When the employee's injury is caused by a third-party tortfeasor-someone other than the employee or the employer or its agents-the act allows either the employer or the employee to bring an action in tort to recover damages from the third party. General Statutes § 31-293 (a) ; Libby v. Goodwin Pontiac-GMC Truck, Inc. ,
After the resolution of the third-party action, the employer remains liable to pay for any later arising workers' compensation benefits due the employee, but our case law interpreting § 31-293 (a) establishes that this subsection implicitly affords the employer a setoff, or a credit, against any later arising benefits in the amount of any proceeds the employee received in the action against the third party. See, e.g., Enquist v. General Datacom ,
In 2011, the legislature amended § 31-293 (a) to allow the employee, if the employee initiated the third-party action, to keep one third of the net proceeds due to the employer from that action, regardless of how much the employer is owed for reimbursement. Public Acts 2011, No. 11-205, § 1 (P.A. 11-205). The relevant portion of P.A. 11-205 provides: "If the action has been brought by the employee, the claim of the employer shall be reduced by one-third of the amount of the benefits to be reimbursed to the employer, unless otherwise
The specific question we address in this appeal is whether the moratorium applies to the one-third portion of the employer's recovery that inures solely to the employee's benefit-that is, whether the employer has a right to a setoff against its obligation to pay for postjudgment workers' compensation benefits until those benefits exceed the one-third portion that the employee received from the proceeds of the third-party action. We conclude that the employee's one-third portion is not subject to the moratorium, and, as a result, the employer does not receive a credit against later arising benefits for the one-third portion paid to the employee.
I
In the present case, the plaintiff, Patrick Callaghan, was injured in a work related automobile collision while working for the defendant, Car Parts International, LLC.
The plaintiff reimbursed the defendant out of the proceeds of the settlement, deducting for himself one third of the amount to be reimbursed, as required by § 31-293 (a). The defendant's two-thirds share of the net proceeds totaled about $44,000; the plaintiff's one-third share amounted to about $22,000.
The parties went before a workers' compensation commissioner to determine the status of the moratorium. The defendant claimed that, although P.A. 11-205 permitted the plaintiff to keep his one-third share of the net proceeds, it did not eliminate the moratorium, created by our case law, requiring the plaintiff to exhaust the proceeds from the third-party action before receiving additional workers' compensation benefits from the defendant. The plaintiff responded that P.A. 11-205 commanded that the plaintiff's one-third share "shall inure solely to the benefit of the employee," which clearly and unambiguously indicated that the legislature did not intend for those proceeds to benefit any party other than the plaintiff, and, thus, those proceeds were not subject to the moratorium. The commissioner concurred with the defendant and allowed the moratorium.
The plaintiff sought review by the Compensation Review Board (board), which upheld the commissioner's decision. The board concluded that, because the text and legislative history of P.A. 11-205 did not explicitly direct that the moratorium should not apply to the one-third reduction, the moratorium should continue to apply, notwithstanding the direction in P.A. 11-205 that the reduction should solely
Contrary to the decisions of the commissioner and the board, we conclude that the moratorium does not apply to the one-third reduction in favor of the plaintiff. The text added to § 31-293 (a) by P.A. 11-205 clearly and unambiguously intended for the one-third reduction to be for the employee's sole benefit. Although we agree that the added text and the legislative history concerning its enactment do not specifically address the moratorium, applying the moratorium to the reduction would erode the benefit conferred on the employee by P.A. 11-205. The moratorium would require the employee to use the proceeds from the one-third reduction to pay any future expenses that otherwise would be covered by workers' compensation benefits from the employer and, thus, contradict the clear directive that the "reduction shall inure solely to the benefit of the employee ...." (Emphasis added.) General Statutes § 31-293 (a). Because application of the moratorium would conflict with and undermine the clear intent of the text added to § 31-293 (a) by P.A. 11-205, we conclude that the moratorium should not apply to the one-third reduction. We therefore reverse the decision of the board and direct it to deny the defendant's request for a moratorium on the plaintiff's workers' compensation benefits.
A
This case requires us to determine whether and to what extent the language added by P.A. 11-205 to § 31-293 (a) impacts our prior case law that has interpreted § 31-293 (a) to implicitly allow the employer a moratorium. This presents a question of statutory interpretation subject to plenary review. See, e.g., Perez-Dickson v. Bridgeport ,
We start with the text of § 31-293 (a), as amended by P.A. 11-205. The relevant portion of P.A. 11-205 provides that, "[i]f the [third-party] action has been brought by the employee, the claim of the employer shall be reduced by one-third of the amount of the benefits to be reimbursed to the employer, unless otherwise agreed upon by the parties, which reduction shall inure solely to the benefit of the employee ...."
Prior to the enactment of P.A. 11-205, General Statutes (Rev. to 2009) § 31-293 (a) gave the employer's claim complete precedence over the employee's right to receive damages from a third party, after deducting litigation costs and attorney's fees. In the absence of the language added by P.A. 11-205, the employee thus could not receive any damages from a third-party action unless the employer's claim had first been satisfied. Specifically, General Statutes (Rev. to 2009) § 31-293 (a) provided in relevant part that "the damages shall be so apportioned that the claim of the employer ... shall take precedence over that of the injured employee in the proceeds of the recovery, after the deduction of reasonable and necessary expenditures, including attorneys' fees, incurred by the employee in effecting the recovery...." Because the employer holds a superior claim to the proceeds, after accounting for litigation
The text added to § 31-293 (a) by P.A. 11-205 altered this arrangement. The current text ensures that, regardless of the amount of an employer's claim, an employee who had brought the third-party action will receive at least one third of the net proceeds due the employer. The text accomplishes this by reducing the employer's claim by one third of the amount the employer otherwise would receive as reimbursement and directing that this reduction instead "shall inure solely to the benefit
C
The text of P.A. 11-205 is, however, silent on whether the moratorium applies to any proceeds paid to the employee because of the one-third reduction. To answer that question, we therefore consider our moratorium case law and how the moratorium would affect the reduction called for by P.A. 11-205. These considerations persuade us that extending the moratorium to the
We begin with an overview of our moratorium case law. The moratorium requires an employee who incurs additional workers' compensation expenses or who is entitled to additional workers' compensation benefits after a judgment has been rendered against a third party to use the employee's proceeds from that judgment, if any, to pay those additional expenses or to replace those benefits. As a general matter, the employer is required by § 31-293 (a) to continue paying workers' compensation benefits even if they arise after a favorable judgment against a third party. General Statutes § 31-293 (a) ("[t]he rendition of a judgment in favor of the employee or the employer against the [third] party shall not terminate the employer's obligation to make further compensation which the commissioner thereafter deems payable to the injured employee"). Nevertheless, our case law applying § 31-293 (a) has interpreted that section to implicitly allow a moratorium. Enquist v. General Datacom , supra,
If the moratorium were applied to the one-third reduction mandated by P.A. 11-205, the employee would be required to use the proceeds from this one-third reduction in lieu of future benefits that otherwise would be paid by the employer. Doing so would erode the benefit that the public act provides to the employee. Suppose, for instance, that an employee was injured on the job and the employer paid $10,000 in workers' compensation benefits. The employee then brought an action against a third party responsible for the injury and recovered $10,000. After deducting attorney's fees and litigation costs,
D
In our view, shifting the benefit away from the employee, by requiring him to use the proceeds from the one-third reduction, would run contrary to the purpose and plain language of § 31-293 (a), which evidences a clear intent for the employee alone to retain the benefit of the one-third reduction. By stating that the reduction was to "inure solely to the benefit of the employee," the legislature expressed a clear intention with P.A. 11-205 that the employee, and no one else, should enjoy the use of that portion of the third-party proceeds.
Even if the text of P.A. 11-205 was unclear or ambiguous concerning the legislature's intent, the public act's legislative history confirms that the legislature intended for the employee, and not the employer, to retain sole use of the proceeds from the one-third reduction. This history clearly indicates the legislature intended that the employee's benefit from the one-third reduction would serve as an incentive to employees to pursue damages from responsible third parties. Legislators supporting the public act observed that employers and their insurance carriers often were not pursuing the third parties responsible for harm and that employees often had little incentive to do so because any recovery was often exceeded by the employer's claim, such that any recovery went entirely to the employer as reimbursement for workers' compensation benefits already incurred. The legislature passed P.A. 11-205 to provide an incentive to both employers and employees to pursue actions against the third parties who should bear primary responsibility for the employee's injury. The public act accomplished this by allowing employees to have the sole benefit of one third of the employer's claim.
Senator Eric D. Coleman explained P.A. 11-205 in the Senate, noting that "this bill would provide for one third of the reimbursement for workers' compensation payments or settlements to be reserved for the employee in the case." 54 S. Proc., Pt. 22, 2011 Sess., p. 7052. When asked about the policy behind this change, Senator
Senator John A. Kissel, in support of the public act, observed that employees typically accept workers' compensation benefits for injuries rather than pursuing responsible third parties. He explained, "[i]f there is another, potential[ly] liable party, a third party, quite often those claims are tenuous and there really isn't that much of a motivation for the injured party, the employee, to bring that case to seek redress, especially if-if [the employee] go[es] through the process of seeking redress [and] the [employer] that paid the workers' compensation benefits gets most [or] all of the funds."
Senator Kissel noted that the two-thirds payment reserved for the employer would ultimately help employers and their insurance carriers, despite the one-third reduction in favor of the employee: "And the reason why I think that's good for all parties concerned is because if we, in this way, somehow incent[ivize] the employee to seek out a claim against the third party and they're successful, then at least there will be some reimbursement back to the insurance provider who paid on the workers' compensation claim.... It's a good bill. It [will] actually help insurers, I believe, down the road, because they don't pursue these claims on their own; they need the injured party to initiate these. And if the injured party is successful, not only will the injured party's benefits get enhanced by what they're allowed to keep, but at least some portion of those proceeds will go to the employer." Id., pp. 7061-62.
Senator Coleman also noted that employers could avoid the one-third reduction simply by bringing the third-party action themselves. When asked what motivation this would provide to an employer or insurer, Senator Coleman responded: "[T]he reservation of one third of whatever is recovered would only apply if the employee brought the [action]. If the insurance carrier or the employer brought the [action], then the one-third reservation would not apply." Id., p. 7056.
These sentiments were also reflected in the debate before the House of Representatives, which preceded the Senate's consideration of the legislation. Representative
The plain text of § 31-293 (a) clearly establishes, and the legislative history confirms, that the legislature intended the employee to receive the financial benefit from the one-third reduction in the employer's reimbursement as an incentive to pursue actions against third parties responsible for the employee's injuries. In this circumstance, we conclude that the moratorium must give way to the extent necessary to give full effect to P.A. 11-205. Although the legislature has acquiesced in our case law interpreting § 31-293 (a) to implicitly provide a moratorium; Enquist v. General Datacom , supra,
E
The defendant nevertheless argues that allowing the plaintiff to keep the one-third reduction while having future workers' compensation expenses paid for by the defendant would essentially give the plaintiff a duplicative recovery: the defendant would end up paying for all of the plaintiff's injury related expenses, while the plaintiff also recovers some damages for the same injury from a third party. For several reasons, we are not persuaded that concerns of duplicative recovery should alter our interpretation of the statute and our moratorium case law.
To be sure, allowing the employee to retain the one-third reduction and to continue to have injury related workers' compensation benefits paid by the employer might result in the employee's receiving some duplication
In the present case, and unlike in Enquist , however, the statutory amendment before us does contemplate the possibility of providing the employee with duplicative sources of recovery. The text of P.A. 11-205 expressly requires that the employer's claim for reimbursement, including for expenses already paid, be reduced and the reduction be given instead to the employee, even though the employer has already paid the employee's workers' compensation benefits. Because the legislature's command that the employee shall receive the sole benefit of this reduction gives rise to the potential for a duplicative recovery, we are not persuaded that these concerns should alter our construction of § 31-293 (a) in the present case. See Weinberg v. ARA Vending Co. ,
Moreover, a double recovery will not arise in all cases. For instance, an employee may receive compensation under the act for only physical injuries, not pain and
Lastly, the principle cautioning against allowing duplicative recovery is less persuasive when, as in the present case, the employer has control over whether the employee will receive duplicative compensation at the employer's expense. See Goodyear v. Discala ,
The decision of the Compensation Review Board is reversed and the case is remanded to the board with direction to reverse the decision of the commissioner.
In this opinion the other justices concurred.
Notes
In this opinion, we use the phrase "workers' compensation benefits" to refer generally to the benefits or payments mandated by the provisions of the act, including, but not limited to, payments for medical expenses or payments to compensate for a resulting disability. See General Statutes § 31-275 (4) (defining compensation for purposes of act).
Peerless Insurance Company, the defendant's insurer, was also named as a defendant in this action. For purposes of clarity, in this opinion, we refer to Car Parts International, LLC, as the defendant.
The plaintiff appealed from the decision of the board to the Appellate Court, and this court transferred the appeal to itself. See General Statutes § 51-199 (c) ; Practice Book § 65-1.
P.A. 11-205 made an additional change to § 31-293 (a), but that change is not relevant to the present appeal.
The defendant seizes upon other comments made by Representative Fox concerning the "solely to the benefit of the employee" language in P.A. 11-205 to argue that the one-third reduction should be subject to the moratorium. Specifically, Representative Fox stated the following during the House debate on the bill: "I do want to make one thing clear as well. There is language here that says the reduction shall inure solely to the benefit of the employee.... [T]he purpose of that line is to make it clear that the one-third reduction does not go ... to the plaintiff's attorney in addition to any fee that they may already be entitled to." 54 H.R. Proc., supra, pp. 3174-75. The defendant asserts this passage demonstrates that the purpose of the "solely to the benefit of the employee" language in P.A. 11-205 was not to prevent the employer from later benefiting from the reduction by applying the moratorium but to simply make sure that the one-third reduction was not used to pay the plaintiff's attorney.
We disagree. The language that the legislature enacted sweeps more broadly than simply ensuring that the reduction does not get paid to the plaintiff's attorney. Its command that the reduction should "solely" benefit the employee unambiguously means that the reduction shall not benefit any other person or entity, including the employer, the attorney, the third-party tortfeasor, or anyone else.