Zurich American Ins. Co. v. Bjelland

• Decision Date: 02 February 2006
• Docket Number: No. A04-709.,A04-709.
• Citation: 710 N.W.2d 64
• Parties: ZURICH AMERICAN INSURANCE COMPANY, Respondent, v. Donald A. BJELLAND, Appellant.
• Court: Minnesota Supreme Court

Page 64

710 N.W.2d 64

ZURICH AMERICAN INSURANCE COMPANY, Respondent, v. Donald A. BJELLAND, Appellant.

No. A04-709.

Supreme Court of Minnesota.

February 2, 2006.

Rehearing Denied March 6, 2006.

Michael D. Barrett, Andrea E. Reisbord, Cousineau, McGuire & Anderson, Chartered, Minneapolis, MN, for Bjelland.

Scott P. Drawe, Drawe & Heisick, Minneapolis, MN, for Zurich American Ins. Co.

Heard, considered, and decided by the court en banc.

OPINION

MEYER, Justice.

In this appeal, we are called on to determine the meaning of Minn.Stat. § 176.061 (2004), the third-party liability section of the Workers' Compensation Act (the Act), as amended in 2000. The district court concluded that a workers' compensation insurer's recovery in a subrogation action against a third-party tortfeasor was measured by the employee's damages recoverable in the tort action. The court then adopted the parties' stipulation, agreed upon to facilitate appeal, that the reasonable value of the wrongful death damages was less than the reasonable value of the workers' compensation benefits paid or payable. On appeal, the court of appeals determined that the 2000 amendments allow the workers' compensation subrogee "unlimited recovery of provable damages." Zurich Am. Ins. Co. v. Bjelland, 690 N.W.2d 352, 356 (Minn.App.2004). Because we conclude that the 2000 amendments did not change the fundamental structure of third-party actions under the Act and that the employer's claim for reimbursement remains subrogated to the employee's claim for tort damages, we reverse.

The parties stipulated to the material facts in this case. On November 6, 2001, while driving in the course and scope of his employment with Associated Milk Producers, Inc., Eugene Bodeker was killed in a two-vehicle traffic accident. Appellant Donald Bjelland, driver of the other vehicle, ran a stop sign, striking Bodeker's vehicle.

Angeline Bodeker, Eugene Bodeker's wife, entered negotiations with Associated Milk Producers' insurer, respondent Zurich American Insurance Company, for workers' compensation benefits. Under the Act, a surviving spouse with no dependent children receives dependency benefits at 50 percent of the weekly wage of the employee at the time of the fatal injury for a period of 10 years. Minn.Stat. § 176.111, subd. 6 (2004). Zurich settled the dependency benefits claim for $92,382.95. Zurich also paid funeral benefits of $8,255.83 and medical benefits of $3,680.22, for a total settlement of the workers' compensation claim of $104,319.

Angeline Bodeker then brought a suit against Bjelland under the Wrongful Death Act. Before trial, she and Bjelland entered into what is known as a Naig settlement. Such a settlement resolves the suit brought by an employee (or his dependents if the work accident is fatal), against a third party for damages such as pain and suffering or loss of consortium that are not compensable under workers' compensation. Jackson v. Zurich Am. Ins. Co., 542 N.W.2d 621, 622 (Minn.1996) (citing Naig v. Bloomington Sanitation, 258 N.W.2d 891, 893 (Minn.1977)).¹ When an employee (or an employee's dependents) enters into a Naig settlement with a third-party tortfeasor, Minnesota law allows the employer or the employer's insurer to move ahead with the suit against a third-party tortfeasor to recover benefits that it has paid to the employee as a result of the tortfeasor's negligence. Minn.Stat. § 176.061, subd. 5(a); Jackson, 542 N.W.2d at 623. An employee who enters into a Naig settlement thereby relinquishes the statutory right to damages that are ultimately recovered from the third party for wage loss and other compensation provided by the employer under workers' compensation law. Naig v. Bloomington Sanitation, 258 N.W.2d 891, 894 (Minn. 1977).

Zurich commenced a subrogation action to recover the workers' compensation benefits paid and payable. On cross-motions for summary judgment on the measure of damages, Zurich argued that under the 2000 amendments to the third-party liability section of the Act, Bjelland should reimburse Zurich for the full amount of benefits paid. Four subdivisions of the section were supplemented with similar language in 2000. Act of April 27, 2000, ch. 447, §§ 4-7, 2000 Minn. Laws 1042, 1046-49 (codified at Minn.Stat. § 176.061, subds. 3, 5, 7, 10). Relevant to Zurich's argument, subdivision 5 was amended to read, in part:

If the injured employee or the employee's dependents or any party on their behalf receives benefits from the employer or the special compensation fund or institutes proceedings to recover benefits or accepts from the employer or the special compensation fund any payment on account of the benefits, the employer or the special compensation fund is subrogated to the rights of the employee or the employee's dependents or has a right of indemnity against a third party regardless of whether such benefits are recoverable by the employee or the employee's dependents at common law or by statute.

Id. § 5, 2000 Minn. Laws at 1047-48 (codified at Minn.Stat. § 176.061, subd. 5) (amendment in italics).²

The district court denied Zurich's cross-motion for partial summary judgment seeking a determination that the proper measure of damages is the full amount of benefits Zurich had paid to Angeline Bodeker. The court simultaneously granted Bjelland's motion for partial summary judgment entitling him to a jury determination of his liability and damages. The court concluded that the 2000 amendments did not set the amount recoverable by Zurich at the total of benefits paid and payable, and that the amendments did not change the fundamental nature of the employer's claim as being subrogated to the employee's (that is, the amendments did not change the fact that the employer stands in the shoes of the employee to pursue a claim, even if the employee has removed himself from the suit by virtue of a Naig settlement).

To facilitate appeal, Bjelland and Zurich stipulated that: (1) if tried to a jury, the jury would find Bjelland was negligent and his negligence was a direct cause of the accident; and (2) if tried to a jury, the jury would find fair and reasonable wrongful death damages for medical expenses, funeral expenses, and loss of financial support to Angeline Bodeker in the amount of $48,336.05; and (3) $104,319 was the fair and reasonable value of workers' compensation benefits.³

The district court entered judgment for Zurich for $48,336.05, plus costs and disbursements, which was premised on the court's determination that the amount of Zurich's recovery is "limited to the amount of damages recoverable under the Wrongful Death Act." Zurich appealed to the court of appeals.

The court of appeals ruled that under the 2000 amendments to section 176.061 an insurer may recover from a third-party tortfeasor the full amount of workers' compensation benefits paid or payable. Zurich, 690 N.W.2d at 357. It based its ruling on the presumption that statutory amendments are meant to change laws. Id. at 356. The court determined that "either through the principle of statutory subrogation as defined by the workers' compensation amendments or the principle of indemnity, Zurich is entitled to recover, without limit, such damages as it may prove it is entitled to." Id. The court went on to state that the measure of Zurich's recovery was the full amount of workers' compensation benefits paid, $104,319. Id. at 357. We granted review.

The sole issue presented on appeal is the interpretation of the third-party liability provisions of the Act in the wake of amendments made in 2000. We interpret statutes and case law de novo. Am. Nat'l Gen. Ins. Co. v. Solum, 641 N.W.2d 891, 895 (Minn.2002).

The first inquiry in statutory interpretation is whether the law is ambiguous. See Minn.Stat. § 645.16 (2004). If the words are clear and unambiguous, "the letter of the law shall not be disregarded under the pretext of pursuing the spirit." Id. Zurich argues the statute unambiguously allows a workers' compensation insurer the right to recover from a third-party tortfeasor the full amount of benefits paid or payable to the employee and the employer's right of recovery is no longer limited to the common law or wrongful death measure of damages. It maintains that the amendatory words of Minn.Stat. § 176.061 — "regardless of whether such benefits are recoverable by the employee or the employee's dependents at common law or by statute"—enlarge the employer's right to recover from a third-party tortfeasor.

Bjelland also urges us to conclude that the statutory changes are unambiguous but argues a contrary meaning to the changes: the amendatory language does not enlarge the employer's right to recover from the third-party tortfeasor but rather, it expands the definition of what types of benefits are eligible to be recovered. Bjelland points to the unchanged portions of the statute in support of his position that the tortfeasor's liability remains essentially one of subrogation. As both parties' interpretations are plausible, we conclude the statute is not clear and free from all ambiguity.

If the words of a statute are not explicit, we interpret the statute's meaning by considering the intent of the legislature in drafting the law. Minn.Stat. § 645.16. We may rely on certain presumptions in ascertaining legislative intent. The first presumption we rely on in this case is that we presume that "the legislature intends the entire statute to be effective and certain." Minn.Stat. § 645.17(2) (2004). Further, we have held that the "provisions of Minnesota's workers' compensation statute should not be construed in isolation, but must be considered in light of related provisions of the statute." Conwed Corp. v. Union Carbide Chems. & Plastics Co., 634 N.W.2d 401, 406 (Minn.2001) (citing Allstate Ins. Co. v. Eagle-Picher Indus., Inc., 410 N.W.2d 324, 327 (Minn.1987)). There are two primary considerations in discerning legislative intent in this case: the...