Opinion
No. 40786.
April 28, 1958.
1. Workmen's compensation — recovery by compensation beneficiary from third party wrongdoer — distribution of proceeds.
When recovery was made by compensation beneficiary from third party wrongdoer, balance of proceeds remaining after payment of costs of collection were to be used to discharge all liability of employer or insurer including that to accrue in future as well as that already paid or accrued, and where future liability of employer or insurer was not ascertainable at time of recovery, and net proceeds of recovery remaining after payment of reasonable costs of collection and reimbursement of employer or insurer, should be paid over to compensation beneficiary whereupon employer and insurer were authorized to suspend payment of compensation benefits until such suspended benefits equaled amount of third party recovery paid to compensation beneficiary. Secs. 6998-01, et seq., 6998-36; Amend. 14, Constitution 1890.
2. Workmen's compensation — recovery by compensation beneficiary from third party wrongdoer — distribution of proceeds.
Where recovery from third party wrongdoer is obtained by compensation beneficiary, balance remaining after payment of cost of collection and reimbursement of compensation carrier of amount of compensation benefits paid plaintiff — compensation beneficiary prior to date of judgment against third party wrongdoer, are to be used to discharge all liability of employer or insurer and this includes any death benefits for which employer and insurer might become liable. Secs. 6998-13, 6998-36, Code 1942.
Headnotes as approved by Gillespie, J.
APPEAL from the Circuit Court of Adams County; JAS. A.. TORREY, J.
Swep S. Taylor, Jr., Jackson; Joseph E. Brown, Natchez, for appellant.
I. The subrogation rights of the appellee exist only by virtue of statutes, and their claim to subrogation must be strictly construed. Baughman v. Aetna Casualty Ins. Co. (Fla.), 78 So.2d 694; Fidelity Cas. Co. of N.Y. v. Beddingfield (Fla.), 60 So.2d 489; Arex Indemnity Co. v. Radin (Fla.), 72 So.2d 393; Vol. II, Larson's Workmen's Comp. Law, Sec. 74.11 p. 206.
II. The subrogation claim of the compensation carrier was limited to "compensation benefits paid." Baughman v. Aetna Casualty Ins. Co., supra; Amend. XIV Sec. 1, U.S. Constitution; Sec. 14, Constitution 1890; Sec. 6998-36, Code 1942.
III. Inasmuch as a very considerable amount of the $50,000 judgment was undoubtedly for pain and suffering, and loss of sexual function, and inasmuch as we have no provision for allocating in a judgment against a third party items which, in their nature are compensable or not compensable, the limit of recovery by the appellee is the sum of $15,375.54, which this appellee had expended at the time of the May 24, 1957, judgment.
Watkins Eager, Elizabeth Hulen, Jackson, for appellee.
I. The Court below properly held that a workmen's compensation carrier can participate in a recovery from a third-party responsible for the injury to the full extent of its "legal liability" to the employee under the Act and that such "legal liability" is not limited to compensation benefits paid on the date of such recovery but, if there is any legal liability upon the carrier to continue compensation benefits, then the carrier is entitled to have this additional legal liability "discharged" by the recovery, only the "excess" belonging to the employee. Richtman v. Honkamp (Wis.), 13 N.W.2d 597; Heaton v. Kerlan (Cal.), 166 P.2d 857; Werthman v. Prudential Ins. Co. of America (N.J.), 22 A.2d 197; Simonetti v. Munro Waterproofing Co., 124 N.Y. Supp.2d 789; Breitwieser v. State (N.D.), 62 N.W.2d 900; Savitt v. L. F. Constr. Co. (N.J.), 10 A.2d 728; Caputo v. Best Foods, Inc. (N.J.), 105 A.2d 445; Cote v. Boudreau (Conn.), 120 A.2d 82; Arex Indemnity Co. v. Radin (Fla.), 72 So.2d 393; Baughman v. Aetna Casualty Surety Co. (Fla.), 78 So.2d 694; Bituminous Cas. Corp. v. Hawes (Miss.), 82 So.2d 731; Universal Life Ins. Co. v. Catchings, 169 Miss. 26, 152 So. 817; Harper v. Adams, 141 Miss. 806, 106 So. 354; Sec. 6998-36, Code 1942; Vol. II, Larson's Workmen's Comp. Law, Chap. XIV Secs. 71.00, et seq.
II. If the future death of appellant is found to be caused by or to be the result of the injury to him of August 14, 1955, compensation payments to any dependents under Section 9 of the Act are part of the legal liability of appellees arising out of or on account of such accident caused by the third party defendant and Section 6998-36 of the Code is applicable thereto. This Court should so hold now or in the alternative should specifically pretermit the question until death occurs. Prentiss Truck Tractor Co. v. Spencer, 228 Miss. 66, 87 So.2d 272; Harris v. Illinois Cent. RR. Co., 111 Miss. 623, 71 So. 878; Sec. 6998-36, Code 1942.
This appeal involves the extent of the subrogation rights of the compensation carrier to the proceeds of a judgment against a third-party wrongdoer under Section 30 of the Workmen's Compensation Act. The facts are not in dispute.
Charles Zack Richardson (claimant) was gravely injured in an accident arising out of and in the course of his employment with Clinch Drilling Company (employer). In due course, United States Fidelity and Guaranty Company (carrier) began paying compensation benefits under the Mississippi Workmen's Compensation Act, including weekly compensation of $25.00 per week and medical benefits. Claimant filed suit in the Circuit Court of Adams County against G.L. "Doc" Fife and Son, Inc., alleging that the latter had negligently caused claimant's injuries, and demand was made in said suit for damages for loss of earnings, permanent pain and suffering, medical expenses, and other elements allowable in suits for personal injuries. The carrier intervened in said suit and showed as its interest therein the amount of compensation benefits it had paid claimant and its liability for the payment of future liability under its Workmen's Compensation policy issued to the employer.
The third-party action against G.L. "Doc" Fife and Son, Inc., was settled for the sum of $50,000, and judgment was entered on May 24, 1957 in that amount in favor of claimant and the intervenor, the carrier. The judgment provided that the sum should be paid to the circuit clerk, who was ordered to disburse said sum by paying the attorneys for plaintiff the sum of $16,666.67, as the reasonable cost of collection, with the balance to be disbursed as follows: To the carrier the amount of is legal liability as fixed by the Workmen's Compensation Commission, and the balance to claimant. It was ordered that the circuit clerk transmit a copy of the judgment to the Workmen's Compensation Commission. Claimant and his wife, and carrier, released G.L. "Doc" Fife and Son, Inc., upon the payment of $50,000 to the clerk, but claimant and his wife each reserved all rights as between them and the carrier.
The claimant, employer, and carrier filed a joint petition with the Workmen's Compensation Commission requesting an order of the Commission fixing the legal liability of the carrier and employer under the terms of the Workmen's Compensation Act, and for a certification thereof to the Circuit Clerk of Adams County. Claimant filed with the Commission a separate petition requesting the Commission to hold that neither the employer nor the carrier were entitled to subrogation or that they were entitled at most to subrogation only for medical benefits and compensation benefits paid prior to the date of the circuit court judgment of May 24, 1957.
The Workmen's Compensation Commission entered its order reciting the foregoing proceedings, and held that prior to May 24, 1957, the date of the third-party judgment, the carrier had paid to or for claimant medical and hospital expenses and compensation to the extent of $15,375.54, and had paid additional benefits in the interim so that the total of such benefits paid to July 23, 1957, was $15,635.32; and found that claimant was totally and permanently disabled and would probably need additional medical treatment for his injuries. The Commission's order recited that it had no way to determine the future liability of carrier. The Commission then declined to make any finding or decision relative to the subrogation rights as between the parties, stating that such questions were not before it. From this order, the employer and carrier appealed to the Circuit Court of Adams County, as did claimant.
The circuit court reversed the Commission in part, and on the 8th day of August, 1957, entered its order finding (on stipulation of parties) that the total benefits paid by carrier to claimant to the date of this order amounted to $15,710.83; and that under Section 30 of the Act (Section 6998-36, Mississippi Code of 1942), the $50,000 in the hands of the clerk of the court should be disbursed as follows: (1) The cost of collection amounting to $16,666.67, as allowed in its previous order; (2) to carrier the sum of $15,710.83 theretofore paid out by it in compensation benefits; and (3) the balance of $17,622.50 to claimant. It was ordered that the future liability of the employer and carrier to pay compensation benefits to claimant for the latter's said injuries be credited with said sum of $17,622.50, and the employer and carrier were authorized and empowered to suspend any and all future payments and benefits under the Workmen's Compensation Act, including disability benefits and medical service and supplies, and any other compensation benefits under the Act on account of the injury to claimant on August 14, 1955, until such time as the Mississippi Workmen's Compensation Commission shall fix and determine by final order the date on which the legal liability of employer and carrier accruing after July 28, 1957, equal the sum of $17,622.50. In other words, the employer and carrier were authorized and empowered to suspend all future compensation benefits until such suspended benefits, which the carrier and employer would otherwise have to pay, equal said sum of $17,622.50. The order further provided that such suspension shall not cause any statute of limitation to run. It was also ordered that the amount of compensation benefits for which the employer and carrier is hereafter to become liable, but which were suspended as stated, be determined by the Workmen's Compensation Commission under the provisions of the Act in force at the time of claimant's injury and in accordance with the rules and regulations of the Commission, and the cause was remanded to the Commission for enforcement of the judgment.
The question is whether the balance of the recovery against the third-party wrongdoer remaining after the payment of costs of collection and reimbursing the compensation carrier of the amount of compensation benefits paid claimant prior to the date of the judgment against the third-party wrongdoer, shall be used to discharge the future liability of the employer and carrier accruing after the date of the judgment against the third-party wrongdoer.
Appellant does not contend that the carrier should not be reimbursed the sum paid in compensation benefits prior to the date of the judgment against the third-party wrongdoer, but contends that such reimbursement should be the extent of the subrogation rights of the carrier and employee. In other words, claimant contends that he should receive the net proceeds of the judgment, amounting to $17,622.50, and continue to draw compensation benefits as provided by the Act.
The question is resolved by reference to Section 30 of the Mississippi Workmen's Compensation Act (Section 6998-36, Mississippi Code of 1942), which provides that when a compensation beneficiary brings an action for his injuries against a third-party wrongdoer, and if such employer or insurer join in such action, the net proceeds of such action shall be applied as follows: (1) "The reasonable cost of collection," and (2) "the remainder, or so much thereof as is necessary, shall be used to discharge the legal liability of the employer or insurer," and (3) "any excess shall belong to the injured employee or his dependents."
The express provisions of the Act provide for the use of the net proceeds of the collection from the third-party wrongdoer to discharge the liability of the employer or insurer, and there is no implication that such proceeds should be used to discharge only that part of the liability of the employer or insurer which has been paid or accrued at the time of the collection of such proceeds, and there is no rational basis for limiting the subrogation rights of the employer and insurer to reimbursement of the amount paid or accrued prior to collection of the proceeds of the suit from the third party.
Professor Larson, in Larson's Workmen's Compensation Law, Section 71.10, says that the basic concept underlying third-party actions is the simple moral idea that the ultimate loss from the wrongdoer should fall upon the wrongdoer. The same authority states: "But it is not true in any jurisdiction having a third party statute that the employee may keep both recoveries." Ibid., Section 71.20, Footnote. Appellant cites no authority sustaining his contention. There are cases from other jurisdictions which have statutes similar to this State, and those cases sustain appellee's contentions; but we need not rely on authorities from other jurisdictions when our statute is so plain and unambiguous that to adopt appellant's contention would amount to judicial amendment of a legislative act.
Appellant contends that the dispositon of the case made by the lower court violates Article III, Section 14, of the Constitution of the State of Mississippi, and the Fourteenth Amendment to the Constitution of the United States in that appellant's property is taken without due process of law. But in the absence of any authority for this contention, we must assume there is none.
(Hn 1) When a recovery is made by a compensation beneficiary from a third-party wrongdoer under the provisions of Section 30 of the Act (Section 6998-36, Code of 1942), the balance of the proceeds remaining after the payment of the costs of collection, or so much as is necessary, shall be used to discharge all the liability of the employer or insurer including that to accrue in the future as well as that already paid or accrued; and where the future liability of the employer or insurer is not ascertainable at the time of such recovery, the net proceeds of such recovery remaining after payment of the reasonable costs of collection and the reimbursement of the employer or insurer to that date, shall be paid over to the compensation beneficiary; whereupon, the employer and insurer are authorized to suspend payment of such compensation benefits as they may be liable for under any provision of the Act until such suspended benefits, which the employer or insurer would have paid except for such suspension, equal the amount of the third-party recovery paid to the compensation beneficiary. The case should remain an active one on the records of the Commission so that under appropriate administrative procedure the rights of all parties may be protected and the liability of the employer and insurer for compensation and medical service or supplies can be appropriately determined under the provisions of the Act in force when claimant was injured. Such suspended payments shall be credited with the net proceeds received by the compensation claimant.
(Hn 2) It is possible that liability for death benefits could accrue in this case under Section 9 of the Act (Section 6998-13, Code of 1942). Apparently under the impression that appellee's subrogation rights for such possible liability were not at issue, the lower court specifically provided that the employer and insurer should not be entitled to subrogation therefor. This action is made the subject of a cross-appeal by appellee. Claimant does not answer the cross-appeal. Of course, from what has been said, it follows that the balance of the third-party recovery, or so much as is necessary, shall be used to discharge all the liability of the employer or insurer, and this includes any death benefits for which the employer and insurer may become liable. Paragraph 6 of the judgment of the lower court is modified so as to strike therefrom the following words, "but not including possible future legal liability under Section 9", and substituting therefor the following: "including possible future legal liability under Section 9".
The case is affirmed on direct appeal, and the case remanded to the Circuit Court of Adams County where the $50,000 held by the clerk of that court shall be disbursed as follows: (1) The cost of collection as previously determined, (2) to the carrier the amount of compensation benefits theretofore paid to or for claimant, and (3) the balance to claimant. Upon the completion of such disbursement the final order reflecting such amounts should be certified to the Mississippi Workmen's Compensation Commission.
No point is raised on this appeal as to the correctness of the procedural route this case has followed since the entry of the judgment in the third-party action; nor do we infer that the procedure was not proper.
Affirmed on direct appeal, modified on cross-appeal, and remanded.
McGehee, C.J., and Hall, Kyle, and Arrington, JJ., concur.