Miller Truck Lines, LLC. v. Central Refrigerated Service, Inc.
2011 U.S. Dist. LEXIS 28544
| W.D. Ky. | 2011Background
- This action arises from a March 18, 2008, collision between two tractor trailers in Kentucky, killing Thompson, an employee of Miller Truck Lines.
- Biebel, driving for CRS, was negligent and the sole cause of Thompson’s death; Miller and CRS dispute damages arising from subrogation.
- Thompson’s estate settled with Miller and CRS under a Confidential Mediation Agreement (July 28, 2008) agreeing Miller would receive $439,441.83 and CRS a significant amount, with the agreement approving by the Oklahoma Workers’ Compensation Court.
- The mediation agreement expressly reserved Thompson’s and Miller’s claims against CRS, leaving CRS liable to Miller for the subrogation amount.
- The core dispute is whether Thompson’s attorney fees ($243,627.85) can be set off against Miller’s subrogation recovery, potentially reducing Miller’s reimbursement to zero.
- The court must decide choice-of-law questions and the availability of a setoff under Oklahoma and Kentucky law.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Which state's law governs Miller’s subrogation claim | Miller asserts Oklahoma law applies as the state where workers’ comp benefits were distributed | CRS argues Kentucky law should apply due to injury situs and connection | Oklahoma law applies to subrogation claim |
| Is a setoff for Thompson’s legal fees available under Oklahoma law | Setoff should be recognized to reduce Miller’s recovery by Thompson’s fees | Oklahoma § 44 provides no setoff for legal fees | No setoff permitted under Oklahoma law |
| If Kentucky law governs, would setoff apply under KRS 342.700(1) | Employee fees should reduce employer’s subrogation credit under 342.700(1) | Equitable interpretation of 342.700(1) favors setoff | Even under Kentucky law, setoff not permitted or appropriately limited in this case |
| What damages and interest are recoverable | Miller seeks reimbursement of $439,441.83 and property damage; prejudgment interest to be determined | CRS disputes interest and rate | Miller entitled to reimbursement of benefits and property damage; prejudgment interest to be determined via briefing; Oklahoma law governs interest on the reimbursement |
| What is the governing law for prejudgment interest | Kentucky should govern prejudgment interest | Oklahoma should govern prejudgment interest on the reimbursement | Oklahoma law governs prejudgment interest for the workers’ compensation reimbursement; Kentucky rate arguments require supplemental briefing |
Key Cases Cited
- Harris Corp. v. Comair, Inc., 712 F.2d 1069 (6th Cir. 1983) (subrogation as contract rights; choice of law tied to compensation benefits)
- Webb v. Employer's Liability Corp., 140 S.W.2d 825 (Ky. 1940) (subrogation rights governed by contract law; choice of law tied to contract formation)
- Noble v. Southern Quarries & Contracting Co., 361 S.W.2d 285 (Ky. 1962) (equitable attorney-fee considerations in workers’ compensation recoveries)
- Bearden v. Beeler, 2006 WL 1980149 (W.D. Ky. 2006) (contract-law approach to choice-of-law in subrogation (cited for methodology))
- Kellman v. Meridian Mut. Ins. Co., 197 F.3d 1178 (6th Cir. 1999) (federal court applying Kentucky choice-of-law rules classifies subrogation as contract-based)
- McBride v. Grand Island Exp., Inc., 246 P.3d 718 (Okla. 2010) (Oklahoma Supreme Court on § 44 subrogation rights)
- AIK Selective Self-Insurance Fund v. Minton, 192 S.W.3d 415 (Ky. 2006) ( Kentucky Supreme Court on interpretation of 342.700(1) in subrogation)
- Vetor v. Clarendon National Ins. Co., 165 S.W.3d 484 (Ky. Ct. App. 2005) (support for employer-subrogation costs allocation)