Kroemer v. Omaha Track Equip.
296 Neb. 972
| Neb. | 2017Background
- Norman Kroemer, an employee of Ribbon Weld, suffered a severe eye injury while using tools in Omaha Track Equipment’s (OTE) shop; Ribbon Weld paid workers’ compensation and obtained approval of an $80,000 lump-sum award, leaving Ribbon Weld with a $207,555.01 subrogation interest.
- Kroemer sued OTE (and others) for negligence; Kroemer and OTE negotiated a $150,000 third‑party settlement which Ribbon Weld opposed and did not fund.
- At a § 48-118.04 hearing, experts differed sharply on liability and damages: projected verdict values ranged from ~$500,000 to over $1,000,000, but some experts estimated a high chance defendants would prevail due to Kroemer’s comparative fault.
- The district court found the $150,000 settlement fair and reasonable, awarded Kroemer $94,834.27 net (after $55,165.73 in attorney fees/expenses), and allocated $0 to Ribbon Weld.
- Ribbon Weld appealed the zero allocation, arguing its statutory subrogation right under Neb. Rev. Stat. § 48-118 was improperly ignored; the Nebraska Supreme Court affirmed settlement fairness but reversed the $0 allocation and remanded for a fair and equitable split of the remaining $94,834.27.
Issues
| Issue | Plaintiff's Argument (Kroemer) | Defendant's Argument (Ribbon Weld) | Held |
|---|---|---|---|
| Was the $150,000 third‑party settlement fair and reasonable under § 48‑118.04(1)? | Settlement was reasonable given high litigation risk and chance of receiving nothing at trial. | Settlement undervalued case given severe damages and prospects of plaintiff verdict. | Court: Affirmed — settlement was fair and reasonable. |
| Was allocating $0 of the settlement proceeds to Ribbon Weld fair and equitable under § 48‑118.04(2)? | Allocation to Kroemer was appropriate given his damages and circumstances. | Zero allocation violated Ribbon Weld’s statutory subrogation right; some recovery must go to employer/insurer. | Court: Reversed — allocation of $0 was untenable; remand for fair/equitable distribution. |
| Are insurer premium payments and comparative risk proper factors in allocation? | (Implied) Such practical considerations support larger employee share. | (Implied) District court considered these factors to justify zero allocation. | Court: Premiums and insurer risk are not appropriate factors; rejecting In re Estate of Evertson to that extent. |
| Is subrogation under § 48‑118 based in statute or equity, and must employee be "made whole" before employer recovers? | (Implied) Court should consider equitable factors including employee needs. | Ribbon Weld insists on statutory subrogation rights to reimbursement irrespective of "made whole" status. | Court: Subrogation is statutory (not equitable); employee need not be made whole before employer recovers; distribution must be fair to both. |
Key Cases Cited
- Burns v. Nielsen, 273 Neb. 724, 732 N.W.2d 640 (statutory scheme and allocation principles under Nebraska Workers’ Compensation Act)
- Bacon v. DBI/SALA, 284 Neb. 579, 822 N.W.2d 14 (employer’s subrogation rights construed liberally; policy favoring employer recovery)
- Turco v. Schuning, 271 Neb. 770, 716 N.W.2d 415 (rejecting "made whole" requirement for subrogation recovery)
- Turney v. Werner Enters., 260 Neb. 440, 618 N.W.2d 437 (historical context on pre-1994 employer-first subrogation)
- Travelers Indem. Co. v. International Nutrition, 273 Neb. 943, 734 N.W.2d 719 (employer insurance coverage obligations under the Act)
- In re Estate of Evertson, 23 Neb. App. 734, 876 N.W.2d 678 (Court of Appeals allocation of zero to carrier; disapproved in part by this Court)