alabama law dictates that the Fund's lien is for the full amount of its payments to and for Chadwick ($899,958.05) minus the Fund's pro rata share of Chadwick's attorney fees and expenses. The Fund also asserts that the trial court mistakenly denied the credit for its future medical expenses for Chadwick.
[¶8] Chadwick, on the other hand, claims the trial court's calculations were correct. We reverse and remand because: (1) the trial court relied on the right formula but miscalculated the lien amount; and (2) the record contains sufficient evidence from which to determine that a future medical expenses credit was necessary.
I. The Trial Court Erred in Its Lien Calculation
[¶9] When reviewing the trial court's lien calculation, we apply a two-tier standard of review. First, we determine whether the evidence supports the findings and, if so, whether the findings support the judgment. Ind. Land Tr. Co. v. XL Inv. Props., LLC, 155 N.E.3d 1177, 1182 (Ind. 2020). We review conclusions of law de novo. Id. Without reweighing the evidence or judging witness credibility, we only set aside the findings or the judgment when they are clearly erroneous. Id.
A. Trial Court's Ruling
[¶10] The trial court found that Alabama Code § 25-5-11 (the Subrogation Statute) governs the lien calculation. This statute provides that the amount of damages recovered and collected by the injured party "shall be credited upon the liability of the employer for compensation." Ala. Code § 25-5-11(a). Furthermore, "[t]o the extent of the recovery of damages against the other party, the employer shall be entitled to reimbursement for the amount of compensation theretofore paid on account of injury or death." Id. The statute further specifies:
For purposes of this amendatory act, the employer shall be entitled to subrogation for medical and vocational benefits expended by the employer on behalf of the employee; however, if a judgment in an action brought pursuant to this section is uncollectible in part, the employer's entitlement to subrogation for such medical and vocational benefits shall be in proportion to the ratio the amount of the judgment bears to the total amount of the judgment.Ala. Code § 25-5-11(a) (emphasis added).
[¶11] Relying on a formula attributed to Fitch v. Ins. Co. of N. Am., 408 So.2d 1017, 1019 (Al. Ct. Civ. App. 1981), the trial court calculated the Fund's lien as follows:
Employer's Reduced Liability $889,958.05 X
Confidential Sum Recovered in Niagara Litigation
Chadwick's Total Attorney Fees and Expenses
X = $387,515.50
Employer's Reduced Liability = PAST WORKER'S COMPENSATION PAYMENTS ($889,958.05) + FUTURE MEDICAL EXPENSES CREDIT ($0).
[¶16] The trial court found that all but 21.43% of Chadwick's claim against Niagara was "uncollectible" within the meaning of the Subrogation Statute. Ala. Code § 25-5-11(a). This finding-which the Fund does not challenge-was based on the percentage that the confidential settlement represented of the overall value of Chadwick's claim. The court therefore reduced the $387,515.50 figure by 78.57% to reach the court's final lien amount of $83,044.57.
B. Lien Calculation
[¶17] The Fund offers three reasons for its belief that the trial court misapplied Alabama law and that its lien should be the total of its payments for Chadwick ($889,985.05) minus its pro rata share of Chadwick's attorney fees. First, the Fund argues that Chadwick did not obtain a "judgment" that was "uncollectible" within the meaning of the Subrogation Statute, and the Statute therefore does not require a percentage reduction of the lien. Second, the Fund claims that even if this "uncollectible" language of the Subrogation Statute applies, it only governs medical expenses, not the Fund's approximate $350,000 in other payments for Chadwick. Third, the Fund asserts the trial court applied the wrong formula in calculating the lien.
1. Uncollectible Judgment
[¶18] This part of the Fund's arguments rests on the final sentence in the Subrogation Statute: "[I]f a judgment in an action brought pursuant to this section is uncollectible in part, the employer's entitlement to subrogation for such medical and vocational benefits shall be in proportion to the ratio the amount of the judgment bears to the total amount of the judgment." Ala. Code § 25-5-11(a). But the Fund merely asserts that "[t]here was no judgment here." Appellant's Br., p. 19. It does not offer any argument or citation to authority defining "judgment" as used by the Subrogation Statute. The Fund therefore has waived this claim. Carter v. Indianapolis Power &Light Co., 837 N.E.2d 509, 514 (Ind.Ct.App. 2005) (ruling that a party generally waives an issue for which it fails to develop a cogent argument or support with adequate citation to authority); Ind. Appellate Rule 46(A)(8)(a) (requiring that the appellant's contentions be supported by cogent reasoning and citations to authorities).
Whereas Alabama Code § 25-5-11(a) refers to a "judgment," Alabama Code § 25-5-11(e) refers to a "settlement" and provides:
In a settlement made under this section with a third party by the employee or, in case of death, by his or her dependents, the employer shall be liable for that part of the attorney's fees incurred in the settlement with the third party, with or without a civil action, in the same proportion that the amount of the reduction in the employer's liability to pay compensation bears to the total recovery had from the third party. For purposes of the subrogation provisions of this subsection only, "compensation" includes medical expenses, as defined in Section 25-5-77, if and only if the employer is entitled to subrogation for medical expenses under subsection (a) of this section.Because the Fund has waived this argument, we do not express any view of the applicability of this language.
2. Limited Scope
[¶19] The Fund's next claim is that the "uncollectible" language in the Subrogation Statute applies only to medical expenses, not benefits. Of the $889,958.05 paid by the Fund, $534,323.30 was for medical expenses, $315,000 was a lump-sum payment for compensation and vocational rehabilitation, and $40,634.75 was a payment for temporary total disability benefits through December 13, 2017. These non-medical expense payments totaled $355,634.75, according to the Fund.
[¶20] Once again, the Fund offers no citations or analysis to support its view. It relies only on the language of the Subrogation Statute, although the Statute expressly allows a reduction in an employer's payments for both "medical" and "vocational" benefits. Ala. Code § 25-5-11(a). The Fund has waived this issue as well. Carter, 837 N.E.2d at 514; App. R. 46(A)(8)(a).
3. Formula
[¶21] The Fund's final claim as to the lien calculation is that the trial court relied on the wrong formula. We agree.
[¶22] The Fitch formula cited by the trial court is designed to calculate the lienholder's pro rata share of the worker's attorney fees in the third-party litigation. Miller &Miller Constr. Co. v. Madewell, 878 So.2d 1171, 1179 (Ala. Civ. App. 2003); Fitch, 408 So.2d at 1019. The future medical expenses are not included in this attorney fees calculation. Id. But because the trial court determined the future medical expense credit was zero, the trial court's inclusion of future medical expenses in the calculation did not impact the result.
[¶23] What did render the calculation incorrect, however, was the trial court's treatment of the X value of $387,515.50. The court viewed the $387,515.50 figure as the "net lien." Appellant's App. Vol. II, pp. 24-25. In fact, the X figure is the Fund's pro rata share of attorney fees and expenses. Id. The trial court therefore should have subtracted $387,515.50 from the Fund's payments of $889,958.05, leading to a lien of $502,442.55. Id.
[¶24] At this point, the Fund would have us stop the calculations, meaning the Fund would be entitled to a $502,442.55 lien. The trial court, however, determined that any calculation under the Fitch formula must be reduced because 78.57 percent of Chadwick's damages were "uncollectible" within the meaning of the Subrogation Statute. Ala. Code § 25-5-11(a). As we already have determined, the Fund has waived its challenges to the proportionate reduction of the lien so we accept this portion of the trial court's calculations as correct. Accordingly, we multiply the $502,442.44 figure by 21.43 percent (the percentage that the settlement represented of the full value of Chadwick's claim). Id. The result- $107,673.44-is the Fund's lien. The trial court therefore erred in finding the lien to be $83,044.57.
The Fund's waiver of the "judgment" and "uncollectible" arguments means that we apply the percentage reduction to the entire $502,442.55 and do not consider whether part of the $502,442.55 is attributable to something other than medical expenses or vocational expenses or "benefits."
II. Credit for Future Medical Expenses
[¶25] The Fund disputes the trial court's refusal to grant a credit to the Fund for Chadwick's future medical expenses. The trial court found that the Fund "did not carry its burden of establishing that it was entitled to a lien credit for sums it has not yet paid" and declined to "speculate as to what those sums would be, if any." Appellant's App. Vol. II, p. 25. Accordingly, the court ruled that the Fund "is entitled to no credit" for Chadwick's future medical expenses that the Fund would be legally obligated to pay. Id.
[¶26] The Fund alleges two problems with the trial court's ruling on the medical expense credit. First, the Fund asserts the credit should be determined by an Alabama court applying Alabama law. The trial court therefore should have granted the Fund's request to "abstain[] and directed the parties to have [the Alabama] court presiding over the workers' compensation claim determine the credit to which [the Fund] is entitled," according to the Fund. Appellant's Brief, p. 21. The Fund does not allege the trial court lacked jurisdiction to rule on the future medical expense credit-only that on this issue, it should have deferred to the Alabama court presiding over Chadwick's workers compensation claim.
[¶27] In support of this argument, the Fund relies, to its peril, on Buca Bldg. Constructors, Inc. v. Myrick, 863 So.2d 1130, 1134 (Ala. Civ. App. 2003). In Buca, the Court of Civil Appeals of Alabama specifically acknowledged the ability of courts presiding over third-party actions to determine future medical expense credits.
[W]here trial courts in which third-party claims have been brought make no determination concerning the proper allocation of settlement proceeds with respect to future medical expenses, or erroneously determine that no portion of a third-party recovery is allocable to such expenses, it devolves upon courts hearing employees' workers'-compensation claims, in the first instance, to rectify such errors or omissions by "fairly apportion[ing]" third-party recoveries so as to equitably determine what portions thereof are "attributable to medical (and vocational) expenses, both past and future."Id. (quoting Ex parte BE &K Constr. Co., 728 So.2d 621, 624 (Ala. 1998)).
Moreover, the Alabama Supreme Court has ruled that "it is in the capable hands of the trial judges presiding over the third-party actions to determine to their satisfaction the amount of each award in a third-party action to be attributed to the employee's medical (or vocational) expenses." Ex parte BE &K, 728 So.2d at 624.
[¶28] The Fund offers no authority holding that the trial court needed to remain silent on the issue of the future medical expense credit and defer to the Alabama court for decision. Accordingly, the Fund has offered no basis on which to find the trial court erred by proceeding with the medical expense credit calculation.
[¶29] The Fund's second claim is that the trial court applied the wrong standard and erroneously required the Fund to bear the burden of proving Chadwick's future medical expenses. "It has been authoritatively decided by the Alabama Supreme Court that the employer is entitled to be subrogated to that portion of the employee's third-party recovery that is properly attributable to compensation for both the past and future medical expenses the employer has paid or would be legally required to pay to the employee." Madewell, 878 So.2d at 1174 (citing Miller &Miller Constr. Co. v. Madewell, 736 So.2d 1104, 1105 (Ala. Civ. App. 1999)). Even so, the Fund bore the burden of proving the amount of the future medical expenses credit to which it was entitled. Ex parte Fort James Operating Co., 895 So.2d 294, 297 (Ala. 2004) (finding that in a worker's compensation dispute, a party asserting an affirmative defense, such as entitlement to a credit, bears the burden of proving that defense); ArvinMeritor, Inc. v. Handley, 12 So.3d 669, 691 (Ala. Civ. App. 2007) ("Because [the employer] is claiming that its liability to [the employee] for any occupational disease should be reduced to the extent of the above payments, [the employer] bore the burden of proving its right to the credits and offsets.").
[¶30] The formula for determining future medical credits is complicated. Madewell, 878 So.2d at 1179-80. But what is clear is that the calculation depends on a determination of the exact future medical expense that the employer will be legally required to pay on the employee's behalf. See id.
[¶31] Although there is evidence in the record that Chadwick's future medical expenses may range from around $700,000 to nearly $8.5 million, the record is silent as to exactly how much of those amounts the Fund will be legally obligated to pay. For instance, the approximate $8.5 million figure is based partly on predictions of future costs of $725,517 for therapy treatment and $5,913,000 for attendant care. Yet, at the time of briefing, the Fund had not paid for Chadwick's therapy since May 2018 nor had Chadwick routinely incurred attendant care expenses. Therefore, the estimation of Chadwick's future medical expenses for purposes of his recovery from Niagara is not necessarily the amount of Chadwick's future medical expenses that the Fund must pay.
[¶32] In addition, the record contains evidence that the Centers for Medicare and Medicaid Services (CMS) in 2019 demanded payment of $1,342,439 to relieve the Fund of future medical payment obligations for Chadwick. The Fund maintains CMS's involvement is contingent on Chadwick's agreement, which, according to the filings before us, has not occurred.
[¶33] Even on appeal, the Fund offers a broad range of figures for Chadwick's future medical expenses and does not specify any evidence in the record that affirmatively establishes the amount the Fund would be legally obligated to pay. Although the Fund was entitled to a credit for these future medical expenses under the Madewell formula, the record does not reveal the information necessary to calculate that credit. Madewell, 878 So.2d at 1174. We thus conclude that the trial court did not err in denying any credit to the Fund for future medical expenses.
Under Buca Bldg. Constructors, Inc. v. Myrick, 863 So.2d 1130, 1134 (Ala. Civ. App. 2003), the issue of the future medical expense credit might be revisited by the Alabama court presiding over the worker's compensation case, depending on the trial court's ultimate judgment.
III. Conclusion
[¶34] We conclude that the lien must be recalculated. Accordingly, we reverse and remand for further proceedings consistent with this opinion.
Mathias, J., and Tavitas, J., concur.