Rascop v. Nationwide Carriers
| Decision Date | 08 June 1979 |
| Docket Number | No. 49282.,49282. |
| Citation | 281 NW 2d 170 |
| Parties | Ronald T. RASCOP, Respondent, v. NATIONWIDE CARRIERS, et al., Relators. |
| Court | Minnesota Supreme Court |
Lommen & Cole and Mark N. Stageberg, Minneapolis, for relators.
Skaar & McCullough and Harvey E. Skaar, Minneapolis, for respondent.
Heard before YETKA, WAHL, and MAXWELL, JJ., and considered and decided by the court en banc.
This is a review by writ of certiorari of a decision of the Workers' Compensation Court of Appeals that a settlement recovery by the employee's wife for loss of consortium is not subrogated to the employer's compensation insurer and cannot be a credit against future compensation payments. We affirm.
Ronald T. Rascop, respondent-employee, a truck driver for Nationwide Carriers, relator-employer, was in the course of his employment on March 8, 1975, when he was seriously injured in Ohio in a motor vehicle accident. Employee and his wife, Shirley Rascop, sued the tortfeasors in Ohio in United States District Court for personal injuries and loss of consortium, respectively. The employee's attorney agreed to protect the subrogation rights of Excalibur Insurance Company, the employer-insurer, in the Ohio action.
The Ohio tortfeasors were financially irresponsible beyond the limits of their $100,000 liability insurance coverage. Therefore, employee and his wife entered into a proposed settlement of their claims with the tortfeasors for $100,000, although the employee had suffered damages probably far in excess of this amount.
On November 16, 1977, employee's attorney notified Excalibur's attorney in writing of the proposed settlement and stipulated distribution of the settlement proceeds as follows:1
TOTAL SETTLEMENT $100,000.00
LESS
Attorney 33,411.71
Loss of Consortium 30,000.00
Reimbursement of Excalibur 21,088.29
Past Pain and Suffering 15,500.00
__________
CREDIT AGAINST FUTURE
COMPENSATION 0
On November 23, 1977, Excalibur's attorney notified employee's attorney in writing of Excalibur's objection to the total settlement and proposed distribution of the settlement proceeds. Excalibur did not make its objections known to the judge of the United States District Court, however, nor did it intervene in the proceedings. On December 6, 1977, the United States District Court approved the settlement.
Thereafter, employee petitioned the Workers' Compensation Division of Minnesota to approve the settlement in accordance with Minn.St.1974, § 176.061, subd. 6.2 He requested that the proceeds be disbursed as follows:
TOTAL SETTLEMENT $100,000.00
LESS
Attorney's Fees 33,333.00
Loss of Consortium 30,000.00
Reimbursement to Excalibur 21,088.29
One-third (1/3) of balance to
Ronald T. Rascop for past pain
and suffering 12,223.00
____________
CREDIT AGAINST FUTURE
COMPENSATION $3,355.71
Relators filed an objection to employee's petition, claiming that the allocation of $30,000 to Shirley Rascop for the loss of consortium was arbitrary, and that it was obviously intended to reduce the funds available to relators as a future credit.3 Relators proposed that the settlement proceeds be divided as follows:
TOTAL SETTLEMENT $100,000.00
LESS
Attorney's Fees 21,097.37
One-third (1/3) to employee (free
from subrogation) 26,300.88
Reimbursement to Excalibur 21,307.89
____________
CREDIT AGAINST FUTURE
COMPENSATION $31,293.86
The compensation judge found that Shirley Rascop's recovery for loss of consortium was not available to relators for subrogation, stating that "the Workers' Compensation Division has no jurisdiction or concern over the allocation of said benefits * *." The judge determined that three-tenths of the attorney's fees allowed should be assigned to the recovery for loss of consortium and approved the division of proceeds as follows:4
TOTAL SETTLEMENT $100,000.00
LESS
Attorney's Fees on $70,000 23,388.20
Loss of Consortium (including
attorneys fees) 30,000.00
One-third (1/3) to employee (free
from subrogation) 15,537.27
Reimbursement to Excalibur 21,080.53
___________
CREDIT AGAINST FUTURE
COMPENSATION $9,994.00
Relators appealed the determination of the compensation judge to the Workers' Compensation Court of Appeals, which affirmed, reasoning that it had "no power to alter the order for distribution of the Federal Court and must consider it binding for purposes of credit for third party recovery under the Workers' Compensation Law."
Two issues are before the court on appeal: (1) Is a third-party settlement received by the employee's wife for loss of consortium subject to subrogation by the compensation insurer so that it becomes a credit against future compensation payments? (2) Was that portion of the third-party settlement allocated to the employee's wife for loss of consortium reasonable?
(1) In commenting on Naig v. Bloomington Sanitation, 258 N.W.2d 891 (Minn.1977), we said in Paine v. Water Works Supply Co., 269 N.W.2d 725, 729 (Minn.1978):
"* * * In Naig v. Bloomington Sanitation, supra, we held that the employer was not entitled to a credit against compensation liability out of an employee\'s settlement with a third-party tortfeasor where (a) the employer had notice of the settlement negotiations, (b) the settlement compensated only damages to the employee which are not cognizable under the Workers\' Compensation Act and are therefore not subject to subrogation by the employer, and (c) the employer\'s right to maintain an independent action to the full extent of its subrogated claims against the third party were preserved by the third party\'s admission that the settlement encompassed none of the employer\'s subrogated interest."
Examining the matter now before the court in light of Naig, it is clear that relators are not entitled to a credit against future compensation out of Shirley Rascop's recovery for loss of consortium. First, relators received notice of and objected to the proposed settlement and distribution, but they failed to intervene in the action. Therefore, they have no standing to...
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