Mastin v. Liberal Markets
| Decision Date | 05 July 1984 |
| Citation | 674 S.W.2d 7 |
| Parties | Melody Ann MASTIN, Appellant, v. LIBERAL MARKETS; Travelers Insurance Company; John C. Wells (Successor to Thelma Stovall), Secretary of Labor and Custodian of the Special Fund; and Kentucky Workers' Compensation Board, Appellees. |
| Court | United States State Supreme Court — District of Kentucky |
E. Andre Busald, Florence, for appellant.
Mark W. Howard, Lionel A. Hawse, Lexington, for appellee, Liberal Markets & Travelers.
Denis S. Kline, Louisville, for appellee, Thelma Stovall.
J. Scott Getsinger, Frankfort, for appellee, Workers' Compensation.
Appellant, Melody Ann Mastin, seeks to reverse a decision of the Court of Appeals directing repayment of certain workers' compensation benefits which she received from the appellees. She suffered an illness resulting from inhaling an insecticide which was being sprayed in the area of her employment. She was working for Liberal Markets and the insecticide was being sprayed by Rose Exterminators, Inc.
The injury had its inception on September 26, 1978. In December 1978 she filed a claim before the Workers' Compensation Board. In May 1979 she and her husband filed a separate products liability claim in Kenton Circuit Court against three defendants, Rose Exterminators, Virginia Chemicals, Inc., and Prentiss Drug & Chemical Co., Inc.
In March 1981 she and her husband made a partial settlement of the circuit court action, accepting payment of $50,000 for a release of all claims against Rose Exterminators, Inc., "SPECIFICALLY RESERVING," their claims against other defendants.
The release evidencing this transaction recited the following:
Four weeks after Mastin's $50,000 settlement with Rose Exterminators, the Workers' Compensation Board entered an award against the appellees, Liberal Markets, Travelers and the Special Fund, for 102 weeks total temporary disability to be followed by payments for 35% permanent partial disability, plus all related medical expenses. The Board also awarded a $6,500 attorney's fee for Ms. Mastin's attorney in the worker's compensation action. Travelers commenced payments pursuant to the Board's award.
Ten months later the appellees learned of the settlement between Ms. Mastin and Rose Exterminators, suspended further payments of worker's compensation benefits and demanded immediate reimbursement of all sums previously paid pursuant to the worker's compensation award. These payments were as follows:
$7,255.56 Total Temporary Disability
(9/26/78--9/9/80)
1,772.39 Permanent Partial Disability
(9/10/80--2/4/82)
596.50 Interest on Payments Due at the
Time of the Award
15,532.95 Medical Expenses
6,500.00 Employee's Attorney's Fee
----------
$30,657.10
Ms. Mastin then filed the present suit, which started as an enforcement action to require these appellees to pay off the balance of the worker's compensation award. Appellees filed a response claiming that Ms. Mastin had obtained a double recovery in violation of KRS 342.700 (Remedies When Third Party is Legally Liable) and a counterclaim for reimbursement of the amounts previously paid pursuant to the worker's compensation award.
The case was submitted to the trial court to decide without a jury on the basis of the pleadings, the record from the Workers' Compensation Board, and an agreed statement of facts. The trial court entered findings and a judgment holding that the appellees were entitled to a "subrogation credit" which should be computed as follows:
$50,000.00 Civil Suit-Settlement Received by
Plaintiff
- 16,666.00 Plaintiff's Attorney's Fee in Her
----------- Civil Action
$33,334.00 Net
The trial court then held that this was a "front-end" credit against future payments of worker's compensation, meaning that commencing from the time the appellees discovered the payment from Rose Exterminators the credit would be set off against unpaid worker's compensation benefits as they would become due. The trial court denied the appellees any right of restitution for the sums already paid Ms. Mastin.
Both sides appealed. Ms. Mastin claimed that KRS 342.700 does not apply to the sum paid to her by Rose Exterminators; that this was not a recovery from a third party legally liable triggering application of KRS 342.700, but only a partial payment or an advanced payment; and that legal liability remained an undecided question until all claims in the products liability case had been disposed of. She claimed she is entitled to keep the worker's compensation benefits which she has been paid and to continue to enforce the worker's compensation award until her products liability case is fully adjudicated. On the other hand the appellees, Liberal Markets, Travelers and the Special Fund, claimed that they are entitled not only to a "front-end" credit from the date they discovered the settlement with Rose Exterminators and suspended future payments, but also to a common law judgment against Ms. Mastin for immediate repayment of benefits they paid after Ms. Mastin received the $50,000 settlement from Rose Exterminators but before the appellees learned of it.
The Court of Appeals affirmed the appellees' right to a subrogation credit holding that the settlement with Rose Exterminators was a resolution of legal liability within the meaning of KRS 342.700, but reversed the trial court's decision that the credit can be applied only against future payments. The Court of Appeals "remanded with instructions to enter a common law judgment against Ms. Mastin for worker's compensation benefits received and to direct suspension of further benefits until subrogation of the entire $33,334.00 settlement from Rose Exterminators is effected." 1 Ms. Mastin then petitioned this Court for discretionary review.
The issues presented by this appeal are as follows:
1) Is the payment from Rose Exterminators a recovery from a third party legally liable triggering subrogation rights under KRS 342.700?
2) If so, is appellees' subrogation limited to a credit against future payments or are appellees entitled to restitution from Ms. Mastin for amounts previously paid?
3) Are appellees entitled to credit against the entire net amount after deduction of attorney's fee ($33,334) or is subrogation limited to those elements of Ms. Mastin's recovery from Rose Exterminators which duplicate elements (disability benefits and medical expense) for which worker's compensation benefits have been paid? And, what is the appropriate method for allocating a limited recovery?
KRS 342.700, "Remedies when third party liable," subsection 1, provides in pertinent part:
The first question is when does "legal liability to pay damages" arise? Rose Exterminators has settled its liability, but Ms. Mastin's tort action is still an open case as to remaining defendants. She argues that because ultimately it may be determined by jury verdict and judgment that these other defendants, not Rose Exterminators, were the parties primarily or entirely at fault, legal liability has not yet been determined. This type of argument is sound where a third party possibly liable settles a common law action brought by an employee and then seeks reimbursement for the settlement from the employer or some other person in an action for contribution or indemnity. One who has not agreed to a settlement is not foreclosed by it from contesting liability. Ashland Oil & Refining Co. v. General Telephone Co., Ky., 462 S.W.2d 190 (1970). But it is unsound in the present circumstances. Here the appellees are the employer, its insurance carrier, and the Special Fund, subrogated by statute to the payments the employee has received from the alleged tortfeasor. Their rights derive from the employee's right to payment and are a corollary to the employee's right to payment. The parameters of "legal liability" under KRS 342.700 require only that the third party tortfeasor "could have been compelled at law to pay" and the settlement itself is sufficient evidence of that fact. Whitney Transfer Co. v. McFarland, 283 Ky. 200, 138 S.W.2d 972, 976 (1940).
As to those elements of Ms. Mastin's recovery from Rose Exterminators which were also elements "for which compensation is payable under" the Workers' Compensation law, she had a right to proceed against both...
To continue reading
Request your trial
-
Aik Selective Self Ins. Fund v. Bush, 2000-SC-0344-DG.
...actually paid stands as a credit against future liability of the carrier." Larson, supra, § 117.01[5], at 117-9. Mastin v. Liberal Markets, Ky., 674 S.W.2d 7, 14 (1984), provides some local authority for crediting an excess recovery against the employer's future liability for workers' compe......
-
Krahwinkel v. Commonwealth Aluminum Corp.
...procedure. Appellant, in his Petition for Rehearing, cited only Whittaker v. Hardin, 32 S.W.3d 497 (Ky.2000), and Mastin v. Liberal Markets, 674 S.W.2d 7 (Ky.1984), both of which hold that the plaintiff is entitled to have a trier of fact allocate elements of damages that should be credited......
-
Krahwinkel v. Commonwealth Aluminum Corporation, No. 2003-SC-0708-DG (KY 2/23/2006), 2003-SC-0708-DG.
...Appellant, in his Petition for Rehearing, cited only Whittaker v. Hardin, 32 S.W.3d 497 (Ky. 2000), and Mastin v. Liberal Markets, 674 S.W.2d 7 (Ky. 1984), both of which hold that the plaintiff is entitled to have a trier of fact allocate elements of damages that should be credited. Whittak......
-
Mata v. Clarion Farmers Elevator Co-op., 85-347
...would be necessary as to the portion of the settlement of $50,000 which is actually allocable to Mr. Mata. See Mastin v. Liberal Markets, 674 S.W.2d 7, 13 (Ky.1984) (employer/insurer not bound by allocation of recovery in settlement to which they were not parties). American would be entitle......