Pinal Cnty. v. Indus. Comm'n of Ariz.
| Decision Date | 07 April 2016 |
| Docket Number | No. 1 CA-IC 15-0041,1 CA-IC 15-0041 |
| Parties | PINAL COUNTY, Petitioner Employer, ARIZONA COUNTIES INSURANCE POOL, Petitioner Carrier, v. THE INDUSTRIAL COMMISSION OF ARIZONA, Respondent, ANDREW GOODE, Respondent Employee. |
| Court | Arizona Court of Appeals |
NOTICE: NOT FOR OFFICIAL PUBLICATION. UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL AND MAY BE CITED ONLY AS AUTHORIZED BY RULE.
Special Action - Industrial Commission
Carrier Claim No. WC2011013296
Joann C. Gaffaney, Administrative Law Judge (Retired)
Michael A. Mosesso, Administrative Law Judge
Jardine, Baker, Hickman & Houston, P.L.L.C., Phoenix
By Scott H. Houston, Rae Richardson
Industrial Commission of Arizona, Phoenix
By Andrew F. Wade
Counsel for Respondent ICA
Snow Carpio & Weekley, PLC, Phoenix
By Dennis R. Kurth
Judge Lawrence F. Winthrop delivered the decision of the Court, in which Presiding Judge Peter B. Swann and Judge Donn Kessler joined.
¶1 This is a special action review of an Industrial Commission of Arizona ("ICA") award and decision upon review lifting the carrier's suspension of workers' compensation benefits. Two issues are presented on appeal:
Because we find no legal error and the evidence of record reasonably supports the rulings by the ALJs, we affirm.
¶2 This court has jurisdiction pursuant to Arizona Revised Statutes ("A.R.S.") sections 12-120.21(A)(2), 23-951(A), and Arizona Rules of Procedure for Special Actions 10.1 In reviewing findings and awards of the ICA, we defer to the ALJ's factual findings, but review questions of law de novo. Young v. Indus. Comm'n, 204 Ariz. 267, 270, ¶ 14, 63 P.3d 298, 301 (App. 2003). We consider the evidence in a light most favorable to upholding the ALJ's award. Lovitch v. Indus. Comm'n, 202 Ariz. 102, 105, ¶ 16, 41 P.3d 640, 643 (App. 2002).
¶3 At the time of injury, claimant Andrew Goode worked as a detective for the petitioner employer, Pinal County Sheriff's Office ("PCSO"). He injured his right knee during an arrest while performing undercover work at a music festival. Goode filed a workers' compensation claim, which was accepted for benefits by the petitioner carrier, Arizona Counties Insurance Pool ("ACIP"). He received medical, surgical, and disability benefits. Goode's claim eventually closed with a scheduled permanent partial impairment to the right lower extremity and a supportive care award.
¶4 Along with other plaintiffs, Goode retained attorney Gary L. Lassen to file a third-party lawsuit against the music venue, other festival vendors, and the couple responsible for causing his injuries during the arrest.2 Professional Event Management ("Pro Em"), one of the named parties, was the security company hired to provide security for the stadium where the bands performed but not the campground area where the claimant was injured. Lassen approached Pro Em's attorney, Rob Justman, with a settlement proposal. Pro Em agreed to settle the claim for $23,000 to all of the plaintiffs, solely for its nuisance value because, in Justman's opinion, his client had no liability for the injury-causing events. Releases were signed in spring 2013, and Lassen filed a notice in the superior court on June 18, 2013, dismissing Pro Em. At the time of the settlement, Justman was unaware of ACIP's workers' compensation lien.
¶5 When Lassen informed Goode of the settlement offer, Goode provided Lassen with a summary of PCSO's written policy on settlement offers via this e-mail:
¶6 Goode received $4,400 from the $23,000 settlement, which Lassen paid to him in two separate checks.3 In May 2014, ACIP suspended Goode's workers' compensation benefits and he became aware at that time that Lassen had not negotiated or otherwise paid ACIP's lien. Goode timely protested the suspension of benefits and requested an ICA hearing.
¶7 The ALJ held two evidentiary hearings and heard testimony from five witnesses, including Goode, Pro Em's attorney, and ACIP's workers' compensation claims manager. Following the hearings, ALJ Gaffaney issued a decision lifting the suspension of benefits and awarding ACIP a credit of $4,400 against Goode's future compensation benefits. ACIP timely requested administrative review; by this time, ALJ Gaffaney had retired. Substitute ALJ Mosesso reviewed the record and affirmed the decision. ACIP brought this appeal.
¶8 On review, ACIP argues that the ALJ erred by lifting the suspension of benefits. An employee entitled to workers' compensation benefits may also pursue a civil remedy against a third party who tortiously caused the work-related injury. A.R.S. § 23-1023(A). If an employee pursues a civil remedy, the employer or carrier responsible to pay workers' compensation has a lien on the employee's entire net recovery from the third party to the extent of workers' compensation paid. § 23-1023(D); Liberty Mut. Ins. Co. v. Western Cas. & Sur. Co., 111 Ariz. 259, 262-63, 527 P.2d 1091, 1094-95 (1974). In order to settle a third-party claim for less than the compensation provided, an employee must obtain written approvalfrom the responsible employer or carrier. § 23-1023(D). The statute does not specify the penalty for failure to comply with the approval requirement.
¶9 The supreme court first interpreted this portion of § 23-1023 ("the lien statute") in Hornback v. Indus. Comm'n, 106 Ariz. 216, 474 P.2d 807 (1970). In Hornback, the claimant filed a workers' compensation claim, received nominal compensation benefits ($266.08), and did not protest the closure of his claim without permanent impairment. Hornback, 106 Ariz. at 218, 474 P.2d at 809. He subsequently filed a third-party tort claim for a new or previously undiscovered condition, and he settled that claim for $10,000, without approval from the self-insured employer. Id. When the claimant subsequently petitioned to reopen his workers' compensation claim to obtain additional workers' compensation benefits for the new and previously undiscovered condition, the ICA dismissed the petition. Id. at 218-19, 474 P.2d at 809-10. The supreme court affirmed the ICA's dismissal and held that the claimant's attempt to reopen his workers' compensation claim was barred as a sanction for the unapproved third party settlement. Id. at 219, 474 P.2d at 810.
¶10 The supreme court next considered the lien statute in Bohn v. Indus. Comm'n, 196 Ariz. 424, 999 P.2d 180 (2000). In Bohn, the claimant filed a workers' compensation claim after falling through a residential roof. Id. at 424, ¶ 2, 999 P.2d at 180. His uninsured employer denied having any employees, and the No Insurance Section of the ICA denied his claim for benefits. Id. An ALJ affirmed, and during the pendency of the appeal in this court, the claimant's attorney settled a third-party tort claim against the homeowner. Id. at 424-25, ¶ 2, 999 P.2d at 180-81. Although the attorney obtained the uninsured employer's permission to settle, he did not seek approval from the No Insurance Section of the ICA. Id. at 425, ¶ 2, 999 P.2d at 181. On remand, an ALJ found that, because of the unapproved third-party settlement, the claimant had forfeited his right to collect workers' compensation benefits. Id. at ¶¶ 3, 5.
¶11 This court affirmed the ALJ's forfeiture award, but the supreme court set it aside. Id. at 425-26, ¶¶ 6, 13, 999 P.2d at 181-82. The supreme court recognized that forfeiture was not the only sanction available for violations of § 23-1023. Bohn, 196 Ariz. at 426, ¶ 9, 999 P.2d at 182. Instead, it fashioned an equitable remedy—awarding the carrier a credit for an amount that depends on the reasonable value of the settlement. Id. at 427, ¶ 17, 999 P.2d at 183. If the settlement amount was reasonable, the carrier (or in this case, the No Insurance Section of the ICA) would have a credit up to the net settlement proceeds against future medical and disability benefits. If the settlement was not for a reasonable amount, thecredit against future medical and disability benefits would be increased to the equivalent of a reasonable settlement amount. Id.
¶12 The supreme court most recently addressed a violation of the lien statute in Hendrickson v. Indus. Comm'n, 202 Ariz. 442, 46 P.3d 1063 (2002). In Hendrickson, the claimant sustained a compensable injury to both of her temporomandibular joints and she received artificial joint implants. Id. at 443, ¶ 2, 46 P.3d at 1064. When the implants failed, she filed a civil action against her dentist, the joint manufacturer (Vitek), and the implant materials supplier (DuPont). Id. at ¶¶ 2-3. Vitek eventually filed for bankruptcy protection, and the claimant received a distribution from the bankruptcy court. Id. at ¶ 3. She later settled with both the dentist and DuPont without obtaining the workers'...
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