ATTORNEYS FOR AMICUS CURIAE
Keith R. Fafarman
Fort Wayne, Indiana
Indiana Trial Lawyers Association
Robert F. Gonderman, Jr.
David L. Cloutier, Jr.
South Bend, Indiana
ATTORNEY FOR APPELLEE
ATTORNEYS FOR AMICUS CURIAE
Keith R. Fafarman
Walkup to enforce the lien. The parties entered into a stipulation of facts
, filed cross-
motions for summary judgment, and waived hearing on the motions. The trial court granted
summary judgment in favor of Wabash. Walkup appealed and the Court of Appeals
affirmed. Walkup v. Wabash Nat'l Corp., 691 N.E.2d 1282 (Ind. Ct. App. 1998). We
granted Walkup's petition for transfer.
Walkup presents two issues:
(1) Is an uninsured motorist carrier an other person under Indiana Code § 22-3-2-13 governing a lien by a payor of worker's compensation benefits on recovery from other persons?
(2) Is payment from an uninsured motorist carrier under an employer's policy that explicitly excludes coverage for injuries subject to worker's compensation benefits subject to a lien by the payor of worker's compensation benefits?
Whenever an injury or death, for which compensation is payable under chapters 2
through 6 of this article shall have been sustained under circumstances creating in
some other person than the employer and not in the same employ a legal liability to
pay damages in respect thereto, the injured employee, or his dependents, in case of
death, may commence legal proceedings against the other person . . . and judgment
is obtained and paid, and accepted or settlement is made with the other person, either
with or without suit, then from the amount received by the employee or dependents
there shall be paid to the employer or the employer's compensation insurance carrier,
subject to its paying its pro-rata share of the reasonable and necessary costs and
expenses of asserting the third party claim, the amount of compensation paid to the
employee or dependents, plus the medical, surgical, hospital and nurses' services and
supplies and burial expenses paid by the employer or the employer's compensation
. . . .
If the injured employee or his dependents shall agree to receive compensation from the employer or the employer's compensation insurance carrier or to accept from the employer or the employer's compensation insurance carrier, by loan or otherwise, any payment on account of the compensation, or institute proceedings to recover the same, the employer or the employer's compensation insurance carrier shall have a lien upon any settlement award, judgment or fund out of which the employee might be compensated from the third party.
Ind. Code § 22-3-2-13 (1998) (emphasis added).
The Court of Appeals recently observed that nothing in the statute expressly limits the phrase 'other person' to the tortfeasor' and held that an underinsured motoristSee footnote 1 carrier could be an other person. Ansert Mechanical Contractors, Inc. v. Ansert, 690 N.E.2d 305,
308 (Ind Ct. App. 1997). In Ansert, an employee injured in the course and scope of
employment received a payment of $900,000 from the employer's underinsured motorist
carrier (UIM). The Court of Appeals held that an employer or worker's compensation
carrier is entitled to a lien on [the] proceeds
of payments made to an injured employee
under a UIM policy. Id. 690 N.E.2d at 310.
We agree with the Court of Appeals in this case and its decision in Ansert that an employer's uninsured motorist carrier is an other person under Indiana Code § 22-3-2-13. The purpose of the statute is to make the employer or its carrier whole and prevent double recovery by the worker. If the third party tortfeasor is uninsured and the employer has provided coverage for that event there is no reason why that coverage should not respond as would Pruett's if he had it. We express no opinion as to this analysis if the uninsured motorist coverage is purchased by the employee.
to the language of Indiana Code § 22-3-2-13, which provides for a lien by a worker's
compensation carrier on any settlement award, judgment or fund out of which the employee
might be compensated
from the third party (emphasis added).
The Court of Appeals also
relied on this statutory language to hold that Walkup's settlement is subject to Wabash's lien.
This ignores the fact that the entire section, including the lien provision, applies to injuries
for which compensation is payable under the worker's compensation law. Ind. Code §
22-3-2-13 (1998). By definition, Walkup's recovery from Cincinnati, whatever it was, was
not for injuries for which compensation is payable under the worker's compensation law.
The lien is ineffective because there are no proceeds left after the exclusion that can be
identified with the compensation payor's lien. 6 Arthur Larson & Lex Larson, Larson's
Workers' Compensation Law § 71.23(c) (1992)
Moreover, emphasis on a single word
of the statute is misplaced.
The General Assembly created a comprehensive statutory scheme with provisions, including the lien by worker's compensation carriers, to ensure the appropriate recovery by the appropriate parties. As the Court of Appeals has stated, the purpose of the worker's compensation lien is to prevent the injured employee from recovering twice at the expense of the employer. See Ansert Mechanical Contractors, Inc. v. Ansert, 690 N.E.2d 305, 309 (Ind Ct. App. 1997); see also Larson & Larson, supra, at § 71.20 (a lien on a recovery from a third party is designed to put the employer back in a neutral position by repayment of medical costs it incurred, to make the injured employee whole and to place the cost of the injury on the wrongdoer) . Because Walkup could recover from Cincinnati only items not
subject to Wabash's worker's compensation benefits, double recovery is impossible.
Moreover, if a lien were allowed, the injured Walkup would not be made whole. Cincinnati presumably pointed correctly to the exclusion in the negotiations leading to its valuing and settling Walkup's claim. In other words, without the exclusion, his claim had a value of medicals plus pain and suffering. If this is correct the $18,000 settlement represents the value of Walkup's pain and suffering alone, and his medical treatment cost an additional $8,599. If Walkup been successful in recovering from Pruett, or if Cincinnati's policy did not exclude the amount paid by worker's compensation, Walkup's negotiated settlement (disregarding policy limits) would total $26,599 on the same assumptions by both parties. In either case, Wabash's lien would then entitle it to recover its outlay for medical services paid from Walkup's recovery from either Pruett or Cincinnati . However, because Walkup has not recovered, indeed cannot recover, the cost of his medical treatment from Cincinnati, Wabash's lien, if allowed, would reduce Walkup's recovery of $18,000 by $8,599 leaving him with $9,401. Cincinnati paid Walkup pursuant to a contract it entered with Wabash to cover uninsured motorist losses but not those covered by worker's compensation. If Wabash wanted an uninsured motorist policy that covered its exposure to worker's compensation benefits, and therefore created a lien in its favor, it could have sought one. Instead, Wabash agreed to self-insure for worker's compensation and enter an uninsured motorist insurance contract with an exclusion for worker's compensation benefits.
The Court of Appeals looked to Dearing v. Perry, 499 N.E.2d 268 (Ind. Ct. App. 1986), for the proposition that recovery for pain and suffering from the tortfeasor is subject
to a lien by a worker's compensation carrier. In Dearing, however, the injured worker sought
recovery for all items of damages by suing the the tortfeasor.
Apparently in an attempt to
evade the worker's compensation carrier's lien, Dearing dismissed her first suit against the
tortfeasor and refiled the suit for pain and suffering only. Because there was evidence that
the parties colluded to arbitrarily apportion the settlement to evade a statuory lien the Court
of Appeals held that the lien was enforceable against Dearing's settlement. Id. at 271.
is no mention of an exclusion in any policy covering the tortfeasor's liability similar to the
one in Wabash's uninsured motorist coverage. Under those facts, where the tortfeasor had
exposure to lienable items and the allocation between lienable and nonlienable items is
unknown, the Court of Appeals held that the lien is valid.
Walkup's case is distinguishable from Dearing because there is no evidence of collusion between Walkup and Cincinnati and no reason to suppose that Cincinnati would pay for uncovered (i.e. lienable) items. Accordingly, Walkup's payment from Cincinnati, under a policy that specifically excluded payment for worker's compensation benefits, is not subject to Wabash's statutory lien under Indiana Code § 22-3-2-13.
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