Ward v. Fayetteville City Hosp., CA

• Decision Date: 24 May 1989
• Docket Number: No. CA,CA
• Citation: 28 Ark.App. 73,770 S.W.2d 668
• Parties: James F. WARD, Appellant, v. FAYETTEVILLE CITY HOSPITAL and Second Injury Fund, Appellees. 88-288.
• Court: Arkansas Court of Appeals

Page 668

770 S.W.2d 668

28 Ark.App. 73

James F. WARD, Appellant, v. FAYETTEVILLE CITY HOSPITAL and Second Injury Fund, Appellees.

No. CA 88-288.

Court of Appeals of Arkansas En Banc.

May 24, 1989.

Rehearing Denied June 21, 1989.

Jay N. Tolley, Fayetteville, for appellant.

David L. Pake, Little Rock, for appellees.

COOPER, Judge.

The appellant was injured on March 22, 1985, while employed by the appellee Fayetteville City Hospital. He subsequently suffered two additional injuries on February 6, 1986, and September 22, 1986. On March 20, 1987, the appellant entered into a joint petition settlement with the employer and its insurer. Prior to the hearing on the settlement, the appellant requested that the Second Injury Fund be joined as a party. The appellant was notified that settling with the employer would be a final ajudication of all the issues and would affect the rights and obligations of all the parties.

At the conclusion of the hearing the administrative law judge approved the joint petition. The Fund was not present at the hearing or included as a party in the settlement. The appellant then requested a hearing to determine the liability of the Second Injury Fund, which was denied based on our decision in Sayre v. State of Arkansas Second Injury Fund, 12 Ark.App. 238, 674 S.W.2d 941 (1984). The administrative law judge stated that he lacked jurisdiction to set further hearings or enter additional orders. The appellant appealed to the full Commission, and the Fund filed a motion to dismiss which the Commission granted. On appeal the only issue is whether the appellant is precluded from proceeding against the Second Injury Fund after entering into the joint petition settlement with the employer and its insurance carrier. We find that he is precluded and affirm.

The Commission, in dismissing the appellant's claim, relied on Sayre, supra, where we said that Ark.Code Ann. § 11-9-805 (1987) clearly and unambiguously prohibited the claimant from proceeding against the Second Injury Fund because the joint petition eliminated the Commission's jurisdiction over the claim. Section 11-9-805 states in pertinent part:

(b) If the commission decides it is for the best interests of the claimant that a final award be made, it may order an award that shall be final as to the rights of all parties to the petition. Thereafter the commission shall not have jurisdiction over any claim for the same injury or any results arising from it.

[emphasis supplied.]

We have, as suggested by the appellant, reexamined our position as stated in Sayre. We have surveyed cases from other jurisdictions, and find several differing views. Several of the cases have applied the doctrine of res judicata and held that since the Funds involved were not parties to the settlements they are excluded from the effects of res judicata and the claimants could proceed against them. Bailey v. Industrial Commission, 137 Ill.App.3d 366, 91 Ill.Dec. 817, 484 N.E.2d 376 (1985); Subsequent Injury Trust Fund v. Alterman Foods, Inc., 162 Ga.App. 428, 291 S.E.2d 758 (1982). Other courts have denied the claimants the right to proceed against the funds because the Funds' liabilities were derivative of the employers' liabilities, and thus the joint petition agreements, which neither admitted or denied liability, precluded any actions against the Funds. In other words, unless there is a determination that the employer is liable, there is no right to proceed against the Funds. Arduser v. Daniel International Corp., 7 Kan.App.2d 225, 640 P.2d 329 (1982); White v. Weinberger Builders, Inc., 49 Mich.App. 430, 212 N.W.2d 307 (1973). In specifically rejecting the derivative theory, New Mexico permits claimants to proceed against its Subsequent Injury Fund after settling with the employer based on the coexistence of liability with the employer. Romero v. Cotton Butane Co., Inc., 105 N.M. 73, 728 P.2d 483 (1986). In Kentucky, a claimant cannot proceed against its Special Fund because the agreement is a final award and the Fund can only be joined before the rendition of a final award. Yocom v. Jordan Auto Parts Company, 521 S.W.2d 519 (Ky.App.1975).

In none of the cases our research has found have we discovered a statute similar to § 11-9-805. However, we remain convinced that the settlement precludes proceeding against the Fund because of the clear language in that statute. We do not at this time need to apply any of the various principles used in other jurisdictions because the Commission is clearly divested of jurisdiction at the time the settlement is entered into. Furthermore, the legislature has met several times since our decision in Sayre and they have not modified or adjusted the statute in response, thus giving rise to the implication that our interpretation and application of the statute was in keeping with legislative intent on the issue. The statute was adopted in 1987 without modification when the Arkansas statutes were revised. The adoption or re-enactment of a statute that has received judicial construction adopts the construction given it. McKenzie v. State, 11 Ark. 594 (1851); see Appleby Road Street Improvement District v. Powell, 282 Ark. 398, 669 S.W.2d 3 (1984). Therefore, we cannot agree with the appellant's assertion that the legislature did not intend a settlement to preclude subsequent proceedings against the Fund.

The Fund also argues that the appellant waived his right to proceed against it. At the hearing on the joint settlement petition the appellant testified that he understood that if the case was ended against the employer and its insurer it would also terminate his rights to proceed against the Second Injury Fund. He also stated in response to questioning by the administrative law judge that he understood the settlement would end his claims for all purposes. The Commission found that by making these statements the appellant had waived his right to proceed against the Fund. We do not find it necessary to address this issue in light of our reaffirmation of the holding in Sayre, where the claimant clearly and unambiguously attempted to preserve her right to proceed against the Fund.

The appellant also asserts that that the Second Injury Fund is similar to a third-party tortfeasor and not permitting him to proceed against the Fund is similar to allowing him to settle around a third-party tortfeasor. The appellant compares the Fund to a workers' compensation insurance carrier who has a potential lien against a third-party tortfeasor. We disagree.

As the appellee points, out a third-party tortfeasor is not subject to the Workers' Compensation Act as is the Fund. For that reason the insurance carrier can settle the claim with the claimant and reserve its right to proceed against the tortfeasor. The purpose of the Second Injury Fund is to pay a portion of the obligation of the employer in accordance with the Workers' Compensation Act, and benefits both the employer and its insurance carrier. See Second Injury Fund v. Mid-State Construction, 16 Ark.App. 169, 698 S.W.2d 804 (1985). In the case of a third-party tortfeasor, the claimant may have two causes of action; he can proceed against the tortfeasor in a civil case and receive workers' compensation benefits. However, in the case of the Second Injury Fund, the claimant can only proceed before the Workers' Compensation Commission. We concur with the rationale argued by the Fund and agree that the two situations are not similar.

Affirmed.

MAYFIELD and ROGERS, JJ., concur.

MAYFIELD, Judge, concurring.

I concur in the majority opinion. The only real reason the appellant gives for faulting the provision of the Workers' Compensation Law giving finality to a joint petition settlement is "without giving the claimant the opportunity to have a 'hammer' over the Second Injury Fund, it can delay and have a potential veto on any possible settlement." Whatever that means, I see nothing in the Act to indicate that a claimant has a right to pursue a claim for an injury after the Commission has approved a joint petition settlement for that injury. Ark.Code Ann. § 11-9-805 (1987) clearly leaves the approval of the settlement to the discretion of the Commission except that it must find the settlement to be in the best interest of the claimant in order to approve it. And section 11-9-805(d) even provides that "no appeal shall lie from an order or award allowing or denying a joint petition."

Pursuant to Amendment 26 of the Arkansas Constitution, our first workers' compensation law was enacted by the General Assembly as Act 319 of 1939. Section 19 of that Act did not contain a provision for a joint petition settlement. However, Initiated Act No. 4, adopted by the people at the General Election in November of 1948, see Acts of Arkansas 1949, page 1420, amended section 19 of the 1939 Act to authorize a joint petition settlement. See Ark.Stat.Ann. § 81-1319(l ) (Supp.1949). That provision has remained unchanged to the present date, and it clearly provides that Commission approval of a joint petition settlement eliminates the Commission's jurisdiction over "any claim for the same injury or any results arising from it." Furthermore, we have said that while as a general rule the law favors compromise settlements, that rule does not apply to joint petition settlements. See Odom v. Tosco Corporation, 12 Ark.App. 196, 199, 672 S.W.2d 915 (1984). So, I am not persuaded that we should help the claimant to "have a hammer" over the Second Injury Fund in order to force it to make a joint petition settlement.

In addition to the statutory finality given to joint petition settlements, I would affirm the Commission's decision in this case for another reason. We stated a general rule in Farmers and Merchant's Bank v. Deason, 25 Ark.App. 152, 155, 752 S.W.2d 777 (1988), that "we do not address issues raised for the first time on appeal," and cited for authority C & L Trucking, Inc. v. Allen, 285 Ark. 243, 686...