Utah State Road Commission v. Industrial Commission

• Decision Date: 25 April 1946
• Docket Number: 6882
• Citation: 109 Utah 553,168 P.2d 319
• Court: Utah Supreme Court
• Parties: UTAH STATE ROAD COMMISSION et al. v. INDUSTRIAL COMMISSION et al

168 P.2d 319

109 Utah 553

UTAH STATE ROAD COMMISSION et al. v. INDUSTRIAL COMMISSION et al

No. 6882

Supreme Court of Utah

April 25, 1946

Certiorari By Utah State Road Commission And The Commission of Finance of Utah, Administering The State Insurance Fund, Against The Industrial Commission of Utah And O E Merrill, To Review The Action of Industrial Commission Commuting An Industrial Compensation Award From Periodical Payments To A Lump-Sum Payment

Order vacated.

F. A Trottier, of Salt Lake City, for plaintiffs.

Grover A. Giles, Atty. Gen., and Edward W. Clyde and Howard F Coray, both of Salt Lake City, for defendants.

Wolfe Justice. McDonough and Wade, JJ., concur. Larson, Chief Justice (concurring specially). Pratt, J., not participating.

OPINION

Wolfe Justice.

Certiorari to review the action of the Industrial Commission changing an industrial compensation award from periodical payments to a lump-sum payment.

On May 11, 1931, O. E. Merrill, the individual defendant, was injured while in the employ of the Utah State Road Commission. In its decision dated December 3, 1931, the Industrial Commission ordered the employer or its insurer to pay Merrill compensation at the rate of $ 16 per week from May 14, 1931, to July 1, 1931,

"and such other and additional compensation for his further disability and expenses thereof, as a result of said accident, following July 1, 1931."

Also the employer or insurance carrier were ordered to pay all medical, hospital and nurse fees incurred as a result of the accident.

Pursuant to the commission's order, the insurer paid Merrill compensation at the rate of $ 16 per week from May 14, 1931, to May 7, 1936. Under the provisions of Sec. 42-1-63, R. S. U. 1933, now Sec. 42-1-63, U. C. A. 1943, his weekly compensation rate was reduced to $ 15.97 per week, which the insurer has been paying him continuously since that date.

Upon Merrill's application and without previous notice to or hearing of the employer or its insurer the Industrial Commission on August 13, 1945, commuted the award to a lumpsum payment of $ 13,000. After notice of the commutation the employer and insurance carrier filed an application for rehearing which was denied by the Industrial Commission on August 28, 1945.

It is noted that the 1945 legislature in its amendment to the code section regarding compensation for permanent total disability provided that not more than $ 8,500 be required to be paid for a permanent total disability. See Sec. 42-1-63, Laws of Utah 1945. However, the law governing this case is that which was in effect when the injury occurred, that is, on May 11, 1931. As then in effect the law provided for payment of the benefits until the death of the person permanently and totally disabled with no limitation on the total amount that would be paid.

The first question is: May the Industrial Commission make commutations in cases of permanent total disability? The statute authorizing commutations is Sec. 42-1-73, U. C. A. 1943, which reads as follows:

"The [Industrial] commission, under special circumstances and when the same is deemed advisable, may commute periodical benefits to one or more lump-sum payments."

The statute is clear and unambiguous. It makes no exception to the authority to commute periodical benefits. Commutation may be made in permanent total disability cases.

The commission in making a commutation in permanent total disability cases should not include in the commutation anticipated medical and hospital expenses as they are not "periodical benefits" which may be commuted. The liability of the employer or its insurance carrier for said expenses is not affected by the commutation.

The next question presented is: May the Industrial Commission commute periodical benefits to one or more lump-sum payments without giving the parties previous notice and opportunity to be heard?

One purpose of the workmen's compensation act is to have payments come in periodically to the injured employee or to the dependents of an employee who was killed in his employment so that the beneficiaries will have the necessities of life for that long period of time and will not be public charges. The legislature provided for lump-sum payments only when "special circumstances" exist which make the commutation advisable. Sec. 42-1-73, supra. Lump-sum payments are the exception because of the possibility that the beneficiaries may dissipate the fund and so defeat one important purpose of the act. The usual and ordinary award is for a small sum each week over the period specified by the statute. When the Industrial Commission denies a request for commutation it requires the usual and ordinary award to continue. When it authorizes a commutation it authorizes a deviation from the ordinary and usual award. This court in the case of Reteuna v. Industrial Commission, 55 Utah 258, 185 P. 535, said that when the commission acting on a request for commutation finds that no special circumstances exist which make the commutation advisable its decision is absolute and not subject to review by this court. However, even in that case the court did go on and review the action of the commission denying the commutation and found that the commission's action was not arbitrary and unlawful under the facts of that case. The question of whether or not this court will review the commission when it finds special circumstances do exist which make the commutation advisable was not before the court in the Reteuna case; neither need we decide it in this case.

Assuming the commission acting on a commutation application correctly finds "special circumstances" which make the commutation advisable, it must then decide upon the amount of the lump-sum payment.

When an award is originally made the Industrial Commission must give notice to the parties and opportunity to be heard. On that hearing the commission determines liability. The amount of that liability may also be there determined. Thus in cases where the employee was killed the award may be, for example, $ 16 per week for 6 years or in partial permanent disability cases the award may be, for example, $ 16 per week for 150 weeks. In other cases such as determined total permanent disability or like the case at bar, the extent of the liability may not be fixed at the time liability itself is decided -- for example, the award may be a certain sum per week for life. Whether or not the extent of the liability is fixed at the time the liability itself is determined every periodical payment award is subject to conditions subsequent which may decrease it or wipe it out. Some of those conditions subsequent are:

In permanent and total disability cases: The death or the recovery of the employee.

In cases where the employee was killed: If the dependents were aliens and become non-residents, the amount of the award is cut to one-half (Sec. 42-1-68, U. C. A. 1943); death of all the dependents terminates the award (Section 42-1-69, U. C. A. 1943); remarriage of widow if she were sole dependent cuts the award to one third. Section 42-1-69, U. C. A. 1943.

In any case where an award was supplemented for a child or children the marriage, death, attainment of 18 years of age, or termination of dependency of any will reduce the award by the amount it was supplemented by reason of that dependent minor. Section 42-1-69, U. C. A. 1943, and Section 42-1-69.10, Laws of Utah 1945.

Before the advantage of prospective contingencies can be cut off, as is done by a commutation to a lump-sum payment, the parties are entitled to notice and opportunity to be heard. Determining the amount of the lump-sum commutation is not merely a matter of arithmetic with the aid of life expectancy table. All the facts bearing on the amount should be weighed and considered by the commission before it makes its determination. Only on a hearing after notice to the parties before the amount of the lump-sum is decided can it be said that all parties had their day in court. Only by the commission having a hearing and making a transcript of same can this court on review determine whether or not the commission acted arbitrarily in determining the amount of the lump-sum payment. Due process requires the Industrial Commission when making a commutation of periodic benefits to one or more lump-sum payments to give notice and hearing to the parties before it decides the amount of the lump-sum or lump-sums to be paid.

By what has been said it is not meant to imply that the employer or insurance carrier has a right to have the commutation take into account possible contingencies to lessen the lump-sum. Where the event is a certainty such as a child either becoming eighteen years of age or dying before it...