Waith v. North Dakota Workmen's Compensation Bureau, 11426

• Decision Date: 24 June 1987
• Docket Number: No. 11426,11426
• Citation: 409 N.W.2d 94
• Parties: 40 Ed. Law Rep. 997 Dorothy A. WAITH, Frances Riskey, Gloria Rhoads, Margaret Kiel, Claimants and Appellants, and Jackie Souder, Ethel Kouba, Sylvia Linstad, Diane Brenno, Glenice Friebohl, Judy Hegg, Vedrenia Kruse, and Janice Miller, Claimants, v. NORTH DAKOTA WORKMEN'S COMPENSATION BUREAU, Respondent and Appellee. Civ.
• Court: North Dakota Supreme Court

Page 94

409 N.W.2d 94

40 Ed. Law Rep. 997

Dorothy A. WAITH, Frances Riskey, Gloria Rhoads, Margaret

Kiel, Claimants and Appellants,

and

Jackie Souder, Ethel Kouba, Sylvia Linstad, Diane Brenno, Glenice Friebohl, Judy Hegg, Vedrenia Kruse, and Janice Miller, Claimants, v. NORTH DAKOTA WORKMEN'S COMPENSATION BUREAU, Respondent and Appellee.

Civ. No. 11426.

Supreme Court of North Dakota.

June 24, 1987.

Nelson, Kalash & Molenaar, Grand Forks, for claimant and appellant Dorothy A. Waith. No Appearance.

Cynthia Tredwell, Third-Year Law Student (argued) and Marjorie M. Young, of Degnan, McElroy, Lamb, Camrud, Maddock & Olson, Grand Forks, for claimants and appellants Frances Riskey, Gloria Rhoads and Margaret Kiel.

Clare Hochhalter (argued) and Dean J. Haas, Asst. Attys. Gen., North Dakota Workmen's Compensation Bureau, Bismarck, for respondent and appellee.

VANDE WALLE, Justice.

The plaintiffs (claimants) appealed from a district court judgment upholding a determination by the North Dakota Workmen's Compensation Bureau (the Bureau) regarding the Bureau's subrogation rights against the claimants. We affirm.

On May 15, 1984, the claimants were injured in a two-vehicle collision involving a Central Valley School District (Central) bus and a University of North Dakota (UND) van. At the time this accident occurred the claimants were employed by UND as food-service workers and were returning to Grand Forks in the van from a food service workshop which was within the scope of their employment with UND.

The claimants filed an action against Central. The claimants also employed an attorney to determine on an individual and total basis the general and special damages incurred by them. He determined that the damages incurred by the claimants totaled $704,757. However, Central, a political subdivision, was subject to a maximum statutory liability limit of $500,000 under the provisions of Section 32-12.1-03, N.D.C.C. For that reason the parties entered into a stipulated agreement regarding liability and damages upon which the district court entered an order holding Central liable to the claimants for total damages of $495,338.01. The order further provided that the disbursement of funds was to be prorated among the claimants in accordance with the attorney's assessment of the damages incurred by each claimant. It is undisputed that the damage award approved by the court resulted in the claimants' receiving approximately 68 percent of the total damages actually incurred by them. The parties also agree that the claimants agreed to accept an award of partial damages, rather than litigating for full damages, because of the $500,000 statutory limitation upon Central's liability.

As a result of the injuries sustained in the collision the claimants received benefits from the Bureau. Following the claimants' recovery of damages against Central, the Bureau determined that it was entitled to reimbursement of benefits from the claimants of an amount up to 50 percent of the damages recovered by the claimants from Central. The claimants appealed the Bureau's determination to the district court, asserting that the Bureau's reimbursement should be reduced to 68 percent of the benefits disbursed by the Bureau to the claimants, reflecting the percentage recovery by the claimants against Central of the total damages incurred by them. The district court entered an order upholding the Bureau's determination from which the claimants have filed this appeal.

The sole issue on appeal is whether the Bureau should receive a prorated subrogation interest when a benefit recipient recovers against a third-party tortfeasor less than the total damages sustained by the recipient because the tortfeasor is protected by a statutory maximum liability limit.

The Bureau's subrogation rights are authorized by Section 65-01-09, N.D.C.C., which provides in relevant part:

"The fund shall be subrogated to the rights of the injured employee or his dependents to the extent of fifty percent of the damages recovered up to a maximum of the total amount it has paid or would otherwise pay in the future in compensation and benefits for the injured employee. The bureau's subrogation interest may not be reduced by settlement, compromise, or judgment." [Emphasis added.]

The Bureau determined that in accordance with the foregoing statutory provision it was entitled to reimbursement of all benefits paid by it to the claimants up to 50 percent of the damages recovered by the claimants from Central. The claimants assert that because the $495,338.01 recovery for damage represented 68 percent of the total damage sustained by them, the Bureau is entitled to reimbursement for only 68 percent of the benefits it paid to the claimants up to a maximum reimbursement of 68 percent of 50 percent of the $495,338.01 recovery. In effect, the claimants contend that the Bureau's subrogation interest must be proportionately reduced to the same percentage as is representative of the claimants' recovered damages to the total damage incurred.

We believe the disposition of this case is controlled by the rationale of our decisions in State by Workmen's Compensation Bureau v. Clary, 389 N.W.2d 347 (N.D.1986), and Kelsh v. North Dakota Workmen's Compensation Bureau, 388 N.W.2d 870 (N.D.1986), which support the Bureau's determination. In both of those cases the benefit recipients asserted that the Bureau's subrogation interest against the recipients' recovery of damages from a third-party tortfeasor should be reduced by the percentage of negligence attributed to the recipients which resulted in a corresponding reduction of damages recovered. We noted in those decisions that when the damages recovered by a recipient are reduced by the percentage of negligence attributable to the recipient, the Bureau's reimbursement, which is based upon damages recovered, is correspondingly reduced. We rejected, however, the contention that the plain meaning of Section 65-01-09, N.D.C.C., required or permitted a further reduction of the Bureau's subrogation interest under such circumstances.

The claimants assert that this case is distinguishable from the facts in Clary and Kelsh because in this case the claimants received a reduced recovery through application of a statutory liability limit protecting the defendant whereas the reduced recoveries in those cases were attributable to the recipients' contributory negligence. While the factual distinction is correctly stated by the claimants, we do not agree that the distinction requires a different application of Section 65-01-09, N.D.C.C., or a different result in this case. As we indicated in Clary, the statute unambiguously provides that the Bureau's subrogation rights apply "to the extent of fifty percent of the damages recovered." The provision neither permits nor requires the Bureau's subrogation interest to be further reduced when the recipient's recovery from the third-party tortfeasor does not constitute a total recovery of the damages sustained by the recipient. The reason that a recipient secures only a partial recovery against the third-party tortfeasor is immaterial to the application of the Bureau's subrogation rights under Section 65-01-09, N.D.C.C.

The concurring opinion criticizes the use of the term "rights" when referring to the subrogation interest of the Bureau. The statutes, as the concurring opinion notes, use the term "interest" but we, several years ago, characterized the subrogation "interests" of the Bureau as "rights." E.g., Ness v. St. Aloisius Hospital, 313 N.W.2d 781 (N.D.1981). More significantly however, the concurring opinion suggests that by the use of the term "subrogation" the Legislature intended to incorporate an entire panoply of equitable principles. For the most part the quotations taken from the cases cited in the concurring opinion refer to the common-law equitable doctrine of subrogation. But there is nothing in our past decisions which support that concept. To the contrary, this court long ago indicated that the rights conferred on employers and employees under workmen's compensation statutes are purely statutory and that while the provisions of the Act are to be construed liberally in favor of the worker, the intent of the statute must be carried out. E.g., Breitwieser v. State, 62 N.W.2d 900 (N.D.1954).

In construing the subrogation clause of what is now Section 65-01-09, N.D.C.C., this court, in 1928, stated:

"If compensation is claimed and awarded, the North Dakota workmen's compensation fund is subrogated to the rights of the injured employee or his dependents to recover against that person. The statute is not ambiguous. It does not say that the workmen's compensation fund shall have the right to recover, it does not extend the right to both parties, but it says the workmen's compensation fund shall be subrogated to the rights of the injured employee, and it follows that all the rights which the injured employee had to bring such action are in law conveyed to the workmen's compensation fund. 'Subrogation in its broadest sense is the substitution of one person in place of another with reference to a lawful claim of right.' 25 R.C.L. 1311." Tandsetter v. Oscarson, 56 N.D. 392, 217 N.W. 660, 661 (1928).

Although the statute was amended to permit the employee or the Bureau to bring actions, there is no indication that the Legislature intended to alter the statutory concept of the Bureau's right of subrogation except as specifically provided therein. E.g., Blaskowski v. North Dakota Workmen's Compensation Bureau, 380 N.W.2d 333, 335 (N.D.1986) [In 1965 the Legislature reduced the Bureau's right to subrogation of third-party recoveries from one hundred percent to fifty percent apparently to induce employees to bring actions against third-parties who were at fault.] Thus this court in the past refused to restrict the Bureau's right to subrogation to instances where the employer is without fault; although...