Rash v. McKinstry Company

• Decision Date: 15 March 2001
• Citation: 331 Or. 665,20 P.3d 197
• Parties: In the Matter of the Compensation of Benny H. Rash, Claimant. Benny H. RASH, Petitioner on Review, v. McKINSTRY COMPANY and Liberty Northwest Insurance Corporation, Respondents on Review.
• Court: Oregon Supreme Court

20 P.3d 197

331 Or. 665

In the Matter of the Compensation of Benny H. Rash, Claimant.

Benny H. RASH, Petitioner on Review, v. McKINSTRY COMPANY and Liberty Northwest Insurance Corporation, Respondents on Review.

(WCB TP-97009; CA A100576; SC S46514)

Supreme Court of Oregon.

Argued and Submitted January 7, 2000.

Decided March 15, 2001.

Meagan A. Flynn, Preston, Bunnell & Stone, LLP, Portland, argued the cause for petitioner on review. Robert K. Udziela, Pozzi Wilson Atchison LLP, Portland, filed the petition.

Alexander D. Libmann, Liberty Northwest Insurance Corp., Portland, argued the cause and filed the brief, for respondents on review.

Before CARSON, Chief Justice, and GILLETTE, DURHAM, KULONGOSKI, LEESON, and RIGGS.¹

RIGGS, J.

In this workers' compensation case, claimant seeks review of a Court of Appeals' decision affirming a Workers' Compensation Board (Board) order. The Court of Appeals held that, notwithstanding ORS 656.236(1)(a) (set out below), the statutory lien rights of Liberty Northwest Insurance Corporation (insurer) on claimant's third-party settlement proceeds survived the parties' Claim Disposition Agreement (CDA). Rash v. McKinstry Co., 160 Or.App. 131, 137, 981 P.2d 343 (1999). We review for errors of law. See ORS 656.298(7) (providing that review of Board order shall be as provided in ORS 183.482); ORS 183.482(8)(a) (providing for review for errors of law). We reverse the decision of the Court of Appeals and the order of the Board.

We take the following undisputed facts from the Court of Appeals' opinion:

"On June 16, 1994, claimant injured his neck and back while in the course and scope of his employment. Employer's insurer accepted the neck and back injuries as work related and provided benefits to claimant. In July 1996, after claimant began a tort action against a third party involved in the cause of the injuries, insurer and claimant entered into a CDA. The CDA did not specifically preserve insurer's lien rights against any recovery that claimant might receive in the tort action. After claimant settled with the third party for $400,000, insurer sought to recover $124,716.73 from the proceeds, the amount that it had paid on claimant's claim."

Rash, 160 Or.App. at 133, 981 P.2d 343.

When claimant refused to pay insurer's demand of $124,716.73, insurer petitioned the Board to resolve the parties' dispute. See ORS 656.593(3) (providing that any conflict between claimant and paying agency concerning "just and proper" distribution of third-party proceeds shall be resolved by Board); ORS 656.576 (defining "paying agency" as "the self-insured employer or insurer paying benefits to the worker or beneficiaries"). Claimant argued that, under ORS 656.236(1)(a), insurer waived its statutory lien rights when it failed to preserve them expressly in the CDA. ORS 656.236(1)(a) provides, in part:

"The parties to a claim, by agreement, may make such disposition of any or all matters regarding a claim, except for medical services, as the parties consider reasonable, subject to such terms and conditions as the Workers' Compensation Board may prescribe. For the purposes of this section, `matters regarding a claim' includes the disposition of a beneficiary's independent claim for compensation under this chapter. Unless otherwise specified, a disposition resolves all matters and all rights to compensation, attorney fees and penalties potentially arising out of claims, except medical services, regardless of the conditions stated in the agreement. Any such disposition shall be filed for approval with the board. If the worker is not represented by an attorney, the worker may, at the worker's request, personally appear before the board. Submission of a disposition shall stay all other proceedings and payment obligations, except for medical services, on that claim. * * *"

(Emphasis added.) The Board considered the phrase "matters regarding a claim," which appears in the first sentence of the statute, in resolving the dispute. For interpretive guidance, the Board looked to ORS 656.704(3)(a), a workers' compensation statute that describes the scope of the authority of the Department of Consumer and Business Services over workers' compensation matters. ORS 656.704(3)(a) provides, in part:

"For the purpose of determining the respective authority of the director and the board to conduct hearings, investigations and other proceedings under this chapter, and for determining the procedure for the conduct and review thereof, matters concerning a claim under this chapter are those matters in which a worker's right to receive compensation, or the amount thereof, are directly in issue. * * *"

(Emphasis added.) Applying that definition to ORS 656.236(1)(a), the Board concluded that "all matters and all rights to compensation" referred only to a claimant's—not an insurer's—rights to compensation. Accordingly, the Board ruled that the parties' CDA did not extinguish insurer's statutory lien. The Board ordered claimant to pay $124,716.73 to insurer.

Claimant sought judicial review in the Court of Appeals. See ORS 656.298(1) (providing for Court of Appeals review of Board orders). The court examined the text, context, and legislative history of ORS 656.236(1)(a) and concluded, as the Board had, that a CDA presumptively resolves only a claimant's right to compensation. Rash, 160 Or.App. at 135-37, 981 P.2d 343. The court's reasoning differed from the Board's, in that the court found that the workers' compensation statutes generally make a distinction between damages recovered against third parties and benefits received by a worker under the workers' compensation system. Specifically, the court found that the statutes relating to third-party recovery use the words "proceeds" and "action." See, e.g., ORS 656.593 ("proceeds"); ORS 656.580 ("action"); ORS 656.587 (same); ORS 656.591(1) (same). Because ORS 656.236(1)(a) does not contain either the word "proceeds" or the word "action," the court concluded that the phrase "all matters and all rights to compensation" did not encompass third-party recovery. Rash, 160 Or.App. at 136, 981 P.2d 343. Consequently, the court determined that the parties' CDA did not extinguish insurer's statutory lien, and it affirmed the Board order. In a dissent to the Court of Appeals' majority opinion, one judge concluded that the meaning of the statute was plain from its text: The legislature intended that a CDA extinguish an insurer's statutory lien—a "matter[ ] * * * potentially arising out of claims"—unless the parties provided otherwise. Rash, 160 Or.App. at 137-38,981 P.2d 343 (Armstrong, J., dissenting). The dissent was "at a loss to see how the phrase `all matters,' given its plain, natural and ordinary meaning, * * * could be read to mean anything other than all matters." Id. at 138, 981 P.2d 343 (Armstrong, J., dissenting) (emphasis in original).

We allowed claimant's petition for review. Claimant argues that the dissenting opinion correctly construed the meaning of the phrase "all matters" in ORS 656.236(1)(a): An insurer's statutory lien rights are resolved by a CDA, unless the parties in the CDA provide otherwise. For its part, insurer argues that the definition of "matters concerning a claim" in ORS 656.704(3) controls the interpretation of the word "matters" in ORS 656.236(1)(a). Because that statutory definition pertains only to a claimant's right to compensation, insurer continues, its statutory lien right is not a "matter[ ]" within the meaning of ORS 656.236(1)(a). Accordingly, insurer concludes, its lien survives the CDA. For the reasons that follow, we conclude that the phrase "all matters * * * potentially arising out of claims" in ORS 656.236 encompasses an insurer's statutory lien.

Before discussing the merits, we outline briefly for background purposes the statutory scheme that gave rise to the events in this case. A worker who receives an injury that arises out of and in the course of employment may file a claim for compensation from the employer or, as in this case, from the employer's insurer. See ORS 656.005(7)(a) (defining "compensable injury"); ORS 656.005(6) (defining "claim," in part, as "a written request for compensation from a subject worker"); ORS 656.202(1) (providing that injured worker "shall receive compensation as provided in this chapter"). If the claimant's injury was caused by the negligence of a third party, as claimant alleges in this case, then the claimant also may elect to recover damages from the third party. ORS 656.154; ORS 656.578.² If a claimant so elects, then the entity that paid the claim (the "paying agency") has a lien against the claimant's action against the third party that is second only to the cost of recovering those damages. ORS 656.580(2).³ If that claimant ultimately recovers money from the third party, then a paying agency also has a lien against those proceeds. ORS 656.593(1).⁴ In this case, insurer is a paying agency, because it provided claimant compensation for his injury. See ORS 656.576 (including insurer that pays benefits to worker within definition of "paying agency"). Because claimant received $400,000 in settlement of his claim against a third party, ORS 656.593(1) granted insurer a lien against the settlement.

We turn to the disputed statute, ORS 656.236. In determining the meaning of that statute, we employ the now-familiar methodology outlined in PGE v. Bureau of Labor and Industries, 317 Or. 606, 610, 859 P.2d 1143 (1993) (stating that court first examines text and context of statute to determine legislative intent). We begin with the statutory text, which is the best evidence of the legislature's intent. Id.

ORS 656.236 governs claim disposition agreements, or settlement agreements, of a claimant's claim. As noted, paragraph (1)(a) of that statute provides, in part:

"* * * Unless otherwise specified, a disposition resolves all matters and all rights to compensation, attorney fees and penalties...