Jewell v. KENTUCKY SCHOOL BD. ASS'N
| Decision Date | 20 May 2010 |
| Docket Number | No. 2008-SC-000244-DG.,2008-SC-000244-DG. |
| Citation | 309 SW 3d 232 |
| Parties | Veronica JEWELL, Appellant, v. KENTUCKY SCHOOL BOARD ASSOCIATION, Appellee. |
| Court | United States State Supreme Court — District of Kentucky |
John E. Anderson, Dennis L. Nagle, Cole, Cole, Anderson & Nagle, W. Patrick Hauser, Barbourville, KY, Counsel for Appellant.
John Steven Harrison, Frankfort, KY, Counsel for Kentucky School Board Association.
Jeanie Owen Miller, Jeanie Owen Miller Law Offices, PLLC, Owensboro, KY, Counsel for Kentucky Justice Association.
This case arises from a motor vehicle collision where the injured party, at work when the collision occurred, pursued her remedies against her under-insured motorist insurer. Among other issues, we address the question of whether an injured worker, as assignee of her workers' compensation carrier's subrogation rights, may enforce those rights against her underinsured motorist insurance provider. Although prior decisions have addressed separate elements of the issue, we find none that have application to the combination of factors present here.
Appellant, Veronica Jewell, while working as a school bus monitor for Williamsburg Independent School System, injured her left knee when the school bus she was riding was struck by another vehicle. The driver of the other vehicle caused the collision. Appellee, Kentucky School Board Association (KSBA), administered a liability self-insurance trust for the school system, and thereby provided motor vehicle insurance coverage for Appellant that included $20,000.00 in basic reparation benefits (BRB) and underinsured motorist (UIM) protection.
The school system's workers' compensation carrier paid $17,734.55 in medical benefits on behalf of Appellant, mainly for knee surgery. She also received temporary disability income benefits of $784.55. Appellant later had total knee replacement surgery. The workers' compensation carrier denied payment for that surgery, based on its assessment that the need for the surgery did not arise from the work-related accident. Ultimately, the knee replacement surgery was paid for by Appellant's health care insurer, whose right to subrogation was preserved.
Eventually, Appellant settled the dispute with her workers' compensation insurer for $25,000.00, from which $8307.45 was paid to the health insurer to satisfy its right of subrogation. As part of the settlement, the workers' compensation carrier and the health care insurer assigned to Appellant their third-party subrogation rights.
The only BRB payments paid by KSBA to, or on behalf of, Appellant was $333.45 for lost wages not paid by workers' compensation.
After settling her tort claim against the negligent driver for his liability policy limits of $25,000, Appellant filed suit against Appellee, KSBA, for the available UIM coverage. The case was tried in the Whitley Circuit Court by a jury which found that Appellant suffered the following damages as a result of the accident:
Medical expenses to date $ 70,558.77
Future medical expenses .00
Lost wages or income $ 5,544.00
Future lost wages .00
Pain and Suffering $ 25,000.00
___________
TOTAL $101,102.77
Before entering final judgment, the trial court reduced the award by the $25,000.00 paid by the tortfeasor's liability carrier and $333.45 previously paid to Appellant by KSBA as basic reparation benefits.
On appeal, the Court of Appeals held: 1) that Appellant's UIM carrier was entitled to an offset for workers' compensation benefits paid on Appellant's behalf; 2) that Appellant's judgment could not be credited with the attorney's fees and expenses she incurred; and, 3) that Appellant's judgment should have been reduced by the full $20,000 of available BRB, rather than $333.45 in benefits actually paid.
We affirm the Court of Appeals with respect to the first two issues. On the third issue, we reverse the Court of Appeals.
Appellant challenges the Court of Appeals' decision that barred her claim against KSBA's UIM coverage in the amount of the workers' compensation award, arguing the KRS 342.700(1)'s prohibition against double recovery does not apply to her because she is exercising her own rights as the injured employee and her rights as assignee of her workers' compensation provider. KRS 342.700(1) provides, in part:
KRS 342.700(1) plainly states that a workers' compensation insurance provider has a right of recovery against the tortfeasor for the liability it incurred on behalf of an injured worker. Appellant correctly relies on the holding of Weinberg v. Crenshaw, 896 S.W.2d 22, 24 (Ky.App.1995) that a provider of workers' compensation benefits may assign that right to the injured worker, and that the injured worker may enforce that right against a person "other than the employer" who is legally liable for the damages. Doing so does not offend KRS 342.700(l)'s rule against double recovery. Weinberg is solidly grounded on the principle that as assignee, the injured employee "step(s) into the shoes" of the insurance carrier and his claim against the tortfeasor exists as a derivative action based on the assignment rather than an independent claim of tort victim in his own right. Id. at 24. There is no "double recovery" when the injured employee/assignee recoups from the tortfeasor what the insurance carrier/assignor had a right to recover. Nor, does the tortfeasor or his insurer pay the same damage twice. What is paid to the injured employee as tort victim compensates different damages than funds paid to recompense the workers' compensation provider.
In Krahwinkel v. Commonwealth Aluminum Corp., 183 S.W.3d 154 (Ky.2005), citing decisions dating back to the initial enactment of the workers' compensation statutes,1 we held that KRS 342.700(1) precludes a plaintiff from recovering from a tortfeasor the same elements of damages for which he had already been compensated by way of workers' compensation benefits; and that the tortfeasor is entitled to an offset or credit against the judgment for those damages awarded by the jury that duplicate workers' compensation benefits. 183 S.W.3d at 160. The workers' compensation carrier's apparent abandonment of its subrogation rights against the tortfeasor does not effect a transfer of those rights to the injured worker. The result may be a "windfall" for the tortfeasor,2 but such is the case any time a cause of action goes unpursued. Krahwinkel, however, did not arise from a motor vehicle accident and therefore does not address the liability of a UIM provider.
Cincinnati Ins. Co. v. Samples, 192 S.W.3d 311 (Ky.2006), did involve the liability of an UIM carrier. In Samples, we applied the Krahwinkel holding to a plaintiff who was seeking to recover from his UIM carrier the same elements of damages for which he had already been compensated by way of workers' compensation benefits. We held that because the UIM carrier "stands in the wrongdoer's shoes for purposes of paying damages," and since under Krahwinkel, the tortfeasor had no liability to the injured employee to the extent of workers' compensation benefits, the UIM carrier had no liability for the same damages. Id. at 316.
Appellant distinguishes herself from the plaintiffs in Krahwinkel and Samples because, unlike those parties, she holds a valid assignment of the workers' compensation insurer's subrogation rights against the tortfeasor, which she may under Weinberg v. Crenshaw clearly enforce. The question she raises now is whether that claim may be enforced, not against the tortfeasor or his liability insurance carrier (whose liability was extinguished by paying Appellant the policy limits), but against KSBA, her own UIM provider.
KRS 342.700(1) permits Appellant's workers' compensation carrier to recover from "the other person in whom legal liability for damages exists." Appellant urges us to enunciate a construction of that phrase broad enough to include KSBA in its role as a UIM provider. Such a construction would require that we overrule the long-standing precedent established by this Court in State Farm Mutual Ins. Co. v. Fireman's Fund Am. Ins. Co., 550 S.W.2d 554 (Ky.1977), and more recently followed by the Court of Appeals in G & J Pepsi-Cola Bottlers, Inc. v. Fletcher, 229 S.W.3d 915 (Ky.App.2007);. State Farm Mutual Ins. Co. v. Fireman's Fund Am. Ins. Co. holds:
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