Lead Opinion
[¶ 1] Robert Haugenoe appeals from a district court judgment affirming an agency order granting Workforce Safety and Insurance (“WSI”) a subrogation interest in a legal malpractice settlement. The legal malpractice action concerned Hauge-noe’s attorney’s failure to properly prosecute a medical malpractice claim related to a physician’s aggravation of a work-related injury suffered by Haugenoe. Haugenoe asserts that N.D.C.C. § 65-01-09, the sub-rogation provision of the workforce safety and insurance law, does not grant WSI a subrogation interest in the legal malpractice settlement. We agree. We hold that N.D.C.C. § 65-01-09 does not grant WSI a subrogation interest in an injured worker’s legal malpractice claim against a third-party tortfeasor. We, therefore, reverse the order of WSI and the district court judgment.
I
[¶ 2] Robert Haugenoe suffered a work-related injury in May 1999 while employed by Earl’s Electric in Williston. He filed a claim for WSI benefits, and WSI accepted the claim. Haugenoe retained a lawyer to represent him in a medical malpractice lawsuit after he concluded that his physician had failed to properly treat his injury. As part of Haugenoe’s representation, his lawyers agreed with WSI to represent its statutory subrogation interest in any damages recovered from the physician.
[¶ 3] Haugenoe’s attorneys failed to properly prosecute his claims against the physician, and a significant part of his claims against the physician were dismissed. Haugenoe retained other legal counsel to represent him for the prosecution of his remaining claims against the physician and for the prosecution of any claims against his former lawyers. Hau-genoe settled his legal malpractice claims against his former lawyers. After Hauge-noe settled the legal malpractice claims, WSI issued an order asserting it had a subrogation interest in the settlement.
[¶4] Haugenoe requested a rehearing of WSI’s order asserting a subrogation lien in the legal malpractice settlement. An administrative hearing followed. The ad
II
[¶ 5] On appeal from a district court judgment in an appeal from an agency order, we review the agency order in the same manner as the district court. N.D.C.C. § 28-32-49. A district court must affirm the order of an administrative agency unless the district court determines that any of the following are present:
1. The order is not in accordance with the law.
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5. The findings of fact made by the agency are not supported by a preponderance of the evidence.
6. The conclusions of law and order of the agency are not supported by its finding of fact.
N.D.C.C. § 28-32-46. We do not make independent findings of fact or substitute our judgment for that of the administrative agency. Aga v. Workforce Safety and Ins.,
[¶ 6] Questions of law are fully reviewable on appeal from an administrative order. Forbes v. Workforce Safety and Ins.,
Ill
[¶ 7] This case presents a question of first impression for this Court, resolution of which requires us to interpret N.D.C.C. § 65-01-09, the statutory provision subro-gating WSI to injured workers’ recoveries against certain third parties. The particular issue we address is whether WSI is subrogated to an injured worker’s cause of action against an attorney for legal malpractice in prosecuting a medical malpractice action against a physician who aggravated the worker’s injury.
[¶ 8] Our primary objective in statutory interpretation is to determine the legislature’s intent. Rojas,
[¶ 9] The purpose of our workforce safety and insurance law is to provide “sure and certain relief’ to injured workers “regardless of questions of fault and to the exclusion of every other remedy, proceeding, or compensation.” N.D.C.C. § 65-01-01. In turn, the law abolishes “all civil actions and civil claims for relief for those personal injuries” suffered by injured workers. Id. While the law relieves employers from liability for the workers’ work-related injuries, it does not reheve third-party tortfeasors from liability for such injuries. See Polucha v. Landes,
[¶ 10] The statute allows WSI to realize upon the liability of third-party tortfeasors through its subrogation provision. See id. Section 65-01-09, N.D.C.C., grants WSI a subrogation interest in injured workers’ recoveries against certain third parties:
When an injury or death for which compensation is payable under provisions of this title shall have been sustained under circumstances creating in some person other than the fund a legal liability to pay damages in respect thereto, the injured employee, or the employee’s dependents may claim compensation under this title and proceed at law to recover damages against such other person.
N.D.C.C. § 65-01-09 (1999). WSI’s sub-rogation rights are intended “to reimburse the fund, to the extent possible, at the expense of the persons at fault.” Blaskowski v. N.D. Workmen’s Comp. Bureau,
[¶ 11] We already established in Polu-cha,
IV
[¶ 13] Haugenoe asserts that WSI does not have a subrogation interest in the legal malpractice settlement. He contends N.D.C.C. § 65-01-09 does not give WSI a lien over his legal malpractice settlement award because there is no compensation payable for legal malpractice under Title 65, N.D.C.C. Moreover, Haugenoe asserts the benefits WSI paid him were not for harm suffered because of Haugenoe’s attorney’s negligence.
[¶ 14] Haugenoe insists that WSI only obtains a lien when the third party at issue has liability relating to the worker’s physical injury. Haugenoe contends that his former attorney was liable for his failure to pursue the medical malpractice claim, which is separate from the compensable physical injury suffered by Haugenoe. Haugenoe further argues that the obligation of the attorney arose separately from and subsequent to the third-party tortfeasor physician’s obligation to compensate Haugenoe for aggravating his physical injury.
[¶ 15] WSI argues that it has a statutory subrogation interest in the legal malpractice settlement award. WSI contends the purpose of statutorily granting WSI subrogation rights in injured employees’ damage awards arising from third-party actions is to reimburse the WSI fund at the expense of the persons at fault. WSI argues that the term “legal liability” should be broadly construed.
[¶ 16] WSI contends it is not necessary for settlement damages to arise out of the initial work injury or an aggravation of the initial physical injury before WSI can as
[¶ 17] The “case-within-a-case” doctrine provides that ‘“a legal malpractice claimant must prove two claims: first, the one that was lost, and also that his attorney’s negligence caused that loss.’ ” Dan Nelson Construction, Inc. v. Nodland & Dickson,
V
[¶ 18] We hold that N.D.C.C. § 65-01-09 does not grant WSI a subrogation interest in an injured worker’s legal malpractice claim against an attorney who committed malpractice in handling the injured worker’s claim against a third-party tortfeasor. Thus, WSI does not have a subrogation interest in Haugenoe’s legal malpractice settlement award.
[¶ 19] The plain language of N.D.C.C. § 65-01-09 (1999) creates a condition precedent to WSI’s subrogation. WSI is sub-rogated to the rights of the injured employee only “[w]hen an injury or death for which compensation is payable under provisions of this title shall have been sustained under circumstances creating in some person other than the fund a legal liability to pay damages in respect thereto.” Id. In Polucha, we interpreted this provision as subrogating the fund to “any cause of action against a third person for a compensable injury.”
[¶20] “Compensable injury” is a defined term under title 65, N.D.C.C. A “compensable injury” is an “injury by accident arising out of and in the course of hazardous employment which must be established by medical evidence supported by objective medical findings.” N.D.C.C. § 65-01-02(11) (1999). The statute lists numerous types of injuries that do and do not constitute “compensable injuries” under the statute. See id. The import of these lists is that only physical injuries suffered by workers in the course of their employment while conducting lawful activities and caused by the employment are compensable under the statute. See id.
[¶ 21] Although an injured worker is required by the case-within-a-case doctrine to demonstrate the malfeasance of the original tortfeasor resulting in the worker’s underlying injury in order to recover damages in a legal malpractice claim, the injured worker’s claim against his attorney is unlike an injured worker’s underlying third-party claim. As a Missouri appellate court noted, a physical injury is “distinguishable from the strictly economic loss compensated by a legal malpractice claim.” See ATS, Inc.,
[¶ 23] Our holding does not deny WSI a remedy for damages suffered as a result of an attorney’s malpractice in the prosecution of a claim against a third-party tortfeasor. WSI is free to assert its own claim against an attorney who has committed malpractice while representing WSI’s subrogation interest.
VI
[¶ 24] Here, the condition precedent to WSI’s subrogation was not met because Haugenoe did not recover from a third party who caused or aggravated his physical injury. Rather, Haugenoe’s recovery is from an attorney who had nothing to do with his physical injury. The damage suffered by Haugenoe as a result of his attorney’s legal malpractice is not a “compensa-ble injury.” Once Haugenoe’s attorney failed to properly prosecute his medical malpractice claim, he was forever barred from recovering from the physician for the aggravation of his compensable injury; thus, there is no possibility of a literal application of the subrogation statute to his legal malpractice settlement. Hauge-noe recovered for the loss of a legal right, not a physical injury as contemplated by the statute.
[¶ 25] We, therefore, hold that WSI does not have a subrogation interest in Haugenoe’s legal malpractice settlement.
VII
[¶ 26] In the alternative, Haugenoe argues that his settlement with his attorney was structured in a manner that exempted the settlement award from any subrogation interest WSI may have in the award. Haugenoe further argues that, even if WSI has a subrogation interest, WSI waived that interest by not participating in the legal malpractice action. We do not reach these issues because we hold that N.D.C.C. § 65-01-09 does not grant WSI a subrogation interest in the legal malpractice settlement.
VIII
[¶ 27] We hold that N.D.C.C. § 65-01-09 does not grant WSI a subrogation interest in an injured worker’s legal malpractice claim against an attorney who committed malpractice in handling the injured worker’s claim against a third-party tort-feasor. We, therefore, reverse the order of WSI and the district court judgment.
Concurrence Opinion
concurring.
[¶ 30] I must respectfully only concur in the result reached in the majority opinion.
[¶ 31] As the majority correctly notes, this case involves the issue of whether WSI has a subrogation interest in Hauge-noe’s legal malpractice settlement. The starting point for this analysis is section
“Compensable injury” means an injury by accident arising out of and in the course of hazardous employment which must be established by medical evidence supported by objective medical fundings.
N.D.C.C. § 65-01-02(10). Further, the Code provides several situations which are specifically exempted from the term “com-pensable injury.” N.D.C.C. § 65-01-02(10)(b). Thus a “compensable injury” does not include: “A nonemployment injury that, although acting upon a prior com-pensable injury, is an independent intervening cause of injury.” N.D.C.C. § 65-01 — 02(10)(b)(8). A common sense reading of this provision leads inescapably to the conclusion that a non-employment injury which is not an independent intervening cause is a “compensable injury.”
[¶ 32] The Agency found Haugenoe sustained three distinct injuries in this case.
[¶ 34] The majority cites Polucha v. Landes,
[¶ 35] I do not believe Polucha has any continued precedential value in North Dakota. Not only do statutory enactments and decisional law cast doubt on its continued vitality, but I believe Polucha is contrary to well established common law principles in North Dakota and lacks a sufficient rationale to warrant further adherence.
[¶ 36] In order to understand the decision in Polucha it is imperative to review general common law principles related to causation. Under the common law, the issue of whether a cause of injury was intervening or superseding has always been governed by concepts of foreseeability of harm. Thus, well over a century ago, this Court explained the standard for determining the existence of an intervening cause was if the jury could “with some reasonable degree of certainty determine the question whether the result could reasonably have been expected to occur in light of the circumstances.” Boss v. Northern Pac. Ry. Co.,
The determination of whether an intervening force is the efficient cause of an injury involves a number of considerations including whether or not the intervening cause is an extraordinary one or one which might be normally expected by a reasonable person in view of the situation existing at the time of its intervention. ... The foreseeability of the act of the unknown person in this case is the*387 crucial point of the sufficiency of the evidence.
State v. Columbus Hall Ass’n,
To relieve a defendant of the consequences of his negligence, an intervening cause must be both independent and unforeseeable.... The intervening negligence of another cannot be a superseding cause that extinguishes a tortfeasor’s liability if that negligence was a foreseeable consequence of the situation created by the tortfeasor.
Miller v. Diamond Resources, Inc.,
[¶ 37] Just as consistently, this Court has stated issues of causation and foreseeability are generally questions of fact, not matters of law. See Miller,
[¶ 38] In contrast to this veritable mountain of cases, with all their variable fact situations, this Court has only on the most limited of occasions held an intervening cause exists as a matter of law. I am able to find only three decisions in North Dakota which create broad categories in which intervening causation is treated as a matter of law.
[¶ 39] Both McLean and First Trust Co. involve underlying torts which include foreseeability of the kind of future harm that came to pass as an element of the torts themselves. For example, in McLean the underlying tortious conduct of the defendant was the negligent failure to properly conduct a background check and screen a door-to-door salesman who later assaulted the plaintiff. McLean,
[¶ 40] Similarly, in First Trust Co. the underlying tortious conduct was negligent entrustment of a dangerous weapon. First Trust Co.,
[¶ 41] The only other case which creates such a broad form category in which intervening cause is determined as a mat
[¶ 42] In Polucha the plaintiff, Szymon Polucha, fractured his ankle while working in a mine. Polucha,
[¶ 43] In so holding, this Court analyzed the issue along lines of causation. Id. at 266. If the subsequent medical malpractice were considered an independent intervening cause then the Workmen’s Compensation Board would not be subro-gated and Mr. Polucha would be entitled to his claim for damages. Id. If, on the other hand, the subsequent medical malpractice were not an independent intervening cause then Mr. Polucha would be entitled to bring the claim, as the Board would not have had the claim assigned to it by operation of law. In making its determination this Court referred to what it believed were general principles of common law, stating: “There is no reason why one rule of causation should be applied in negligence cases at common law and another rule in compensation cases.” Id. at 267. The specific ruling of the Court on this point was stated as follows:
At common law one liable to respond in damages, as employers frequently were for personal injuries sustained by employees, is held liable in damages for the injury, including any aggravation thereof due to the mistake of the physician or surgeon selected by the injured person in the exercise of due care for the purpose of treating the injuries and thus minimizing the damages. The aggravation in such cases is not deemed to be the fault of the injured person, but is regarded in law as a consequence of the original fault of the defendant. It is, therefore, not such an independent, intervening act of a third party as to break the chain of causation between the primary injury and the ultimate consequence or result.
Id. at 266 (emphasis added). In support of this ruling, the Court cited several cases from other jurisdictions and one North Dakota decision. See Pyke v. City of Jamestown,
[¶ 44] While the cases from the other jurisdictions may have supported the proposition that subsequent malpractice may be categorically considered intervening causation (therefore negating the need for
[¶ 45] In the McLean and First Trust Co. decisions an understandable rationale was enunciated for the rule that in those categories of torts (negligent entrustment and negligent screening) subsequent acts were not intervening causal acts. The rationale is those torts contain foreseeability of the future wrongful act as an element inherent in the tort. By finding liability under the tort, the jury has already found foreseeability of the future harm. It would be logically inconsistent, and therefore legally impossible, to find both that the tort existed and that the future harm was not reasonably foreseeable. As a matter of law the subsequent act cannot be an intervening cause. No such rationale is set forth in Polucha. Instead, in Polucha a categorical rule is simply pronounced. Instead of an articulated rationale, the Po-lucha rule substitutes an assumption I am not willing to make. This assumption is that in all cases it is probable a doctor will commit negligence.
[If 46] As set forth above, the crucial issue in determining whether an act subsequent to the initial wrongdoing is an intervening cause is whether the act is foreseeable. This Court described this standard in State v. Columbus Hall Ass’n as whether the subsequent act is “one which might be normally expected by a reasonable person in view of the situation existing at the time of its intervention.” State v. Columbus Hall Ass’n, 27 N.W.2d at 668. In Mourn, this Court similarly described the standard as follows:
Thus a party is not chargeable with all possible consequences of his negligent act, and he is not responsible for a consequence which is possible according to occasional experiences. His is liable only for the consequences which are probable according to the ordinary, usual experiences of mankind.
Moum,
[¶ 47] Further, the sole stated reason this Court gave in Polucha for adopting the rule that medical malpractice is as a matter of law foreseeable, and thus not an intervening cause, is no longer extant. The Court in Polucha stated the reason to adopt this rule in the workers compensation area was because that same rule allegedly applied in regular negligence cases. Polucha,
[¶ 48] As this Court explained in Haff, when the legislature adopted comparative fault in North Dakota it effectively overruled the Polucha rule that an original tortfeasor is responsible for subsequent malpractice as a matter of law in the general law. Haff,
We decline to construe the “[l]egal requirements of causal relation” in N.D.C.C. § 32-03.2-01 to impose liability on an original tortfeasor for an intervening cause like medical malpractice that the original tortfeasor was deemed to foresee under common law, because that interpretation would render meaningless the language for determining the percentage of fault and damages attributable to each person and for allocating several liability to each party for the amount of damages attributable to the percentage of fault of that party.
Id. There is no longer operative any general common law rule that subsequent malpractice of a physician is, as a matter of law, foreseeable and hence, not an independent cause. If anything, the interests of consistency now favor abandonment of the outdated Polucha rule in workers compensation cases.
[¶ 49] A broad reading of the changes enunciated in Haff, combined with the rather vague standard set forth in Section 65 — 01—02(10)(b)(8) (which simply incorporates general standards of causation into the workers compensation arena), could support the conclusion Polucha has already been totally abandoned by this Court, even in the workers compensation setting. However, to the extent this Court has not expressly recognized the broad categorical rule in Polucha is no longer good law in workers compensation cases, I believe it should expressly now so state. While I doubt the propriety of the Polucha rule since its very inception, I do not doubt that at least since the Haff decision was rendered the rule in Polucha has simply not been good law. Any reliance upon Polucha by either the Agency or the majority is, in my view, error. Therefore, when the Agency concluded as a matter of law that subsequent acts of malpractice were compensable injuries, it did so in a manner not in accord with the law of North Dakota. This error impermissibly tainted its decision WSI had a subrogation interest in the proceeds of Haugenoe’s legal malpractice settlement. This error warrants reversal. For this reason I can concur only with the result reached by the majority.
Notes
. As will be explained in more detail herein, independent causation is governed by the concept of foreseeability. See ¶ 36, infra. When winding one’s way through the many-layered thicket of negatives and double negatives found in the obtuse language of the WSI statutes, keeping in mind the following tautological formulas can be quite useful:
foreseeable = no intervening cause = com-pensable injury = subrogation not foreseeable = intervening cause = no compensable injury = no subrogation.
. Although the summation of these three types of injuries is found in the second Conclusion of Law, the ALJ (and therefore by adoption the Agency) identified each of these injuries in separate Findings of Fact. Recommended Findings of Fact, Conclusions of Law, and Order at Findings of Fact ¶¶ 1 (injury from the fall), 2 (injury from the medical malpractice) and 5 (injury from the legal malpractice).
. The Agency adopted the ALJ's Recommended Findings of Fact, Conclusions of Law, and Order verbatim, with the exception of one conclusion of law not relevant to these proceedings. It is this document, therefore, to which I will refer when speaking of the Agency’s decision.
. The Agency’s adopted Findings include no discussion of intervening cause. Undoubtedly the Agency, like the majority, simply relied upon Polucha v. Landes,
. This Court has described its decision in Mourn v. Maercklein,
Dissenting Opinion
dissenting.
[¶ 51] I respectfully dissent. The Workforce Safety and Insurance order is consistent with the statute.
[¶ 52] Workforce Safety and Insurance paid nearly a quarter of a million dollars in benefits for Haugenoe, including the costs incurred because of the medical malpractice. The legal malpractice recovery represents what should have been recovered in the medical malpractice action. WSI seeks fifty percent of the legal malpractice recovery, reduced by attorney’s fees and its share of expenses.
[¶ 53] Although some states allow sub-rogation of legal malpractice claims arising out of medical malpractice in connection with a compensable workplace injury, and some states do not allow such subrogation, the determination usually turns on the wording of the state statute. See In Re Worker’s Compensation Lien,
When an injury or death for which compensation is payable under provisions of this title shall have been sustained under circumstances creating in some person other than the fund a legal liability to pay damages in respect thereto, the injured employee, or the employee’s dependents may claim compensation under this title and proceed at law to recover damages against such other person. The fund is subrogated to the rights of the injured employee or the employee’s dependents to the extent of fifty percent of the damages recovered up to a maximum of the total amount it has paid or would otherwise pay in the future in compensation and benefits for the injured employee. The organization’s subrogation interest may not be reduced by settlement, compromise, or judgment.
N.D.C.C. § 65-01-09 (1999).
[¶ 54] There was “an injury” caused by the malpractice in treating the original workplace injury, for which compensation was payable and paid by WSI. It was under circumstances which created in some person other than WSI “a legal liability to pay damages in respect thereto.” The circumstances of this case, legal malpractice, created in the lawyer a duty to pay damages “in respect” to the damages caused by the medical malpractice in treating the claimant’s injuries.
[¶ 55] North Dakota’s worker’s compensation agency has had subrogation rights since the worker’s compensation fund was established in 1919. State v. Clary,
[¶ 56] Haugenoe’s legal malpractice claim is directly derived from the medical malpractice claim against the doctor. I would affirm the district court judgment affirming the order of WSI.
[1167] DALE V. SANDSTROM