Anderson v. National Carriers, Inc., 58405

• Decision Date: 31 October 1986
• Docket Number: No. 58405,58405
• Citation: 240 Kan. 101,727 P.2d 899
• Parties: Archie ANDERSON, Appellee, v. NATIONAL CARRIERS, INC., a Kansas Corporation, and Travelers Insurance Company, Lien Intervenor, Appellants.
• Court: Kansas Supreme Court

Page 899

727 P.2d 899

240 Kan. 101

Archie ANDERSON, Appellee, v. NATIONAL CARRIERS, INC., a Kansas Corporation, and Travelers

Insurance Company, Lien Intervenor, Appellants.

No. 58405.

Supreme Court of Kansas.

Oct. 31, 1986.

Syllabus by the Court

In an appeal by the workers' compensation insurance carrier and lien claimant from a judgment apportioning the recovery made by the injured worker against a third-party tortfeasor, it is held that the trial court did not err (1) in reducing the subrogation lien by the percentage of fault attributed to the employer, pursuant to K.S.A. 1985 Supp. 44-504(d), or (2) in awarding attorney fees to be paid proportionately by the employer and the injured worker. It is further held that the trial court did err in awarding all of the post-judgment interest to the injured worker and in failing to award the employer post-judgment interest on the amount of the subrogation lien.

Ken W. Strobel, of Williams, Larson, Strobel, Estes & Malone, P.A., Dodge City, argued the cause, and B.G. Larson, of the same firm, was with him on the brief for appellants.

Lelyn J. Braun, of Lelyn J. Braun, Chartered, Garden City, argued the cause and was on the brief for appellee.

MILLER, Justice:

This is an appeal by National Carriers, Inc., and Travelers Insurance Company, a workers' compensation insurance carrier and lien intervenor, from the judgment of the District Court of Seward County, Kansas, which reduced the amount of the insurer's subrogation lien by the percentage of fault attributed to the plaintiff's employer. The basic issue concerns the applicability of the 1982 amendment to K.S.A. 44-504 to the insurer's subrogation rights. The injury occurred before the amendment, and recovery by the worker against the negligent third party occurred after the effective date of the amendment.

The factual and procedural background is as follows. On November 24, 1980, Anderson, an employee of National Beef Packing Company, was injured on the job when a truck of National Carriers, Inc., backed over him. Travelers Insurance Company, as National Beef's workers' compensation carrier, made substantial payments to or on behalf of Anderson following his injury. On December 21, 1981, Anderson filed this lawsuit against National Carriers, Inc., as owner and operator of the truck which caused his injuries. On July 6, 1982, a settlement agreement in the workers' compensation matter was entered into between Anderson and Travelers and was approved by the administrative law judge. That agreement provided in part that:

"It is understood by the claimant that the respondent, Idle Wild Foods, and insurance carrier, Travelers Insurance Co., [do] not by this settlement waive [their] statutory Workers' Compensation subrogation lien as to any recovery made by the claimant pursuant [to] K.S.A. 44-504."

Idle Wild Foods is the parent company of both National Beef and National Carriers.

On July 1, 1982, the 1982 amendment to K.S.A. 44-504 became effective. Thus, at the time of the compromise settlement, July 6, the 1982 amendment to K.S.A. 44-504 was in effect. On September 3, 1982, Travelers filed its notice of lien and intervened in this case. On April 22, 1983, following a jury trial, judgment was entered in this case for the plaintiff. The jury attributed 29% fault to Anderson, 22% fault to National Carriers, and 49% fault to National Beef. It also found total damages in the amount of $700,000. The judgment was affirmed on appeal. Anderson v. National Carriers, Inc., 10 Kan.App.2d 203, 695 P.2d 1293, rev. denied 237 Kan. 886 (1985). Thereafter, National Carriers paid to the district court the amount of the judgment against it, $154,000, with accrued interest. This amount was invested in an interest-bearing account pending disbursement. Travelers claimed a lien for the total amount of its workers' compensation payments to Anderson, $96,219.39. In June 1985, the district court reduced Travelers' subrogation claim by the percentage of fault attributed to Anderson's employer, National Beef, (49%) and the district court also awarded one-third of the remaining subrogation lien as attorney fees for plaintiff's counsel. National Carriers and Travelers appeal.

Travelers contends that the trial court erred in reducing the subrogation lien for two reasons. It claims that the 1982 amendment to K.S.A. 44-504, now K.S.A. 1985 Supp. 44-504(d), could not be applied in this case because the accidental injury occurred prior to the effective date of the amendment. It also contends that the compromise settlement should not be interpreted to allow reduction of the employer's subrogation lien. Additionally, it argues that the trial court erred in allowing attorney fees to plaintiff's attorney; and finally, it argues that the district court erred in failing to award accrued interest to the employer and Travelers on the amount of the subrogation lien recovered as a result of this action.

We agree with the trial court and the Court of Appeals that the 1982 amendment, K.S.A. 1985 Supp. 44-504(d), applies in this case. We adopt the applicable portion of the opinion of the Court of Appeals which states:

"K.S.A. 1985 Supp. 44-504(a) allows an employee who is injured by a third party to sue such third party for damages and still be entitled to workers' compensation benefits. In the event the employee recovers a judgment, the employer is subrogated 'to the extent of the compensation and medical aid provided by the employer.' K.S.A. 1985 Supp. 44-504(b). Prior to 1982, K.S.A. 44-504 did not provide for reduction of an employer's subrogation lien if the employer was found to be partially at fault for the employee's injuries, even though K.S.A. 60-258a provided for comparative fault. The Kansas Supreme Court recognized the inequities in allowing a partially negligent employer to recover full subrogation in Negley v. Massey Ferguson, Inc., 229 Kan. 465, 468-69, 625 P.2d 472 (1981). However, the Supreme Court refused to reduce the employer's lien since '[t]he extent and nature of the subrogation rights of an employer under the workmen's compensation statutes are matters for legislative determination.' 229 Kan. at 469 .

"To remedy this inequity, the Kansas Legislature amended K.S.A. 44-504 effective July 1, 1982, by adding subsection (d). This provision reads:

" '(d) If the negligence of the worker's employer or those for whom the employer is responsible, other than the injured worker, is found to have contributed to the party's injury, the employer's subrogation interest or credits against future payments of compensation and medical aid ... shall be diminished by the percentage of the damage award attributed to the negligence of the employer or those for whom the employer is responsible, other than the injured worker.' K.S.A. 1985 Supp. 44-504(d).

"Travelers contends that this provision was retroactively applied since the accident involved in this case occurred prior to the enactment of K.S.A. 1985 Supp. 44-504(d). As a general rule, a statute will only operate prospectively unless the statute clearly indicates legislative intent for it to operate retroactively. Tew v. Topeka Police & Fire Civ. Serv. Comm'n, 237 Kan. 96, 103, 697 P.2d 1279 (1985); Kopp's Rug Co. v. Talbot, 5 Kan.App.2d 565, 568-69, 620 P.2d 1167 (1980).

"The Kansas Supreme Court has interpreted K.S.A. 1985 Supp. 44-504(d) and has held that it only operates prospectively. McGraw v. Sanders Co. Plumbing & Heating, Inc., 233 Kan. 766, 768-69, 667 P.2d 289 (1983). Therefore, it is necessary to determine whether the district court applied the statute retroactively in this case. Here, the injury to the employee occurred on November 24, 1980. The plaintiff-employee filed an amended petition against National Carriers on December 30, 1981. The trial leading to a judgment against National Carriers began on April 19, 1983, and the verdict was returned on April 22, 1983.

"The appellate courts of Kansas have dealt with the problem of retroactive application of amendments to the workers' compensation statutes several times. In Johnson v. Warren, 192 Kan. 310, 387 P.2d 213 (1963), the Supreme Court dealt with a 1961 amendment which allowed an increased amount of medical benefits to be paid to injured workers. The court held that the increase in benefits could not be retroactively applied to injuries incurred prior to the effective date of the amendment. The court stated:

" 'The liability of an employer to an injured employee is a liability arising out of a contract between them, and the terms of the statute are embodied in the contract [citation omitted]; the injured employee must therefore recover upon the contract with his employer, and the cause of action accrues on the date of the injury. [Citations omitted.] Where parties are under the compensation act their substantive rights are determined by the law in effect on the date of the workmen's injury. [Citation omitted.]' 192 Kan. at 313-14 .

"While this language would appear to apply to all rights between the employer and employee, including the employer's right to subrogation, it should be noted that in Johnson v. Warren, 192 Kan. 310 , and all other similar workers' compensation cases, the courts dealt with legislative amendments which directly affected the employer's liability for benefits to the injured employee. For example, in Lyon v. Wilson, 201 Kan. 768, 443 P.2d 314 (1968), the issue was the application of 1967 amendments which altered the conditions for which compensation would be paid to an injured employee in heart cases. The Supreme Court held that the amendments, which affected the amount of compensation, were not applicable to injuries which occurred prior to the effective date of the statute. Similarly, in Horton v. Fleming Co., 3 Kan.App.2d 121, 590 P.2d 594, rev. denied 225 Kan. 844 (1979), this court refused to retroactively apply the repealed setoff provision which would affect the employer's liability to the...