Kroemer v. Omaha Track Equip.
296 Neb. 972
| Neb. | 2017Background
- Norman Kroemer, a Ribbon Weld employee, suffered a severe eye injury while using Omaha Track Equipment (OTE) tools in OTE’s shop; Ribbon Weld paid workers’ compensation and obtained court-approved lump-sum benefits, leaving a $207,555.01 subrogation interest.
- Kroemer sued OTE (and related entities) for negligence; Kroemer and OTE mediated and agreed to a $150,000 settlement, which Ribbon Weld opposed and did not fund.
- The district court held a § 48-118.04 hearing, received expert testimony about liability, damages (experts valued the claim roughly $850,000–$1.25M), and comparative negligence risk; the court found the $150,000 settlement fair and reasonable.
- The court allocated the settlement as $94,834.27 to Kroemer, $55,165.73 to attorneys/expenses, and $0 to Ribbon Weld, prompting Ribbon Weld’s appeal.
- The Nebraska Supreme Court affirmed the fairness of the settlement amount but reversed the zero allocation to Ribbon Weld, holding the court must make a fair and equitable distribution that recognizes the employer’s statutory subrogation right.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the $150,000 third-party settlement was fair and reasonable under § 48-118.04(1) | Kroemer: settlement reasonable given high risk of losing at trial due to comparative negligence | Ribbon Weld: settlement inadequate compared to damages and case value | Court: Affirmed — settlement was fair and reasonable given substantial liability risk and jury unpredictability |
| Whether allocating $0 to employer/insurer (Ribbon Weld) was fair and equitable under § 48-118.04(2) | Kroemer: employer need not receive proceeds; emphasis on employee’s substantial uncompensated loss | Ribbon Weld: entitled to reimbursement of compensation paid (statutory subrogation) | Court: Reversed — allocation of $0 was legally untenable; employer entitled to some portion of proceeds |
| Whether insurer premiums and comparative risk may justify denying subrogation recovery | Kroemer: courts may consider equities like premiums and insurer’s risk in distribution | Ribbon Weld: premiums and risk are irrelevant to statutory subrogation right | Court: Rejected using premiums or insurer-risk as basis to deny recovery; disapproved In re Estate of Evertson on that point |
| Standard of review for settlement fairness and allocation | N/A (procedural) | N/A | Court: fairness/reasonableness reviewed for abuse of discretion (affirmed); allocation reviewed for abuse of discretion but must comply with statutory subrogation framework (reversed and remanded with direction) |
Key Cases Cited
- Burns v. Nielsen, 273 Neb. 724 (statutory background on § 48-118 and distribution discretion)
- Bacon v. DBI/SALA, 284 Neb. 579 (discussing liberal construction favoring employer subrogation rights)
- Turco v. Schuning, 271 Neb. 770 (rejecting requirement that employee be made whole before subrogation recovery)
- Turney v. Werner Enters., 260 Neb. 440 (prior approach to employer dollar-for-dollar subrogation and legislative change)
- In re Estate of Evertson, 23 Neb. App. 734 (Court of Appeals decision allocating $0 to carrier; disapproved by Nebraska Supreme Court to extent it relied on premiums/comparative risk)