Anderson v. United Parcel Service
Decision Date | 09 July 2004 |
Docket Number | No. 20020473.,20020473. |
Citation | 2004 UT 57,96 P.3d 903 |
Parties | Jody Anderson, individually and as Guardian of her minor children Sasha Bree Anderson and Conley Karl Anderson, Plaintiff and Appellant, v. United Parcel Service, an Ohio corporation; and Liberty Mutual Insurance Company, a Massachusetts company, Defendants and Appellees. |
Court | Utah Supreme Court |
This opinion is subject to revision before final publication in the Pacific Reporter.
Fred R. Silvester, Spencer Siebers, Salt Lake City, for plaintiff.
Michael E. Dyer, Kira M. Slawson, Salt Lake City, for defendants.
¶1 This case arises from the death of an employee killed in the course and scope of his employment due to the conduct of a third person, not his employer. Under these circumstances, section 34A-2-106 of the Workers' Compensation Act provides that any recovery obtained in an action against the third person must go first to reimburse the employer, or insurance carrier, for any workers' compensation benefits paid, less the costs of the action. Appellant, the spouse of the deceased employee, requested the district court to apply principles of equitable subrogation, rather than the statutory reimbursement provision, arguing that the statutory scheme was inconsistent with the Utah Constitution and that she should be "made whole" before the employer or insurer should be entitled to reimbursement. The district court dismissed appellant's claim, holding equitable subrogation inapplicable in the face of the statutory scheme, which it found to be constitutional. We affirm.
¶2 In April 1998, Karl Anderson was killed in an automobile accident while in the course and scope of his employment with United Parcel Service ("UPS"). UPS was not at fault in the accident. Mr. Anderson is survived by his wife, Jody Anderson, and two minor children ("the Andersons"). Pursuant to the Workers' Compensation Act ("WCA"), Utah Code Ann. §§ 34A-2-101 to -803 (2001), the Utah Labor Commission awarded workers' compensation benefits to the Andersons. Payment of these benefits is the responsibility of UPS and its workers' compensation insurance carrier, Liberty Mutual Insurance Company (collectively, "the Insurers").
¶3 In November 1998, the Andersons brought an action for wrongful death against Jacob Gregory ("Gregory"), alleging that Gregory's reckless driving proximately caused Mr. Anderson's death. The Andersons discovered that Gregory was only insured for losses up to $100,000 and had minimal other assets. Pursuant to section 34A-2-106(5) of the WCA, the Insurers asserted their statutory right to first-dollar reimbursement from any recovery the Andersons obtained from Gregory. The Insurers expected their liability to the Andersons to far exceed the $100,000 recovery.1 Therefore, applying first-dollar reimbursement as required by section 34A-2-106(5), the Insurers would be entitled to the entire $100,000, less litigation costs and attorney fees, and the Andersons would receive nothing from the recovery.
¶4 As the Andersons calculated their total economic loss to significantly exceed the amount provided through workers' compensation benefits,2 they contested the fairness of the Insurers' statutory right to reimbursement. The Andersons cross-claimed against the co-plaintiff Insurers for a declaratory judgment, asking the district court to allocate the distribution of any third-party recovery in accordance with principles of equitable subrogation. The Andersons reasoned that, because a strict application of the reimbursement provision would require all of their recovery to go to the Insurers, such an application would effectively abrogate their cause of action against Gregory and would be inconsistent with article XVI, section 5 of the Utah Constitution, which prohibits any abrogation of, or statutory limitation on, the right to recover damages for wrongful death.
¶5 The Insurers moved to dismiss the Andersons' cross-claim. The Insurers argued that application of section 34A-2-106(5) did not abrogate the Andersons' wrongful death action against Gregory, but only specified how any recovery from that action was to be distributed. Thus, the Insurers concluded that equitable subrogation would be inapplicable since the reimbursement provision is a valid legislative enactment and dispositive of any third-party recovery.
¶6 The district court granted the Insurers' motion to dismiss, finding no conflict between article XVI, section 5 and the distribution plan required by the WCA and, thus, declining to invoke principles of equitable subrogation. The Andersons appeal the district court's decision. This court has jurisdiction pursuant to Utah Code section 78-2-2(3)(j) (2002).
¶7 Matters of statutory construction, as well as the issue of whether a statute is constitutional, are questions of law that we review for correctness. Esquivel v. Labor Comm'n, 2000 UT 66, ¶ 13, 7 P.3d 777; Ryan v. Gold Cross Servs., Inc., 903 P.2d 423, 424 (Utah 1995). However, "when reviewing statutes for constitutionality, a statute is presumed constitutional, and 'we resolve any reasonable doubts in favor of constitutionality.'" Ryan, 903 P.2d at 424 (quoting Soc'y of Separationists, Inc. v. Whitehead, 870 P.2d 916, 920 (Utah 1993)).
¶8 The WCA, Utah Code Ann. §§ 34A-2-101 to -803 (2001), is a detailed statutory scheme that provides injured workers or their dependents a "simple, adequate, and speedy means of securing compensation" for injuries suffered in the course and scope of employment. Park Utah Consol. Mines Co. v. Indus. Comm'n, 84 Utah 481, 485-86, 36 P.2d 979, 981 (1934). When a death for which compensation is payable under the WCA is caused by the wrongful act or neglect of a person other than the employer, the employee's dependents may claim compensation from the employer and may also have an action for damages against the third-party tortfeasor. Utah Code Ann. § 34A-2-106(1). The WCA further provides that the employer or the employer's insurance carrier may maintain the action against the third party either in its own name or in the name of the employee's heirs. Id. § 34A-2-106(2).
¶9 Where workers' compensation is accepted, any recovery obtained from the third-party tortfeasor is distributed according to the prioritization established in section 34A-2-106(5). First, the expenses of the action, including attorney fees, are to be paid. Id. § 34A-2-106(5)(a). Second, the person responsible for compensation payments must be reimbursed for the amount already paid, less the proportionate share of costs and attorney fees. Id. § 34A-2-106(5)(b). Third, the remaining balance of the third-party recovery is to be paid to the employee's heirs "to be applied to reduce or satisfy in full" any future obligation accruing against the person liable for compensation payments. Id. § 34A-2-106(5)(c).
¶10 Under a strict application of this reimbursement provision, both parties in the present case agree that, due to the limited recovery available from the third-party tortfeasor, any amount the Andersons may obtain in an action against Gregory will go to reimburse the Insurers. Because of the perceived unfairness wrought by such an application, the Andersons suggest that the court should apply principles of equitable subrogation, which, they contend, require that they be "made whole" before the Insurers are entitled to any reimbursement. In support of this proposition, the Andersons cite Hill v. State Farm Mutual Automobile Insurance Co., 765 P.2d 864 (Utah 1988), where we explained that "[s]ubrogation is an equitable doctrine and is governed by equitable principles." Id. at 866. "This doctrine," we continued, "can be modified by contract, but in the absence of express terms to the contrary, the insured must be made whole before the insurer is entitled to be reimbursed from a recovery from the third-party tortfeasor." Id.
¶11 Contrary to the Andersons' analysis, the equitable doctrine of subrogation that we described in Hill is inapplicable to the present case. In Hill, we addressed the subrogation claims of an automobile insurer. In the realm of automobile insurance, while an insurer's right to subrogation is provided for by statute, see Utah Code Ann. § 31A-21-108 (1994), the statutory scheme supplies no further regulations beyond merely granting the right. Hence, in governing an auto insurer's right to subrogation, a court must, of necessity, apply equitable principles in determining how that right is to be exercised.
¶12 In workers' compensation cases, however, the WCA provides a detailed statutory scheme governing how an employer's or insurance carrier's subrogation right may be exercised and how proceeds from an action against a culpable third party are to be distributed. "We have long held that where a conflict arises between the common law and a statute or constitutional law, the common law must yield, because the common law cannot be an authority in opposition to our positive enactments." Gottling v. P.R. Inc., 2002 UT 95, ¶ 7, 61 P.3d 989 (internal quotations and citations omitted). Further, "an equitable remedy is only available where there is no remedy at law." Mead Corp. v. Dixon Paper Co., 907 P.2d 1179, 1187 (Utah Ct. App. 1995).
¶13 Here, the Andersons are requesting a distribution of the third-party recovery that is contrary to that mandated by the WCA's reimbursement provision. Because "[t]he extent and nature of the subrogation rights of an employer under the workmen's compensation statutes are matters for legislative determination," we are not at liberty to modify a valid legislative enactment, even if, as the Andersons contend, a strict application of the statute yields an inequitable result. Sullivan v. Scoular Grain Co., 853 P.2d 877, 883 n.7 (Utah 1993) ( )(quoting Negley v. Massey Ferguson,...
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