Collier v. City of Brundidge

CourtAlabama Court of Civil Appeals
Citation897 So.2d 1118
Decision Date12 December 2003

897 So.2d 1118



Court of Civil Appeals of Alabama.

December 12, 2003.

897 So.2d 1119
J. Farrest Taylor of Cochran, Cherry, Givens & Smith, P.C., Dothan, for appellant

Steadman S. Shealy, Jr., and Anthony B. McCallister of Cobb, Shealy, Crum & Derrick, P.A., Dothan, for appellee.


This case presents a single primary issue: whether the right of an employer to reimbursement of workers' compensation payments made to an injured employee who has recovered damages as a result of his or her injury from a third party can properly attach when the third-party recovery is paid on behalf of the third-party tortfeasor by the Alabama Insurance Guaranty Association ("AIGA") pursuant to the Alabama Insurance Guaranty Association Act, § 27-42-1 et seq., Ala.Code 1975 ("the Guaranty Association Act").

The underlying facts are not in dispute. On May 5, 1999, Coston Collier ("the employee") was injured in an automobile accident while working in the line and scope of his employment with the City of Brundidge. At the time of the accident, the employee was 47 years old, and he had been employed with the City of Brundidge ("the employer") for 19 years. The accident caused two vertebral disks in the employee's neck to bulge and a disk in his lower back to herniate. Those injuries have prevented the employee from returning to work. The employee's treating physician opined that, as a result of the employee's injuries, the employee was permanently and totally disabled from employment. To avoid protracted litigation, the employer and the employee reached a settlement agreement whereby the employee would receive a payment every two weeks in the amount of $531.98 as workers' compensation benefits resulting from his permanent, total disability. That settlement agreement, filed with the trial court and incorporated into a judgment, included the following language:

"Employer/Defendant, the City of Brundidge, Alabama, and/or its insurance carrier, the Municipal Worker's Compensation Fund, Inc., and/or its worker's comp. administrator, Millennium Risk Managers, Inc. reserve any and all rights to recover and be reimbursed for any amount of compensation benefits paid to Employee/Plaintiff on account of any recovery from any third party as a result of this accident."

The employee's injuries were caused when an automobile driven by Deborah Berry collided with the rear of Collier's vehicle. The employee pursued an action against Berry. At the time of the accident, Berry was insured under an automobile-liability insurance policy issued by Reliance Insurance Company ("Reliance"); her single-incident liability limit under the policy was $1,000,000. In June 2001, Reliance filed for protection under Chapter 11 of the United States Bankruptcy Code. As a result of Reliance's bankruptcy, AIGA assumed the obligations of Reliance with respect to the employee's claim against Berry. See § 27-42-8(a)(2), Ala.Code 1975. Pursuant to the Guaranty Association Act, AIGA's liability is capped at the amount of $150,000 per incident. See § 27-42-8(a)(1), Ala.Code 1975. Eventually, the employee accepted $124,900 from AIGA to settle his claim against Berry.

897 So.2d 1120
The employer and its workers' compensation carrier, Municipal Worker's Compensation Fund, Inc., petitioned the trial court for the award of a credit against the employer's workers' compensation liability in the same amount that the employee had received from AIGA.1 The employee opposed the petition. On August 29, 2002, the trial court entered a judgment granting the employer's petition. In its judgment, the trial court stated
"The facts in this case are undisputed, only the proper law to be applied is at issue.
"The [employer] insists that Section 25-5-11, Code of Alabama should control while the [employee] believes that Section 27-42-5[(4)] prevents the [employer] from recovering against him. This Court agrees with the [employer] and believes that it and its worker's compensation carrier are entitled to recover a refund of any benefits paid to [the employee] from April 30, 2002 to date and further are entitled to credit the balance of the [$124,900] recovered from [AIGA] on [the employer's] liability for worker's compensation benefits."

Following a postjudgment motion filed by the employee, the trial court amended its judgment on October 8, 2002, to reduce the amount of the credit to $79,411.14 to reflect payment of attorney fees and expenses.2

The employee argues that the trial court erred in granting the employer's petition for subrogation because the Guaranty Association Act expressly prohibits payment of any amount due "as subrogation recoveries." See § 27-42-5(4), Ala.Code 1975. "[B]ecause the underlying facts are not disputed and this appeal focuses on the application of the law to those facts, there can be no presumption of correctness accorded to the trial court's ruling." Beavers v. County of Walker, 645 So.2d 1365, 1373 (Ala.1994) (citing First Nat'l Bank of Mobile v. Duckworth, 502 So.2d 709 (Ala.1987)). Moreover, a ruling on a question of law carries no presumption of correctness, and appellate review is de novo. See Rogers Found. Repair, Inc. v. Powell, 748 So.2d 869 (Ala.1999); Ex parte Graham, 702 So.2d 1215 (Ala.1997).

The pertinent issue in this case is whether § 25-5-11(a), Ala.Code 1975, a provision that allows an employer who has paid an injured employee workers' compensation benefits to receive a credit if the injured employee recovers damages as a result of his or her injury from a third party, applies to payments made by AIGA in light of § 27-42-5(4), Ala.Code 1975, a provision of the Guaranty Association Act that defines a "covered claim" to exclude "any amount due any reinsurer, insurer, insurance pool, or underwriting association, as subrogation recoveries or otherwise." The employee argues that § 27-42-5(4) prevents the employer and its insurance carrier from asserting a credit with respect to funds paid to the employee by AIGA rather than by the third-party tortfeasor's insurance carrier. The employer argues that § 27-42-5(4) is merely a limitation on the power of AIGA; it contends that that statute does not apply to the employee's third-party recovery in this case. The employer's argument is based solely on § 25-5-11(a) and the language of the settlement agreement signed by the employer and the employee.

897 So.2d 1121
Generally, no contract or agreement can modify or nullify a law, but parties may agree to forgo protection of the law. See Bell v. General American Transp. Corp., 52 Ala.App. 123, 290 So.2d 184 (1973), writ quashed, 292 Ala. 708, 290 So.2d 189 (1974); Ivey v. Dixon Inv. Co., 283 Ala. 590, 219 So.2d 639 (1969). In this case, each party relies on a specific statutory provision that, each says, requires a disposition favoring that party in this dispute. If the employer is correct, the language of the settlement agreement requiring subrogation is redundant; if the employee is correct, then the provisions of the settlement agreement cannot create a right of subrogation that the Guaranty Association Act specifically prohibits. See, e.g., Derico v. Duncan, 410 So.2d 27 (Ala.1982) (citing Sunflower Lumber Co. v. Turner Supply Co., 158 Ala. 191, 48 So. 510 (1909)). Therefore, we must review both statutory provisions in order to determine whether the trial court correctly awarded the employer and its workers' compensation carrier a credit in the amount of $79,411.14

The employer acknowledges that its right to recover payments made to the employee by or on behalf of a third-party tortfeasor is exclusively a statutory right and does not exist independent of a statute. See Metropolitan Cas. Ins. Co. v. Sloss-Sheffield Steel & Iron Co., 241 Ala. 545, 3 So.2d 306 (1941); see also Ex parte Howell, 447 So.2d 661 (Ala.1984). Although § 25-5-11(a) "creates a right in favor of the employer to a credit on its compensation liability" that is not subject to the equitable defenses that a true subrogation claim would be subject to (see 2 Terry A. Moore, Alabama Workers' Compensation § 21.59 (1998)), statutory rights of reimbursement under workers' compensation statutes for compensation paid are generally characterized as affording "subrogation" rights. See 6 Arthur Larson & Lex K. Larson, Larson's Workers' Compensation Law § 116.01 (1997). Moreover, the Legislature, in amending § 25-5-11(a) so as to afford similar reimbursement rights as to medical and vocational benefits paid by an employer, stated that employers would "be entitled to subrogation" for such benefits. (Emphasis added.) Therefore, we conclude that the Alabama Legislature employed the term "subrogation" in its commonly understood meaning when drafting § 27-42-5(4) of the Guaranty Association Act and that that term encompasses an employer's right to reimbursement under § 25-5-11(a).

We must, therefore, consider the statute establishing the employer's right to reimbursement in light of the Guaranty Association Act, a coequal enactment of the Legislature, and we must apply the rules of statutory construction in order to determine the proper application of § 25-5-11(a) and § 27-42-5(4) in this case.

"`The fundamental rule of statutory construction is to ascertain and give effect to the intent of the legislature in enacting the statute. Words used in a statute must be given their natural, plain, ordinary, and commonly understood meaning, and where plain language is used a court is bound to interpret that language to mean exactly what it says. If the language of the statute is unambiguous, then there is no room for judicial construction and the clearly expressed intent of the legislature must be given effect.'"

Ex parte Master Boat Builders, Inc., 779 So.2d 192, 196 (Ala.2000) (quoting IMED Corp. v. Systems Eng'g Assocs. Corp., 602 So.2d 344, 346 (Ala.1992)); see also Smith v. Smith, 836 So.2d 893 (Ala.Civ.App.2002). It is a...

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