Gutierrez v. City of Albuquerque

1998 NMSC 027, 964 P.2d 807, 125 N.M. 643
CourtNew Mexico Supreme Court
DecidedAugust 25, 1998
Docket23313
StatusPublished
Cited by21 cases

This text of 1998 NMSC 027 (Gutierrez v. City of Albuquerque) is published on Counsel Stack Legal Research, covering New Mexico Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Gutierrez v. City of Albuquerque, 1998 NMSC 027, 964 P.2d 807, 125 N.M. 643 (N.M. 1998).

Opinion

OPINION

McKINNON, Justice.

{1} This ease requires us to revisit a provision of the Workers’ Compensation Act, NMSA 1978, § 52-5-17 (1987), and our decision in Montoya v. ARAL Security, 114 N.M. 354, 838 P.2d 971 (1992). In Montoya, we held that Section 52-5-17 allows an injured worker to pursue a third-party tort claim and also receive compensation benefits for the same injury, subject to an employer’s right of reimbursement depending on the relative success of the tort claim. The question presented here is whether an employer is entitled to full reimbursement from a worker’s fair, but partial, third-party tort recovery, even though the worker will probably receive nothing after the reimbursement. The Court of Appeals held that the employer was entitled to full reimbursement. See Gutierrez v. City of Albuquerque, 121 N.M. 172, 909 P.2d 732 (Ct.App.), cert. granted, 120 N.M. 828, 907 P.2d 1009 (1995). We reverse the Court of Appeals, and hold that the employer is entitled to be reimbursed only from that portion of the settlement proceeds which duplicates compensation benefits paid under the Act. We accordingly remand the case to the workers’ compensation judge for an allocation of the proceeds consistent with this opinion.

I. Facts and Proceedings

{2} Connie Gutierrez (Worker) was employed as a plumbing inspector for the City of Albuquerque (Employer) until she was injured on July 9,1987. On that day she was inspecting a construction site and fell over materials left at the site by Thermal Control, Inc. She received workers’ compensation disability and medical benefits totaling $52,-163.37 from Employer from July 1987 through September 1992. In April 1990, Worker filed a workers’ compensation claim contesting the amount of her entitlement, and thereafter filed a third-party negligence suit against Thermal Control. In January 1992, Worker and Thermal Control settled the tort action for $140,000, which Worker and Employer agreed, and the workers’ compensation judge expressly found, was a reasonable compromise of the third party claim. Employer then asserted that Section 52-5-17 entitled it to reimbursement from Worker’s settlement proceeds for the full amount of compensation benefits it had paid, minus its proportionate share of the legal fees and costs incurred in her third party suit. See Transport Indemnity Co. v. Garcia, 89 N.M. 342, 344-45, 552 P.2d 473, 475-76 (Ct.App. 1976) (expenses of third-party action to be prorated between the employer and the worker).

{3} The workers’ compensation judge heard evidence on the extent of Worker’s tort damages proximately caused by Thermal Control, and determined that she had sustained $367,609.13 in actual tort damages, the elements being $24,969.13 in medical expenses (entirely paid by workers’ compensation), $220,604.00 in total lost wages (only a portion paid by workers’ compensation), and $122,000.00 in pain and suffering (none paid by workers’ compensation). Gutierrez, 121 N.M. at 174, 909 P.2d at 734. The judge concluded that Worker’s $140,000 tort settlement covered 38% of these damages. Apparently reasoning that Employer should equitably share the loss sustained by Worker under the principles enunciated in Montoya, the judge ruled that Employer was entitled to be reimbursed only to the same extent: 38% of the $52,163.37 it paid on behalf of Worker, or $19,822.08. 1 Employer appealed to the Court of Appeals. See NMSA 1978, § 52-5-8 (1986) (providing for judicial review of final order of workers’ compensation judge in court of appeals).

{4} In a divided decision, the Court of Appeals reversed, holding that Employer was entitled to full reimbursement of the benefits it had paid to Worker. See 121 N.M. at 173, 909 P.2d at 733. The majority acknowledged that under its holding Worker was likely to receive nothing, 121 N.M. at 175, 909 P.2d at 735, but concluded that the “plain meaning” of Section 52-5-17 compelled a “pro tanto reimbursement” equal to the amount paid by the employer. 121 N.M. at 177-78, 909 P.2d at 737-38. Judge Bosson, in dissent, would have affirmed the judge’s order as a reasonable method, among several, of applying Section 52-5-17 under the equitable principles of Montoya. See Gutierrez, 121 N.M. at 185, 909 P.2d at 745. We granted certiorari to determine whether and how the proceeds of a worker’s third-party action are to be allocated for reimbursement under Section 52-5-17.

II. Discussion

{5} Section 52-5-17 of the Worker’s Compensation Act is entitled “Subrogation” and provides in relevant part:

The right of any worker ... shall not be affected by the Workers’ Compensation Act ... but the claimant shall not be allowed to receive payment or recover damages for those injuries ... and also claim compensation from the employer. In such case, the receipt of compensation from the employer shall operate as an assignment to the employer ... to the extent of payment by the employer to or on behalf of the worker or employee for compensation or any other benefits to which the worker ... was entitled under the Workers’ Compensation Act....

NMSA 1978, § 52-5-17 (1989, before 1990 amendments) (emphasis added). 2 In Montoya, we interpreted this provision to allow an injured worker who receives compensation to pursue a tort action against a non-employer third party who caused the injuries. 114 N.M. at 357, 838 P.2d at 974. We noted that if the worker’s tort suit is successful, the statute prevents the worker from receiving a windfall by granting the employer an interest in the tort recovery to reimburse it for compensation paid to the worker. 114 N.M. at 357, 838 P.2d at 974. If the worker receives a full recovery in tort, the statute “give[s] the employer so much of the negligence recovery as is necessary to reimburse him for his compensation outlay, and [gives] the employee the excess.” See 6 Arthur Larson & Lex Larson, Larson’s Workers’ Compensation Law § 17.20, at 14-5 to 14-7 (1997) (footnote omitted) [hereinafter Larson’s ]. As Larson’s explains:

This is fair to everyone concerned: the employer, who, in a fault sense, is neutral, comes out even; the third person pays exactly the damages he would normally pay, which is correct, since to reduce his burden because of the relation between the employer and the employee would be a windfall to him which he has done nothing to deserve; and the employee gets a fuller reimbursement for actual damages sustained than is possible under the compensation system alone.

Larson’s § 71.20, at 14-5 to 14-13.

{6} In this case, however, “there is not enough to go around.” Gutierrez, 121 N.M. at 175, 909 P.2d at 735. As the Court of Appeals acknowledged,

Of $140,000 recovered in the tort settlement, Worker paid $47,530.70 for attorney fees and related costs. Worker owes another $15,221.78 for doctor’s bills not covered by workers’ compensation.

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Bluebook (online)
1998 NMSC 027, 964 P.2d 807, 125 N.M. 643, Counsel Stack Legal Research, https://law.counselstack.com/opinion/gutierrez-v-city-of-albuquerque-nm-1998.