Meyer v. North Dakota Workers Compensation Bureau

• Decision Date: 23 February 1994
• Docket Number: No. 930205,930205
• Citation: 512 N.W.2d 680
• Parties: Henry MEYER, Appellant, v. NORTH DAKOTA WORKERS COMPENSATION BUREAU, Appellee, v. KOST BROTHERS, INC., Respondent. Civ.
• Court: North Dakota Supreme Court

Page 680

512 N.W.2d 680

Henry MEYER, Appellant, v. NORTH DAKOTA WORKERS COMPENSATION BUREAU, Appellee, v. KOST BROTHERS, INC., Respondent.

Civ. No. 930205.

Supreme Court of North Dakota.

Feb. 23, 1994.

Patrick J. Maddock and Randall S. Hanson of McElroy, Camrud, Maddock & Olson, Grand Forks, for appellant.

Ken R. Sorenson, Asst. Atty. Gen., Bismarck, for appellee.

SANDSTROM, Justice.

Henry Meyer, a permanently injured worker, appeals from a district court judgment affirming the decision of the workers compensation bureau: (1) suspending his benefits for half of the total third-party settlement amount paid to Henry and his wife, Jane Meyer, for Jane's loss of consortium claim; and, (2) denying reimbursement for the total cost of a handicap accessible van.

We reverse the district court and hold: (1) the bureau's right of subrogation does not extend to amounts paid to a wife for loss of consortium; and, (2) the injured worker is entitled to reimbursement for the difference between the cost of a handicap accessible van and the cost of a vehicle he would have otherwise owned.

I

Henry J. Meyer was a truck driver for Kost Brothers in Wahpeton, North Dakota. On August 17, 1988, the double-axle tandem truck he was driving went out of control when a front tire lost its re-cap. The tire allegedly had been negligently retread by Fargo Tire. The work-related accident left Henry paralyzed from the chest down and permanently confined to a wheelchair.

At the time of the accident, Henry was married to Jane Meyer. The Meyers have three children. After the accident, Jane quit her job at the local hospital and nursing home to provide home-care services for Henry. She performed home-care services for 2 1/2 years before the parties separated.

Henry Meyer filed an application for workers compensation benefits on August 24, 1988. The North Dakota Workers Compensation Bureau accepted responsibility on the claim and paid disability and medical benefits. The Meyers also sued Fargo Tire for damages incurred by both Henry and Jane. The complaint consisted of claims by Henry for personal injury, pain and suffering, and lost earnings, and by Jane for loss of consortium and emotional and mental suffering.

After the lawsuit began, but prior to the time of settlement, Henry and Jane entered into a marital termination agreement. As part of the agreement, Jane was to receive 10 percent of any settlement or judgment from Fargo Tire, after all costs, fees, and reimbursements had been paid, not to exceed $60,000. Fargo Tire paid Henry and Jane $900,000 as a release of all claims against it. From the $900,000 settlement, the bureau was immediately reimbursed for the amount of benefits it had expended up to the date of settlement. After costs and attorney's fees were paid, the remaining funds were distributed to Henry and Jane according to their agreement.

The bureau notified Henry it intended to suspend his future benefits based on the total settlement amount. Henry requested the bureau reduce his suspended benefits by the amount of the settlement awarded to Jane. The bureau denied Henry's request. Henry requested a rehearing. The administrative hearing officer affirmed the bureau's order. The district court, on appeal, upheld the bureau.

II

In an appeal from a judgment of the district court involving the decision of an administrative agency, we review the decision of the agency and not the decision of the district court. Skjefte v. Job Service North Dakota, 392 N.W.2d 815 (N.D.1986). Under N.D.C.C. Sec. 28-32-19, we review administrative decisions to determine: (1) if the findings of fact are supported by a preponderance of the evidence; (2) if the conclusions of law are sustained by the findings of fact; and, (3) if the decision is supported by the conclusions of law. Skjefte at 817. Administrative agency decisions on questions of law are fully reviewable by this Court. Blueshield v. Job Service North Dakota, 392 N.W.2d 70, 73 (N.D.1986); Walter v. North Dakota State Highway Commissioner, 391 N.W.2d 155, 159 (N.D.1986).

III

N.D.C.C. Sec. 65-01-09 provides, in part:

"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. The fund is subrogated to the rights of the injured employee or the employee's dependents to the extent of fifty percent of the damages recovered up to a maximum of the total amount it has paid or would otherwise pay in the future in compensation and benefits for the injured employee. The bureau's subrogation interest may not be reduced by settlement, compromise, or judgment. The action against such other person may be brought by the injured employee, or the employee's dependents in the event of the employee's death.... If the action is brought by the injured employee or the employee's dependents, or the employer as provided above, the bureau shall pay fifty percent of the costs of the action, exclusive of attorney fee, when such costs are incurred.... When there is recovery of damages in the action, the costs of the action, exclusive of attorneys fees, must be prorated and adjusted on the percentage of the total subrogation interest of the bureau recovered to the total recovery in the action." (Emphasis added.)

The bureau contends, under Sec. 65-01-09, its right to subrogation extends to both the rights of the injured employee and the rights of the employee's dependents. The bureau's interpretation of Sec. 65-01-09 is flawed. Section 65-01-09 only grants the bureau subrogation to the rights of the injured employee, or alternatively, in cases where the employee dies, to the rights of the employee's dependents, up to the amount the bureau has paid or would otherwise pay in compensation and benefits for the injured employee. Subrogation is "a legal operation by which a third person who pays a creditor succeeds to his rights against the debtor as if he were his assignee." Ness v. St. Aloisius Hospital, 313 N.W.2d 781, 782 (N.D.1981). Because the bureau only paid benefits based on Henry's injuries, not the related injuries of Jane, the bureau cannot succeed to Jane's rights, and is limited to amounts recovered by Henry.

Citing Wald v. City of Grafton, 442 N.W.2d 910 (N.D.1989), the bureau contends because workers compensation benefits enriched the Meyers' marital partnership, Jane Meyer's rights are merged with her husbands. The bureau misapplies our holding in Wald. In Wald, this Court said the workers compensation statute provided the exclusive remedy against an employer for a wife's loss of consortium damages from her husband's work-related physical injuries. Wald at 911; see Schreder v. Cities Service Co., 336 N.W.2d 641 (N.D.1983); N.D.C.C. Sec. 65-05-06. This Court's decision in Wald was based on the theory that under the workers compensation statute, the spouse of an injured worker forfeited an independent cause of action for loss of consortium against the employer in return for sure and certain relief by the injured worker. Wald at 911.

"In recent times, this Court has viewed marriage as an economic partnership, with both spouses' contributions to the marital enterprise entitling them to share in the marital assets as partners upon the dissolution of the partnership. So too, when one spouse is injured during the course of employment and thus entitled to workers compensation benefits, those benefits inure to the benefit of the economic partnership of husband and wife. In return for those benefits, all remedies of both partners, other than workers compensation benefits are sacrificed, including the claim for lost consortium. While we may question the sufficiency of the awards provided under workers compensation, we should not overlook the benefits of the protection to injured workers and their spouses from the expense, uncertainty and delays of litigation that would be entailed in all cases, absent workers compensation, and the specter of defeat in those cases where there was failure to establish negligence against an employer or co-employee or where the injured employee was contributorily negligent."

Wald at 913 (Levine, J., concurring specially) (citations omitted).

Unlike Wald, this case does not involve the exclusive remedy provision of N.D.C.C. Sec. 65-05-06. In suits against a liable third party, an injured employee, and the employee's spouse, are not guaranteed sure and certain relief, and therefore, the rationale for merging a spouse's claim does not exist.

In support of its position, the bureau cites several cases from other states. We have reviewed those cases, and are convinced they do not support the bureau's position. See Martinez v. Industrial Com'n of Arizona, 168 Ariz. 307, 812 P.2d 1125, 1129 (App.1991) (insurance carrier's subrogation lien attaches to entire third-party...