Aitken v. Industrial Com'n of Arizona

• Decision Date: 17 October 1995
• Docket Number: No. CV-92-0257-PR,CV-92-0257-PR
• Citation: 904 P.2d 456,183 Ariz. 387
• Parties: , 104 Ed. Law Rep. 501 Faith AITKEN, Petitioner Employee, v. INDUSTRIAL COMMISSION OF ARIZONA, Respondent, Amphitheater Public Schools, Respondent Employer, and Unigard Insurance Company, Respondent Carrier.
• Court: Arizona Supreme Court

Page 456

904 P.2d 456

183 Ariz. 387, 104 Ed. Law Rep. 501

Faith AITKEN, Petitioner Employee, v. INDUSTRIAL COMMISSION OF ARIZONA, Respondent, Amphitheater Public Schools, Respondent Employer, and Unigard Insurance Company, Respondent Carrier.

No. CV-92-0257-PR.

Supreme Court of Arizona.

Oct. 17, 1995.

[183 Ariz. 388] Dee-Dee Samet, P.C. by Dee-Dee Samet and Arthur V. Gage, Tucson, and Gerald T. Barton, Tucson, and Robert Q. Hoyt, P.C. by Robert Q. Hoyt, Tucson, for Petitioner.

Bury, Moeller, Humphrey & O'Meara by J. Michael Moeller and Roger W. Frazier, Tucson, for Unigard Insurance and Amphitheater Public Schools.

The Industrial Commission of Arizona by Anita R. Valainis, Chief Counsel, Phoenix.

Plattner Verderame, P.C. by Frank Verderame, Phoenix, and The Langerman Law Offices by Amy G. Langerman, Phoenix, for Amicus Arizona Trial Lawyers Association.

J. Stephen Dix, P.C. by Robert J. Forman, Tucson, for Amicus Southern Arizona Workers' Compensation Claimant's Attorneys Association.

OPINION

ZLAKET, Justice.

Petitioner, Faith Aitken, while in the scope of her employment with Amphitheater School District, was seriously injured when she fell in an area where a sidewalk had been removed by Maya Construction Company. She filed a workers' compensation claim and received $28,929.70 in benefits from her employer's carrier, Unigard Insurance Co. She also filed a third party suit against Maya, which responded by alleging her contributory negligence and naming the school district a nonparty at fault.

A jury in the third party action assessed total damages of $319,292 and apportioned responsibility as follows: 65% to Maya, 25% to Amphitheater, and 10% to Aitken. After reducing the award by the employer's and Aitken's percentages of fault, the court entered judgment against Maya in the amount of $207,350. ¹ From this sum, petitioner reimbursed Unigard $28,929.70 for benefits previously collected. The carrier thereafter claimed a lien credit against future compensation of $74,466.54, the amount remaining from the recovery after deductions for attorneys' fees and costs.

Aitken asserted that both the lien and the credit were excessive. She also challenged their constitutionality under Article 18, Section 6 ("The right of action to recover damages for injuries shall never be abrogated, and the amount recovered shall not be subject to any statutory limitation."); Article 18, Section 8 (requiring the establishment of "a just and humane compensation law ... for the relief and protection of [injured or deceased] workmen, their widows, children or dependents ... from the burdensome, expensive and litigious remedies for injuries to or death of such workmen, now existing in the State of Arizona, and producing uncertain and unequal compensation therefor"); and Article 2, Section 31 ("No law shall be enacted in this State limiting the amount of damages to be recovered for causing the death or injury of any person.") of the Arizona Constitution. More particularly, she argued that the lien statute, A.R.S. § 23-1023(C), operates in combination with a more recent measure abolishing joint and several liability, A.R.S. § 12-2506, to produce an unconstitutional result.

The administrative law judge found in favor of the carrier, holding that the lien could not be reduced merely because the insured employer shared responsibility for petitioner's injuries. The court of appeals affirmed, finding that an injured worker who has received compensation must fully reimburse the carrier even though the total damages assessed in a third party action have been diminished by the employer's percentage of fault. Aitken v. Industrial Comm'n, 173 Ariz. 300, 302, 842 P.2d 1313, 1315 (Ct.App.1992). We granted review.

A. Constitutionality of A.R.S. § 23-1023

We "usually will not determine the constitutionality of a statute when the case can be decided without ruling upon such question." State v. Church, 109 Ariz. 39, 41, 504 P.2d 940, 942 (1973).

Indeed, it is well-settled that the constitutionality of a statute will not be determined in any case, unless such determination is absolutely necessary in order to determine the merits of the suit in which the constitutionality of such statute has been drawn in question, and such rule should not be departed from except for strong reason and under extraordinary circumstances.

County of Maricopa v. Anderson, 81 Ariz. 339, 341, 306 P.2d 268, 269 (1957) (quoting 16 C.J.S. Constitutional Law § 94, at 307). We do not find these circumstances to be present here.

Consistent with our "duty to construe a statute so as to give it, if possible, a reasonable and constitutional meaning," Arizona Downs v. Ariz. Horsemen's Found., 130 Ariz. 550, 554, 637 P.2d 1053, 1057 (1981), we must make every effort to harmonize these legislative acts. Fortunately, because the underlying purposes of the lien statute and the broader objectives of the workers' compensation scheme are clear and well understood, we are able to reach a reasonable interpretation of the law that comports with legislative intent without having to address the foregoing constitutional challenges.

B. Interpreting the Lien Statute

In addition to collecting workers' compensation benefits, an injured employee may sue a third party who caused or contributed to his or her injuries. A.R.S. § 23-1023(A). If the employee successfully recovers against the third party tortfeasor, § 23-1023(C) allows the employer or its carrier to assert a lien on the recovery. This lien applies to "the total recovery less the reasonable and necessary expenses, including attorneys' fees." A.R.S. § 23-1023(C). Before the legislature abolished or severely restricted joint and several liability in A.R.S. § 12-2506, a literal reading of the lien statute did not detract from the overall purpose of the workers' compensation scheme, which is to protect injured employees. See Stephens v. Textron, Inc., 127 Ariz. 227, 230, 619 P.2d 736, 739 (1980); State ex rel. Industrial Comm'n v. Pressley, 74 Ariz. 412, 418, 250 P.2d 992, 996 (1952). Those who paid compensation obtained liens on "total" recoveries from third party tortfeasors who were, under the law existing at the time, responsible for all damages regardless of how big or small their respective portions of liability might have been. Thus, even when employers shared responsibility for the injuries, their employees received a full measure of damages from third parties whose conduct contributed to the result.

The law has changed. Joint and several liability has been effectively abrogated. Moreover, in Dietz v. General Elec. Co., 169 Ariz. 505, 510, 821 P.2d 166, 171 (1991), we held that under A.R.S. § 12-2506(B) an employer liable for workers' compensation can be designated a nonparty at fault in a claimant's suit against a third party. Therefore, judges or juries in such cases must now assign, when appropriate, a percentage of fault to the employer. As we recognized in Dietz, although this method of apportionment is in accord with the overall legislative objective of holding parties liable only for their own wrongdoing, it may work an injustice on claimants in the lien context. Id. at 511, 821 P.2d at 172. Once employees accept compensation, they give up their rights to sue negligent employers. See A.R.S. § 23-1022(A). Yet, without an equitable adjustment or apportionment, employers and their carriers will continue to obtain full liens against third party recoveries even where those awards have been effectively reduced by virtue of the employers' own fault. The result is a diminution of the injured claimant's total recovery that appears quite inconsistent with the overall goal of Arizona's compensation scheme. ²

We are not alone in this view. Our court of appeals pointedly questioned "the equity of this outcome--that the employee, whose damages have already been reduced by 25%, reflecting Amphitheater's proportionate share of fault, must nevertheless reimburse Amphitheater's carrier for 100% of the benefits received." Aitken, 173 Ariz. at 302, 842 P.2d at 1315. And in Sullivan v. Scoular Grain Co., 853 P.2d 877 (Utah 1993), where the court held that Utah's Liability Reform Act requires a jury to apportion the fault of a plaintiff's employer even though the latter is immune from suit under workers' compensation laws, the majority candidly noted:

Plaintiff also protests the detrimental effect on his recovery created by the employer reimbursement provisions of the Workers' Compensation Act. Section 35-1-62 provides for an employer or insurer to obtain reimbursement for any payments made to an injured employee. This lien is not reduced in any respect by the amount by which the employer's act or omission contributed to the employee's injuries....

Consequently, when a verdict is granted to the plaintiff in an amount equal to or greater than the employer's workers' compensation payments, the Act allows an at-fault employer to escape liability altogether at the expense of the injured employee. We agree with plaintiff that this result is inequitable, but the effect of the statutory language is clear.

Id. at 883 (emphasis added) (footnote omitted).

The dissent in Sullivan expressed the thought more strongly:

Thus, not only is the plaintiff made responsible for the employer's proportionate share of fault, but he must also reimburse his employer out of his diminished recovery for any workers' compensation benefits received. This is not only unjust and inequitable, but might well be unconstitutional.

853 P.2d at 887 (Stewart, J., dissenting) (emphasis added).

In Taylor v. Delgarno, 100 N.M. 138, 667 P.2d 445 (1983), the Supreme Court of New Mexico, by a 3-2 vote, opted to leave a similar issue to the legislature. The dissenting justices, however, saw no reason for judicial inaction and commented:

We would therefore hold that the comparative negligence doctrine should be read in conjunction with the workmen's compensation statutes to...