40 Mass. App. Ct. 692 | Mass. App. Ct. | 1996
This appeal by a workers’ compensation insurance carrier arises from the way the proceeds from the settlement of a third-party negligence claim have been allocated between an injured insured employee and his spouse. The settlement was approved by a Superior Court judge pursuant to G. L. c. 152, § 15.
Upon execution of the settlement agreement between Harvey and the Hultins, the Hultins filed a petition pursuant to G. L. c. 152, § 15, with the Superior Court for approval of the settlement. The proposed settlement allocated ninety percent of the total damages to the wife and ten percent to Hultin. TIC, a lien holder for benefits paid and, therefore, an interested party, appeared at the hearing on the petition and objected to the allocation formula.
In a revised petition for approval of the settlement, Harvey and the Hultins agreed to allocate seventy-nine percent of the proceeds to the wife and twenty-one percent to Hultin. After a second hearing, at which TIC again appeared and objected, the judge approved the petition upon finding that the revised allocation was fair and reasonable under the circumstances. The ensuing two judgments from which TIC now appeals award damages of $136,500 to Hultin and $513,500 to his wife. The judge held and the parties do not dispute that the entire amount allocated to Hultin will be applied to TIC’s lien. TIC claims, however, that its lien against benefits
1. TIC’s reimbursement and offset rights. General Laws c. 152, § 15, enables an injured employee such as Hultin, who has received workers’ compensation benefits, to seek damages against a negligent third party. “The sum recovered,” however, “shall be for the benefit of the insurer, unless such sum is greater than that paid by [the insurer] to the employee . . . .” G. L. c. 152, § 15, as appearing in St. 1991, c. 398, § 39.
The cases have uniformly held that, when allocating the
The claims of the spouse of an injured employee for loss of consortium, however, are entirely independent and distinct from the personal injury claims of the employee. Feltch v. General Rental Co., 383 Mass. 603, 607-608 (1981). Moreover, a spouse’s loss of consortium is not a compensable injury under G. L. c. 152. Bongiorno v. Liberty Mut. Ins. Co., 417 Mass, at 404 n.9. Taylor v. Trans-Lease Group, 34 Mass. App. Ct. at 405 n.4, citing Eisner v. Hertz Corp., supra at 133-134. Hence, TIC’s lien for “benefits provided under this chapter [G. L. c. 152]” does not extend to that portion of the settlement that has been allocated to a nonemployee spouse for loss of consortium. See Bongiorno v. Liberty Mut. Ins. Co., supra; Walsh v. Telesector Resources Group, Inc, ante 227, 229 (1996).
TIC urges us, nonetheless, to construe the 1991 amendment to G. L. c. 152, § 15 (see note 5, supra), to create, in essence, an absolute right for the insurer to have its lien rights satisfied out of the total available proceeds of a third-party tort action before any allocation has been made. As support, TIC relies on the cases previously cited in this opinion, all holding that, as between the insurer and the insured employee, the insurer’s lien rights may not be compromised.
We also see nothing within the 1991 amendment that points us in the direction TIC would have us travel. Section 15, as amended, requires the court during a hearing on approval of a settlement, to “inquire and make a finding as to the taking of evidence on the merits of the settlement, [and] on the fair allocation of amounts payable to the employee and the employee’s spouse . . . and any other member of the employee’s family.” The 1991 amendment further requires that “the amount of excess [once the insurer’s lien has been satisfied] that shall be subject to offset against any future payment of benefits. . . shall be determined at the time of such approval” in light of “the fair allocation of amounts payable to and amongst family members.”
The 1991 amendment focuses in large part upon an insured employee’s statutory excess recovery and on the insurer’s possible corresponding rights of offset for future benefits against any such excess. Language inserted by that amendment requires that the insurer’s rights to an offset from the statutory excess be determined at the time of the hearing, taking into consideration the “fair allocation” of damages between the injured employee and other family members. Finding nothing in the 1991 language that expands the insurer’s basic lien rights at the expense of the consortium claim of a spouse, we hold that § 15 does not allow a workers’ compensation insurer to satisfy its statutory lien against past benefits paid out of the total proceeds available in a third-party claim prior to allocation of those proceeds between the insured employee’s personal injury claims and the spouse’s loss of consortium claims. From this, it follows that TIC is entitled to reimbursement of its lien (after proportionate deductions described elsewhere in § 15 for attorney’s fees and other costs) only from the twenty-one percent portion of the total recovery allocated to Hultin as the insured employee. Moreover, because its lien against benefits already paid remains partially unsatisfied and where the proposed split was a fair one in the circumstances (as we decide, infra), we can safely conclude — as did the judge — that TIC has no offset rights.
2. Fairness of the allocation. At the hearing for approval of
Attached to the judge’s memorandum, and incorporated therein, is the Hultins’ own memorandum in support of their petition for approval of the settlement. In it, the Hultins describe with particularity Hultin’s and his wife’s injuries. Hultin’s injuries are well known to the parties, and, hence, we need not restate them. Suffice it to say, they are extensive and disabling.
For her part, the wife has suffered the substantial loss of her husband’s companionship and consort. The couple now have little social life to speak of, whereas, before the accident, they enjoyed an active social life together. They no longer engage in marital relations, and the wife has not been able to return to work as she must provide day-to-day care for her husband, including preparing his meals and assisting him with bathing and dressing. In addition, the wife must now do all of the outside yard work around the couple’s house, where previously that was largely her husband’s domain. Because Huitín has little control over his hands or his grip, the wife must perform certain basic manual operations for him. As a result of extensive burning over much of Hultin’s body, he is unable properly to adjust to normal room temperatures and, hence, will sometimes turn on the air conditioner in the winter, or the heat in summer, creating obvious and extreme discomfort for his wife. Over-all, Hultin’s frustration, anger, frequent mood swings, and seeming loss of interest in life are difficult for his wife to live with.
The Hultins’ memorandum also makes clear that Hultin’s own conduct was a major contributing cause of the accident
Given the statutory language, we conclude that the judge’s inquiry into the “merits of the settlement” allowed — indeed, required — him to consider and weigh the relative merits of the husband’s and the wife’s claims when deciding whether or not the recommended allocation was fair in the circumstances. The judge had before him the fixed and undisputed figure of $650,000 as total damages, and, hence, the sole issue at the hearing, essentially, was how that figure should be apportioned between the two plaintiffs in light of the comparative worth of their respective claims.
TIC has argued with some force that the apportionment of damages amounts to a transparent effort by the settling parties to defeat its lien rights and to deny it any offset rights. • Again, this overlooks the extent to which the husband’s claim was weakened by serious, if not fatal, questions of comparative negligence. In its reply brief, TIC buttresses its point that
We wish, however, to reemphasize the strong policy underlying the workers’ compensation statute against the sort of double recovery that is possible whenever settlement of a third-party claim involving an injury to an employee and the loss of consortium of a spouse or family member has been so structured as to insulate a significant portion of the proceeds from the insurer’s statutory rights to full reimbursement of compensation benefits it has already paid, and to a possible offset against any excess recovery for future compensation benefits it may have to pay. See DiMartino v. Quality Indus. Propane, Inc., 407 Mass. 171, 176-177 (1990). Absent countervailing factors such as are found here (or other equally unusual factors), we think that a settlement agreement of an employee’s third-party tort action that has been submitted to the Superior Court for approval, pursuant to G. L. c. 152, § 15, wherein the bulk of the settlement proceeds has been allocated to the loss of consortium claims of the nonemployee spouse or family member, and not to the claims of the injured employee, must be eyed by the court with a healthy dose of skepticism. Moreover, in unusual cases such as this, explanatory or subsidiary findings become particularly critical on the question of “fair allocation” of settlement proceeds.
Judgments affirmed.
Although TIC was neither a plaintiff nor a defendant, “General Laws c. 152, § 15, expressly grants the workers’ compensation insurer ... an opportunity to be heard concerning approval of a third-party settlement . . . [and itj, therefore, has sufficient interest to be entitled to appellate review.” DiMartino v. Quality Industrial Propane, Inc., 407 Mass. 171, 174 (1990).
At the time of the settlement agreement, TIC had paid Hultin $469,400 in weekly incapacity and medical benefits. Pursuant to G. L. c. 152, § 15, TIC holds a lien in that amount against any damages Hultin might receive as a result of his claims against a negligent third party.
TIC emphasizes its substantial exposure to the injured employee for likely future medical claims.
The statute goes on to provide, in pertinent part, as follows. (Material inserted by St. 1991, c. 398, § 39, is italicized.)
“[N]o settlement by agreement shall be made with such [third party] without the approval of. . . the court in which the action has been commenced after a hearing in which both the employee and the insurer have had an opportunity to be heard. At such hearing the court shall inquire and make a finding as to the taking of evidence on the merits of the settlement, on the fair allocation of amounts payable to the employee and the employee's spouse, children, parents and any other member of the employee's family or next of kin who may have claims arising from the injury for which are payable, under this chapter in which the action has been commenced after an opportunity has been afforded both the insurer and the employee to be heard on the merits of the settlement and on the amount, if any, to which the insurer is entitled out of such settlement by way of reimbursement, and on the amount of excess that shall be subject to offset against any future payment of benefits under this chapter by the insurer, which amount shall be determined at the time of such approval. In determining the amount of ‘excess’ that shall be subject to offset against any future compensation payment the board, the reviewing board, or the court in which the action has been commenced shall consider the fair allocation of amounts payable to and amongst family members who may have claims arising from the injury for which said compensation is payable.”
Investigations of the accident conducted by the United States Department of Labor Occupational Safety and Health Administration (OSHA) and the Massachusetts Department of Public Safety both concluded that Hultin’s actions were a contributing, if not the major contributing, cause of the accident.
The judge found the issue “very triable” as to whether Harvey was in any way at all a contributing cause of the accident.
The judge was confined to approving or rejecting the parties’ proposed allocation upon making the findings required by the statute; he could of course have made disinterested observations as to a different allocation. He could not, however, have substituted his judgment for that of the parties and imposed upon them his own formula. See Walsh v. Telesector Resources Group, Inc., supra at 233.