Chavez v. SED LABORATORIES

• Decision Date: 20 November 2000
• Docket Number: No. 231., No. 227, No. 26
• Citation: 2000 NMSC 34,129 N.M. 794,14 P.3d 532
• Parties: Phil CHAVEZ, Worker-Respondent, v. S.E.D. LABORATORIES and United States Fidelity & Guaranty Company, Employer-Insurer-Petitioners. Phil Chavez, Worker-Petitioner, v. S.E.D. Laboratories and United States Fidelity & Guaranty Company, Employer-Insurer-Respondents.
• Court: New Mexico Supreme Court

14 P.3d 532

129 N.M. 794

2000 NMSC 34

Phil CHAVEZ, Worker-Respondent, v. S.E.D. LABORATORIES and United States Fidelity & Guaranty Company, Employer-Insurer-Petitioners.

Phil Chavez, Worker-Petitioner, v. S.E.D. Laboratories and United States Fidelity & Guaranty Company, Employer-Insurer-Respondents.

Nos. 26,227, 26,231.

Supreme Court of New Mexico.

November 20, 2000.

Robert L. Pidcock, Albuquerque, NM, for Worker.

Silva, Rieder & Maestas, P.C., Paul Maestas, Wayne R. Suggett, Albuquerque, NM, for Employer-Insurer.

OPINION

MINZNER, Chief Justice.

{1} S.E.D. Laboratories (SED) and United States Fidelity & Guaranty Company (USF & G) (jointly, SED/USF & G) appeal from an opinion of the Court of Appeals holding that an employer's right of reimbursement is equal to the amount of an injured worker's duplicative recovery from uninsured motorist benefits and workers' compensation benefits and directing reconsideration of an order requiring Phil Chavez to pay all of his attorney's fees. We affirm these holdings of the Court of Appeals. Chavez appeals from the Court of Appeals' holding that he waived appellate review of the determination that he had returned to work at a wage equal to or greater than his pre-injury wage. We vacate the wage rate determination and remand to the workers' compensation judge (WCJ) for entry of an amended order.

I.

{2} On October 15, 1993, Chavez, a courier for SED, was involved in an automobile accident with a third-party uninsured motorist. The parties have stipulated that the accident arose from and occurred during Chavez's employment. As a result of the accident, Chavez suffered two lumbar disk herniations and his resulting disability.

{3} Chavez requested findings of fact that he had suffered between $187,000 and $335,000 in damages including loss of access to the labor market, loss in earning capacity, loss in ability to perform household services, and lost wages. Chavez received workers' compensation benefits under SED's workers' compensation insurance policy with USF & G in the amount of $150.61 per week from October 16, 1993 to June 23, 1994 and $28.65 per week since June 24, 1994. Chavez also received $50,000 in benefits under his mother's uninsured motorist policy with Allstate Company and $60,000 in benefits under SED's uninsured motorist policy with Fireman's Fund Insurance Company.

{4} SED/USF & G instituted an action before the Workers' Compensation Administration (WCA) seeking reimbursement under NMSA 1978, § 52-5-17 (1991) for workers' compensation benefits paid to Chavez on a dollar-for-dollar basis and a determination as to what additional workers' compensation benefits were due and owing Chavez as a result of his accident.¹ The WCJ decided that SED/USF & G was entitled to dollar-for-dollar reimbursement for workers' compensation benefits paid as well as a credit against future payments subject to the agreement to reduce the reimbursement entered into by the parties. The WCJ also determined that Chavez had a permanent impairment rating of seventeen percent and that his permanent partial disability rating is equal to his impairment rating because he returned to work at a wage equal to or greater than his pre-injury wage, see NMSA 1978, § 52-1-26(D) (1991), and denied his petition for attorney's fees and sanctions.

{5} Chavez appealed the determinations that SED/USF & G was entitled to dollar-for-dollar reimbursement for workers' compensation benefits paid and that he had returned to work at a wage equal to or greater than his pre-injury wage. The Court of Appeals reversed in part and affirmed in part, holding that SED/USF & G was only entitled to reimbursement for duplicative recovery received by Chavez and deeming his challenge to the wage rate determination waived due to his failure to cite any evidence that supports the determination. See Chavez v. S.E.D. Lab., 2000-NMCA-034, ¶ ¶ 27, 29, 128 N.M. 768, 999 P.2d 412. The Court of Appeals declined to reach the attorney's fees issue. Id. ¶ 28.

II.

{6} Section 52-5-17 defines the rights of employers to reimbursement of workers' compensation benefits paid to injured workers who receive compensation for their injuries from other sources. As this Court has long recognized, "[t]he statute plainly intends to prevent dual recovery" by the employee. Brown v. Arapahoe Drilling Co., 70 N.M. 99, 104, 370 P.2d 816, 820 (1962) (referring to 1951 N.M. Laws, ch. 205, § 3, a predecessor of the current Section 52-5-17); see Montoya v. AKAL Sec., Inc., 114 N.M. 354, 355, 838 P.2d 971, 972 (1992)

(finding that the primary purposes of Section 52-5-17 are "(1) prohibition against double recovery, and (2) protection of the employer's right to reimbursement from the proceeds of the third-party action"); Gutierrez v. City of Albuquerque, 1998-NMSC-027, ¶ 10, 125 N.M. 643, 964 P.2d 807 (stating Montoya recognized "that the employer's reimbursement is bottomed on the principle that a worker must not receive a windfall").

{7} In order to prevent a worker from receiving such a windfall, we have held that "an employer is entitled to recoup the amount of a worker's duplicative recovery." Gutierrez, 1998-NMSC-027, ¶ 28, 125 N.M. 643, 964 P.2d 807. To determine the amount of a worker's duplicative recovery, we have held that a WCJ must do an element-by-element comparison of the amounts recovered by the worker from third parties and those benefits paid by the employer. Id. ¶ 14. {8} Applying Gutierrez, the Court of Appeals held SED/USF & G was entitled solely to reimbursement and potential future offset credit for those uninsured motorist benefits that duplicated the workers' compensation benefits paid or to be paid to Chavez. Chavez, 2000-NMCA-034, ¶ 24, 128 N.M. 768, 999 P.2d 412. The case was then remanded for an element-by-element analysis in order to determine the amount of duplicative recovery. Id.

{9} SED/USF & G contends that the Court of Appeals erred in requiring the application of the Gutierrez element-by-element analysis because subsection (C) of Section 52-5-17 has a different goal than subsections (A) and (B). SED/USF & G argue that the goal of Section 52-5-17(C) is the prevention of a worker's double recovery from his or her employer. SED/USF & G reasons that when a worker collects both workers' compensation benefits from his or her employer and uninsured motorist benefits from an insurance policy paid for by the employer, under Section 52-5-17(C) the worker must reimburse the employer the workers' compensation benefits paid on a dollar-for-dollar basis.

{10} We reject the argument that the concern of subsection (C) of Section 52-5-17 is substantively different than that of subsections (A) and (B) and conclude that the Court of Appeals was correct in requiring application of the Gutierrez element-by-element analysis in order to determine the amount of duplicative recovery. We reach this result on the basis of a brief review of the history of Section 52-5-17(C) and its predecessor, the purposes of the uninsured motorist statute, NMSA 1978, § 66-5-301 (1983), and the governing canons of statutory construction.

{11} New Mexico's first subrogation statute, 1929 N.M. Laws, ch. 113, § 24, created a right in employers to obtain reimbursement for workers' compensation benefits paid where the injured employee received compensation for his or her injuries in tort. As a successor of 1929 N.M. Laws, ch. 113, § 24, Section 52-5-17 maintained this right of employers and adopted language that is substantially similar to its predecessor.

{12} We first addressed the issue of whether the subrogation statute covered uninsured motorist benefits stemming from a policy paid for by an employer in Continental Insurance Co. v. Fahey, 106 N.M. 603, 747 P.2d 249 (1987). We held that a worker's receipt of uninsured motorist benefits was not the same as a recovery from a tortfeasor and was not covered by the subrogation statute. Id. at 606, 747 P.2d at 252. In reaching this result, we noted that granting a right of reimbursement to an employer where an injured employee has received uninsured motorist benefits would "penalize[ ] the insured for his or her providence in purchasing uninsured motorist coverage." Id.

{13} In response to our decision in Continental Insurance, the Legislature amended Section 52-5-17 to create a right of reimbursement in employers for workers' compensation benefits paid when the injured worker has received uninsured motorist benefits from a policy paid for by the employer. See § 52-5-17(C). The new subsection (C) provides:

The worker or [the worker's] legal representative may retain any compensation due under the uninsured motorist coverage provided in Section 66-5-301 NMSA 1978 if the worker paid the premium for that coverage. If the employer paid the premium, the worker or [the worker's] legal representative may not retain any compensation due under Section 66-5-301 NMSA 1978, and that amount shall be due to the employer. For the purposes of this section, the employer shall not be deemed to pay the premium for uninsured motorist coverage in a lease arrangement in which the employer pays the worker an expense or mileage reimbursement amount that may include as one factor an allowance for insurance coverage.

The Legislature specifically exempted uninsured motorist policies purchased by employees from the subrogation statute so as to continue to encourage employees to purchase their own uninsured motorist coverage.

{14} In Draper v. Mountain States Mutual Casualty Co., 116 N.M. 775, 867 P.2d 1157 (1994), we first examined the right of reimbursement created by Section 52-5-17(C). Literal application of the terms of Section 52-5-17(C) would have yielded the nonsensical result that "the employer receive more money than it is paying its employee in workers' compensation benefits when it is the employee who suffered the injury." Id. at 778, 867 P.2d at 1160. It also would have placed Section 52-5-17 in conflict with the...