Paternoster v. La Cuesta Cabinets, Inc.
Decision Date | 25 September 1984 |
Docket Number | 7548,Nos. 7535,s. 7535 |
Citation | 101 N.M. 773,689 P.2d 289,1984 NMCA 97 |
Parties | Mark PATERNOSTER, Plaintiff-Appellant/Cross-Appellee, v. LA CUESTA CABINETS, INC., Employer, and Rockwood Insurance Company, Insurer, Defendants-Appellees/Cross-Appellants. |
Court | Court of Appeals of New Mexico |
FACTS:
Plaintiff-Appellant/Cross-Appellee Mark Paternoster (plaintiff) sustained an accidental injury to his left hand while operating a table saw in the cabinet shop of Defendant-Appellee/Cross-Appellant La Cuesta Cabinets, Inc. (La Cuesta). Insurer, Defendant-Appellee/Cross-Appellant Rockwood Insurance Company (Rockwood) (collectively, defendants), timely paid plaintiff compensation benefits at the rate of $133.34 per week from September 11, 1980 to October 12, 1983, past the time of trial. The trial court determined that the healing period lasted from September 10, 1980 to May 9, 1982. On May 10, 1982, Rockwood unilaterally deemed future payments to be scheduled member benefits rather than temporary disability payments. However, the compensation rate paid remained at $133.34. The trial court determined that plaintiff had an 80% loss of the use of his left hand due to the accidental injury. Additionally, it found that plaintiff had developed a post-traumatic stress syndrome, a separate and distinct injury to his body as a whole. Also, the trial court found that La Cuesta failed to provide recognized safety devices.
The trial court concluded that after May 9, 1982 plaintiff was 20% disabled and, together with the 10% safety device penalty, was only entitled to receive $29.33, which is 22% of $133.34. The court then discussed a credit which was to be given in its judgment:
2. Plaintiff is awarded weekly benefits at the rate of Twenty Nine Dollars and Thirty Three Cents ($29.33) per week from May 9, 1982 until further order of the Court for a period not to exceed six hundred (600) weeks from September 10, 1980 subject to the following credits:
a) Defendants are awarded credit for total temporary disability payments paid from September 10, 1980 to May 9, 1982 for eighty six (86) weeks and four (4) days.
b) Defendants are awarded a credit for seventy four (74) weeks compensation benefits in the amount of Twenty Nine Dollars and Thirty Three Cents ($29.33) per week paid to Plaintiff on May 10, 1982 to October 12, 1983.
c) Defendants are awarded a credit against future weekly compensation benefits which may be payable to Plaintiff in the amount of Seven Thousand Six Hundred Ninety Six Dollars and Seventy Four Cents ($7,696.74) as the overpayment made by Defendants to Plaintiff from May 10, 1982 to October 12, 1983.
Both plaintiff and defendants interpret the judgment to mean that plaintiff will not receive any weekly benefits until $7,696.74 worth of credits have accrued to repay defendants for their prejudgment overpayments. According to the plaintiff, he has received no benefits since October 12, 1983, and, by the terms of the judgment, if he remains disabled to the extent of 20%, he will receive no weekly benefits for a period of more than five years.
While it is not clear from the judgment that the credit is to be applied in the manner assumed by the parties, it is clear that the court granted some form of credit for the overpayment made between May 10, 1982 and October 12, 1983. On appeal, plaintiff raises an issue of first impression: whether an employer or his insurer (employer) are entitled to a credit against the amount of worker's compensation benefits ordered by the court for overpayment of compensation benefits prior to judgment; and, if so, whether the credit should be applied on a dollar-for-dollar basis or on another basis. We hold that an employer is entitled to a credit for overpayments made in good faith by mistake. Notwithstanding our conclusion that a credit is available, we reject the credit awarded below, which resulted in the immediate termination of post-judgment benefits, and remand for determination of a credit in accordance with the guidelines discussed in this opinion.
On cross-appeal, La Cuesta and Rockwood raise three issues. They argue: (1) that the case should have been dismissed for premature filing; (2) that the trial court's award of attorney fees was improper; and (3) that costs were awarded without proper notice to defendants pursuant to NMSA 1978, Civ.P. Rule 54(d) (Repl.Pamp.1980). We affirm the trial court on all of these issues.
We note at the outset that New Mexico does not provide a statutory section in the Workmen's Compensation Act (Act), NMSA 1978, Sections 52-1-1 to -69 (Orig.Pamp. and Cum.Supp.1984), which deals with the question of overpayment of prejudgment compensation benefits. While we normally would look to the Act for the rights, remedies, and procedures to be applied in any given case, Security Insurance Co. of Hartford v. Chapman, 88 N.M. 292, 540 P.2d 222 (1975), we are provided no direction with regard to the availability of overpayment credit. However, where no guidance is given, "fundamental fairness" must be our guideline. Transport Indemnity Co. v. Garcia, 89 N.M. 342, 552 P.2d 473 (Ct.App.1976).
Other jurisdictions do make available a credit for prejudgment overpayments. One approach, by statute, is to provide a dollar-for-dollar credit against future disability payments under circumstances similar to the present case. Belam Florida Corp. v. Dardy, 397 So.2d 756 (Fla.App.1981). Another approach, under statutory authorization, has mandated that dollar-for-dollar credit is not to be applied to reduce the amount of the periodic payments. Instead, dollar-for-dollar credit is applied to reduce the period for which compensation is due and still maintain the periodic level of payment. Dodgen v. St. Paul Fire & Marine Insurance Co., 138 Ga.App. 499, 227 S.E.2d 64 (1976) ( ); Jacks v. Banister Pipelines America, 418 So.2d 524 (La.1982) ( ).
Some jurisdictions, even in the absence of statutory authority, provide a dollar-for-dollar credit against future disability payments for earlier overpayments in benefits. Wilson Food Corp. v. Cherry, 315 N.W.2d 756 (Iowa 1982); Hudson v. Kaiser Steel Corp., 662 P.2d 29 (Utah 1983). In Cherry, such a credit resulted in a reduction of the compensation period. In Hudson, the credit resulted in the termination of all future periodic payments because the large overpayment actually exceeded the amount of future compensation due under the award.
Perhaps the clearest rationale for the application of credit is found in Western Casualty & Surety Co. v. Adkins, 619 S.W.2d 502, 503-04 (Ky.App.1981), where the Kentucky Court of Appeals concluded:
In our view, the voluntary payment of compensation benefits during the pendency of [compensation] proceedings ... is a matter of great importance to an injured worker and should not be discouraged. Any statutory interpretation which would penalize an employer who voluntarily makes weekly payments to an injured employee in excess of his ultimate liability would certainly discourage voluntary payment by his employers and would therefore constitute a disservice to injured workers generally.
Underlying all these cases is the recognition that a substantial benefit accrues to an employee where the employer makes prejudgment payments under the good faith belief that he (the employer) is discharging his obligation under workmen's compensation law. We agree with the policy of encouraging voluntary, prejudgment payments. The employer, in so making these payments, furthers the prime goal of the Act, which is to protect an employee against want, and to prevent an employee from becoming a public charge. Boughton v. Western Nuclear, Inc., 99 N.M. 723, 663 P.2d 382 (Ct.App.1983). Using "fundamental fairness" as our guideline, therefore, we believe it equitable to acknowledge, in some fashion, the employer's prejudgment payment contribution. We conclude that a credit is appropriate for overpayments made under the employer's good faith belief that he is discharging his statutory obligation. In so concluding, we presuppose that the prejudgment overpayments are intended by the employer to be compensation payments, and not a mere gratuity. If, from the circumstances of the individual case, it is found that an employer intended to offer a gratuity to the employee, obviously no credit would then be forthcoming. See Roybal v. County of Santa Fe, 79 N.M. 99, 440 P.2d 291 (1968).
Our next concern involves the manner in which the credit is to be applied. The trial court, in ordering the credit, found Smith v. Trailways Bus System, 96 N.M. 79, 628 P.2d 324 (Ct.App.1981), controlling. We disagree that Smith is dispositive of the issue. Smith dealt with the application of Section 52-1-47(D) of the Act, which addresses the limitation on benefits for successive injuries to the same member, or function. The court, relying on Gurule v. Albuquerque-Bernalillo County Economic Opportunity Board, 84 N.M. 196, 500 P.2d 1319 (Ct.App.1972), interpreted the statute to prohibit benefits for a subsequent injury where those benefits would duplicate benefits for a prior injury to the same member or function. The court then affirmed the trial court's reduction of a 1980 benefits award by the amount of a previous award covering the same period of weeks. Smith, 96 N.M. at 83, 628 P.2d 324. Credit was not granted for an employer's voluntary overpayment of prejudgment benefits. There was no overpayment issue involved in Smith upon which the court focused. The court merely affirmed a modification of a subsequent award designed to eliminate the overlap in benefits between the subsequent award and a prior...
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