Kroemer v. Omaha Track Equip.
296 Neb. 972
| Neb. | 2017Background
- Norman Kroemer, an employee of Ribbon Weld, suffered a severe eye injury while using a grinder in Omaha Track Equipment (OTE)’s shop; Ribbon Weld paid workers’ compensation and obtained a subrogation lien of $207,555.01.
- Kroemer settled his workers’ compensation claim with Ribbon Weld for $80,000 (approved by the Workers’ Compensation Court) and later sued OTE and others for negligence.
- Kroemer and OTE negotiated a $150,000 settlement of the third-party tort claim; Ribbon Weld contested the settlement and sought repayment of its subrogation interest.
- The district court held a § 48-118.04 hearing, found the $150,000 settlement fair and reasonable, and allocated $94,834.27 to Kroemer, $55,165.73 to attorneys/expenses, and $0 to Ribbon Weld.
- Ribbon Weld appealed the zero allocation; the Nebraska Supreme Court affirmed the settlement’s fairness but reversed the allocation of $0 to Ribbon Weld and remanded for a fair and equitable division of the remaining $94,834.27.
Issues
| Issue | Plaintiff's Argument (Kroemer) | Defendant's Argument (Ribbon Weld) | Held |
|---|---|---|---|
| Whether the $150,000 third-party settlement was fair and reasonable under § 48-118.04(1) | Settlement reasonable given high trial risk and comparative negligence exposure | Settlement undervalued given strong damages and likelihood of plaintiff verdict | Court: Settlement was fair and reasonable (no abuse of discretion) |
| Whether allocating $0 to the employer/insurer (Ribbon Weld) was a fair and equitable division under § 48-118.04(2) | Employee should retain substantial share because of high damages and personal loss; attorneys incurred costs securing settlement | Employer entitled to portion to reimburse workers’ compensation benefits paid and protect statutory subrogation right | Court: Allocation of $0 was an abuse of discretion; reversed and remanded for a fair and equitable distribution |
| Proper factors for distribution of third-party recovery under § 48-118.04(2) | Focus on employee’s damages and litigation risk; consider contributions to settlement | Court must respect statutory subrogation and weigh employer’s reimbursement right | Court: Distribution must be fair to both employee and employer; courts must not consider insurer premium payments or comparative insurer/employee risk to justify $0 allocation |
| Precedential effect of In re Estate of Evertson (Court of Appeals) on allocations | (implicit) lower-court reliance supported zero allocation in some cases | Ribbon Weld relied on precedent allowing zero allocation where insurer bore no settlement cost | Court: Disapproved In re Estate of Evertson to extent it considered premium payment and comparative risk to justify zero allocation |
Key Cases Cited
- Burns v. Nielsen, 273 Neb. 724 (explaining § 48-118 subrogation and deference to statutory subrogation rights)
- Bacon v. DBI/SALA, 284 Neb. 579 (favoring liberal construction of employer’s subrogation rights under the Act)
- Turco v. Schuning, 271 Neb. 770 (rejecting requirement that employee be made whole before subrogation recovery)
- Turney v. Werner Enters., 260 Neb. 440 (background on pre-1994 dollar-for-dollar subrogation approach)
- Travelers Indemnity Co. v. International Nutrition, 273 Neb. 943 (noting employers must generally carry workers’ compensation insurance)
- In re Estate of Evertson, 23 Neb. App. 734 (Court of Appeals allocation of zero to insurer; disapproved in part by this Court)
- Sterner v. American Family Ins. Co., 19 Neb. App. 339 (discussing allocation and made-whole concepts)