Prettyman v. Halliburton Co., 63557
| Decision Date | 05 May 1992 |
| Docket Number | No. 63557,63557 |
| Citation | 1992 OK 63,841 P.2d 573 |
| Parties | Arie J. PRETTYMAN, Guardian of the Person and the Estate of Patrick John Prettyman, a Mentally Incompetent Person, Appellees, v. HALLIBURTON COMPANY, a Delaware Corporation, dba Halliburton Services, Appellee, v. NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, Appellant. |
| Court | Oklahoma Supreme Court |
John S. Oldfield, Michael Mancillis, Oldfield & Coker, Oklahoma City, for appellant.
Kenneth R. Webster, McKinney, Stringer & Webster, Oklahoma City, for appellee Halliburton.
Jane S. Eulberg, John W. Norman, Oklahoma City, for appellee Prettyman.
This is an appeal by the workers' compensation carrier from the trial court's denial of its efforts to recover the amount of compensation benefits paid to its insured's injured worker from proceeds of a settlement reached by the worker and the negligent third party responsible for his injury. Although the settlement exceeded the amount of the compensation paid, the trial court agreed with the worker's argument that a 1975 amendment to 85 O.S.1971, § 44, required compromising the amount of the carrier's claim, and the trial court compelled the insurer to accept a lesser sum as full satisfaction of its subrogated claim.
We granted certiorari to address first impression questions regarding the proper construction of § 44, as amended, its effect on the subrogation rights of a compensation carrier and its application to settlement proceeds recovered in a third party action in an amount greater than the benefits previously paid by the carrier. The statute at issue, 85 O.S.1981, § 44, supra, with the amendatory language at issue set out in italics, provides as follows:
The relevant facts are these. The employee, Patrick Prettyman, was very seriously injured on March 24, 1963, while working for Noble Drilling Company and was paid $152,986.95 in temporary total disability benefits and medical expenses by National Union Fire Insurance Company, Noble's workers' compensation carrier. Through his guardian, Prettyman elected to sue Halliburton in Oklahoma County District Court under § 44, for negligently causing his injuries. The action was originally brought for eleven million dollars. During the course of the litigation the parties agreed that because there was a serious question of liability, the chances for plaintiff's success were no more than 1 in 3. They decided, therefore, that six million dollars was a more reasonable probable recovery and, because the chances for a verdict were evaluated at no more than 1 in 3, Plaintiff and Halliburton settled the suit for two million dollars. As a condition of their settlement, Halliburton and Prettyman agreed that Halliburton would receive a complete release of all claims of National Union. National Union, however, was not a party to the lawsuit; it chose not to participate in the settlement process and did not consent to the terms. After the terms of the settlement were agreed to by the parties and the proceeds were paid by Halliburton and placed in escrow, Prettyman filed an "Application for Compromise of Workers' Compensation Lien" seeking to have the trial court apportion National Union's total claim from $152,986.95 to $29,205.48. Plaintiff's position was that since he had compromised his six million dollar prayer to two million dollars, accepting 33 cents on the dollar, it would be "just and reasonable" under § 44 for the compensation carrier to also accept 33 cents on the dollar in full satisfaction of its subrogated claim. Plaintiff argued this result was compelled by the amendatory provisions of § 44. He submitted that this recovery was effected by "compromise settlement" and that the carrier's recovery should therefore be compromised and it should also be ordered to reimburse plaintiff for its fair share of costs and attorney fees as directed by the statute. Under Plaintiff's proposed formula those figures were as follows:
1. Total workers' compensation claim $152,986.95
2. Apportionment of recovery
(33% x $152,986.95) = 50,485.69
3. Apportionment of attorney's fee
(40% x $50,485.69) = 20,194.27
4. Apportionment of litigation
expenses (4% x $27,148.52) k 1,085.94
------------ --------------
21,280.21 - 21,280.21
--------------
Employer's/carrier's net recovery $ 29,205.48
National Union intervened and argued that under the provisions of § 44, it was subrogated to the rights of plaintiff against defendant Halliburton for the full amount of the compensation payments made to Prettyman. National Union contended there, as it has on appeal, that its right to recoup the entire amount of its $150,000.00 subrogated interest was protected by § 44, and that the only changes effected by the amendment provided for sharing costs and expenses in third party suits. It argued that there was no basis for plaintiff's claim that § 44, as amended, required or justified compromising its claim in the same proportion as plaintiff had willingly compromised his lawsuit, or in any other proportion. Defendant Halliburton asserted before the trial court, as it has on appeal, that it has fully met all obligations to plaintiff and intervenor by reason of the settlement with plaintiff and escrow of an amount representing all compensation payments which had been paid by intervenor to Prettyman.
The trial court agreed with plaintiff's assessment of § 44 and entered its order compelling National Union to accept $29,205.48 as full and complete settlement of its total subrogation interest. On appeal, the Court of Appeals reversed the trial court upholding National Union's argument that it could not be bound by the trial court's apportionment of its claim since it had never assigned its subrogated interest to plaintiff and had not participated in, or consented to, the negotiation and settlement of the claim.
Until the 1975 amendment, § 44 had existed in essentially unchanged form since 1915. Without question, the purpose of the statute had always been to protect the right of employers and their insurers to be fully subrogated to the claims of injured workmen against third party defendants, and to guard against the employee receiving a double recovery; one from the employer and one from the tort-feasor. See Parkhill Truck Co. v. Wilson, 190 Okl. 473, 125 P.2d 203 (1942).
In general, the Workers' Compensation Act was enacted for the benefit of workers injured in covered employment, providing compensation for injuries without regard to negligence at a rate fixed by the legislature. The legislature, we have held, did not intend the enactment of the Workers' Compensation Act to abrogate, modify or affect in any way the worker's common law right to exact payment for his injuries from a negligent third party not in the same employ who causes the personal injury. Parkhill Truck Co. v. Wilson, supra; DeShazer v....
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