Haugenoe v. Workforce Safety and Ins.

• Decision Date: 22 April 2008
• Docket Number: No. 20070099.,20070099.
• Citation: 2008 ND 78,748 N.W.2d 378
• Parties: Robert N. HAUGENOE, Claimant and Appellant v. WORKFORCE SAFETY AND INSURANCE, Appellee and Earl's Electric, Respondent.
• Court: North Dakota Supreme Court

748 N.W.2d 378

2008 ND 78

Robert N. HAUGENOE, Claimant and Appellant v. WORKFORCE SAFETY AND INSURANCE, Appellee and Earl's Electric, Respondent.

No. 20070099.

Supreme Court of North Dakota.

April 22, 2008.

Paul A. Sortland, Minneapolis, MN, for claimant and appellant.

Jacqueline S. Anderson, Special Assistant Attorney General, Fargo, N.D., for appellee.

MARING, Justice.

[¶ 1] Robert Haugenoe appeals from a district court judgment affirming an agency order granting Workforce Safety and Insurance ("WSI") a subrogation interest in a legal malpractice settlement. The legal malpractice action concerned Haugenoe's attorney's failure to properly prosecute a medical malpractice claim related to a physician's aggravation of a work-related injury suffered by Haugenoe. Haugenoe asserts that N.D.C.C. § 65-01-09, the subrogation provision of the workforce safety and insurance law, does not grant WSI a subrogation interest in the legal malpractice settlement. We agree. We hold that N.D.C.C. § 65-01-09 does not grant WSI a subrogation interest in an injured worker's legal malpractice claim against a third-party tortfeasor. We, therefore, reverse the order of WSI and the district court judgment.

I

[¶ 2] Robert Haugenoe suffered a work-related injury in May 1999 while employed by Earl's Electric in Williston. He filed a claim for WSI benefits, and WSI accepted the claim. Haugenoe retained a lawyer to represent him in a medical malpractice lawsuit after he concluded that his physician had failed to properly treat his injury. As part of Haugenoe's representation, his lawyers agreed with WSI to represent its statutory subrogation interest in any damages recovered from the physician.

[¶ 3] Haugenoe's attorneys failed to properly prosecute his claims against the physician, and a significant part of his claims against the physician were dismissed. Haugenoe retained other legal counsel to represent him for the prosecution of his remaining claims against the physician and for the prosecution of any claims against his former lawyers. Haugenoe settled his legal malpractice claims against his former lawyers. After Haugenoe settled the legal malpractice claims, WSI issued an order asserting it had a subrogation interest in the settlement.

[¶ 4] Haugenoe requested a rehearing of WSI's order asserting a subrogation lien in the legal malpractice settlement. An administrative hearing followed. The administrative law judge ("ALJ") recommended on November 15, 2006, that WSI had a subrogation interest in the legal malpractice damages recovered by Haugenoe. WSI issued its final order on December 13, 2006. WSI's final order adopted the ALJ's recommended findings, conclusions, and order in their entirety except for one conclusion of law, which was stricken. Haugenoe appealed. The district court affirmed WSI's final order. Haugenoe appeals to this Court, arguing N.D.C.C. § 65-01-09 does not grant WSI a subrogation interest in his legal malpractice settlement.

II

[¶ 5] On appeal from a district court judgment in an appeal from an agency order, we review the agency order in the same manner as the district court. N.D.C.C. § 28-32-49. A district court must affirm the order of an administrative agency unless the district court determines that any of the following are present:

1. The order is not in accordance with the law.

....

5. The findings of fact made by the agency are not supported by a preponderance of the evidence.

6. The conclusions of law and order of the agency are not supported by its finding of fact.

N.D.C.C. § 28-32-46. We do not make independent findings of fact or substitute our judgment for that of the administrative agency. Aga v. Workforce Safety and Ins., 2006 ND 254, ¶ 12, 725 N.W.2d 204. We determine only "whether a reasoning mind reasonably could have determined that the factual conclusions reached were proved by the weight of the evidence from the entire record." Id.

[¶ 6] Questions of law are fully reviewable on appeal from an administrative order. Forbes v. Workforce Safety and Ins., 2006 ND 208, ¶ 10, 722 N.W.2d 536. Questions of statutory interpretation are questions of law. Rojas v. Workforce Safety and Ins., 2006 ND 221, ¶ 13, 723 N.W.2d 403. "Unless otherwise provided, statutes in effect on the date of an injury govern WSI benefits." Rodenbiker v. Workforce Safety and Ins., 2007 ND 169, ¶ 16, 740 N.W.2d 831. Thus, the Workforce Safety and Insurance statute in effect in May 1999 governs Haugenoe's benefits and provides the statutory provisions relevant to our consideration of this case.

III

[¶ 7] This case presents a question of first impression for this Court, resolution of which requires us to interpret N.D.C.C. § 65-01-09, the statutory provision subrogating WSI to injured workers' recoveries against certain third parties. The particular issue we address is whether WSI is subrogated to an injured worker's cause of action against an attorney for legal malpractice in prosecuting a medical malpractice action against a physician who aggravated the worker's injury.

[¶ 8] Our primary objective in statutory interpretation is to determine the legislature's intent. Rojas, 2006 ND 221, ¶ 13, 723 N.W.2d 403. To determine the legislature's intent, we look at the language of the statute itself and give it its plain, ordinary, and commonly understood meaning. Overboe v. Farm Credit Services, 2001 ND 58, ¶ 9, 623 N.W.2d 372. "Although courts may resort to extrinsic aids to interpret a statute if it is ambiguous, we look first to the statutory language, and if the language is clear and unambiguous, the legislative intent is presumed clear from the face of the statute." Id. We harmonize statutes when possible to avoid conflict between them. Rojas, 2006 ND 221, ¶ 13, 723 N.W.2d 403. Our interpretation of a statute "must be consistent with legislative intent and done in a manner which will accomplish the policy goals and objectives of the statutes." Id. "We presume the Legislature did not intend an unreasonable result or unjust consequence." Id.

[¶ 9] The purpose of our workforce safety and insurance law is to provide "sure and certain relief" to injured workers "regardless of questions of fault and to the exclusion of every other remedy, proceeding, or compensation." N.D.C.C. § 65-01-01. In turn, the law abolishes "all civil actions and civil claims for relief for those personal injuries" suffered by injured workers. Id. While the law relieves employers from liability for the workers' work-related injuries, it does not relieve third-party tortfeasors from liability for such injuries. See Polucha v. Landes, 60 N.D. 159, 233 N.W. 264, 269 (1930). Instead, it "expressly provides measures for realizing upon that liability, both in the interest of making the fund whole on account of the award and in the interest of the employee." Id.

[¶ 10] The statute allows WSI to realize upon the liability of third-party tortfeasors through its subrogation provision. See id. Section 65-01-09, N.D.C.C., grants WSI a subrogation interest in injured workers' recoveries against certain third parties:

When an injury or death for which compensation is payable under provisions of this title shall have been sustained under circumstances creating in some person other than the fund a legal liability to pay damages in respect thereto, the injured employee, or the employee's dependents may claim compensation under this title and proceed at law to recover damages against such other person.

N.D.C.C. § 65-01-09 (1999). WSI's subrogation rights are intended "to reimburse the fund, to the extent possible, at the expense of the persons at fault." Blaskowski v. N.D. Workmen's Comp. Bureau, 380 N.W.2d 333, 335 (N.D.1986). The legislature intended this provision to create an incentive for workers to pursue and litigate third-party claims. Lawson v. N.D. Workmen's Comp. Bureau, 409 N.W.2d 344, 347 (N.D.1987).

[¶ 11] We already established in Polucha, 60 N.D. 159, 233 N.W. 264, that an injured worker is entitled to benefits for the aggravation of his work-related injury due to the mistake of a physician which occurs in the course of treating the injury. See id. at 268. We also established that WSI is subrogated to an injured worker's cause of action against a physician for aggravation of a work-related injury occasioned by the physician's malpractice. See id. at 269. Like the 1999 version of the WSI subrogation statute, the then-applicable version of the WSI subrogation statute provided that WSI was granted a subrogation interest in injured workers' recoveries against third parties "`[w]hen an injury or death for which compensation is payable under this act shall have been sustained under circumstances creating in some other person than the North Dakota workmen's compensation fund a legal liability to pay damages in respect thereto....'" See id. (quoting Section 396a20 of the 1925 Supplement to the Compiled Laws of 1913). We held that the subrogation provision "subrogates the fund to any cause of action against a third person for a compensable injury." Polucha, 233 N.W. at 269. We reasoned that "the injury, if any, caused by the malpractice of the physician is regarded as resulting from the original injury and is compensable under the law." Id. [¶ 12] Now we must determine whether WSI's statutory subrogation interest also extends to an injured worker's cause of action against an attorney for the attorney's failure to properly prosecute a medical malpractice claim against a physician whose treatment of the injured worker aggravated the worker's injury. The conclusions reached by other courts that have considered this issue are decidedly mixed. Some have held that the workers' compensation insurer is entitled to a subrogation interest in legal malpractice proceeds. See Frazier v. N.J. Mfrs. Ins. Co., 142 N.J. 590, 667 A.2d 670 (1995); Williams v. Katz, 23 F.3d 190 (7th Cir.1994) (interpreting Illinois law); Nicholas v. Morgan, 58 P.3d 775 (Okla.2002);...