Kroemer v. Omaha Track Equip.
296 Neb. 972
Neb.2017Background
- Norman Kroemer, a Ribbon Weld employee, suffered a severe eye injury while using tools in Omaha Track Equipment (OTE)’s shop; Ribbon Weld paid workers’ compensation and obtained court-approved lump-sum benefits, leaving a subrogation interest of $207,555.01.
- Kroemer sued OTE and others for negligence; Kroemer and OTE mediated and agreed to a $150,000 settlement, which Ribbon Weld contested because it received nothing from the settlement.
- At the § 48-118.04 hearing, experts offered divergent views: some placed Kroemer’s damages well over $800,000 but also testified a jury might rule for defendants or assign high comparative negligence; risk of losing at trial was a key reason Kroemer accepted the $150,000.
- The district court approved the settlement as fair and reasonable, allocated $94,834.27 to Kroemer, $55,165.73 to attorneys/expenses, and $0 to Ribbon Weld; Ribbon Weld appealed.
- The Nebraska Supreme Court affirmed the fairness/reasonableness of the $150,000 settlement but reversed the allocation of $0 to Ribbon Weld, holding the court abused its discretion by denying any subrogation recovery and remanded for a fair and equitable distribution 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 | Settlement appropriate given high trial risk and potential for complete loss if jury found ≥50% comparative negligence | Settlement undervalued claim given damages estimates and likelihood of plaintiff verdict | Affirmed: settlement was fair and reasonable (no abuse of discretion) |
| Whether allocating $0 to Ribbon Weld was a "fair and equitable" distribution under § 48-118.04(2) | Employee argued needs and damages justify keeping net recovery | Employer argued statutory subrogation entitles it to reimbursement of compensation paid; $0 allocation ignores statute | Reversed: allocation of $0 was an abuse of discretion; remand to allocate a fair and equitable share to Ribbon Weld |
| Whether factors like insurer premiums and comparative risk may justify denying insurer/employer subrogation recovery | Not controlling; employee-focused equities matter | Court relied on premiums, comparative risk, and insurer’s nonparticipation to justify $0 allocation | Court held such factors are improper bases to wholly deny statutory subrogation; disapproved In re Estate of Evertson to that extent |
| Standard of review applicable to settlement approval and allocation | N/A — parties disputed outcomes under statutory scheme | N/A — court must apply independent statutory interpretation and defer to district court discretion unless abused | Court: statutory interpretation reviewed de novo; allocation reviewed for abuse of discretion |
Key Cases Cited
- Burns v. Nielsen, 273 Neb. 724 (explaining employer statutory subrogation and standards for allocation under § 48-118.04)
- 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 "made whole" rule as required allocation approach)
- In re Estate of Evertson, 23 Neb. App. 734 (Court of Appeals decision disapproved in part for considering premiums and comparative risk when allocating zero to insurer)