Liberty Mutual Insurance v. Western Casualty & Surety Co.

519 P.2d 216, 21 Ariz. App. 363, 1974 Ariz. App. LEXIS 322
CourtCourt of Appeals of Arizona
DecidedMarch 4, 1974
DocketNo. 2 CA-CIV 1498
StatusPublished
Cited by2 cases

This text of 519 P.2d 216 (Liberty Mutual Insurance v. Western Casualty & Surety Co.) is published on Counsel Stack Legal Research, covering Court of Appeals of Arizona primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Liberty Mutual Insurance v. Western Casualty & Surety Co., 519 P.2d 216, 21 Ariz. App. 363, 1974 Ariz. App. LEXIS 322 (Ark. Ct. App. 1974).

Opinion

OPINION

HOWARD, Judge.

The issue involved here is the extent of the employer-insurer’s lien under A.R.S. § 23-1023(C).

At all times hereinafter the individual parties will be referred to as Martinez, McDuffee and Torres; Western Casualty & Surety Company as Western and Liberty Mutual Insurance Company as Liberty.

Martinez, McDuffee and Torres, while working for a plastering contractor were injured on the job. Claiming that the medical treatment they received for their injuries aggravated their injuries because [365]*365of the negligence of certain doctors and the Tucson General Hospital, the three injured workmen filed a malpractice action against the doctors and the hospital. They also claimed Workmen’s Compensation benefits. Their claims were accepted and they were paid compensation and medical benefits by Liberty, the insurance carrier of their employer.

The parties in the malpractice action stipulated as to the total amount each plaintiff was to receive as and for a settlement and additionally stipulated that the trial court, as to each plaintiff, would further break down the total amount into various items of damage such as pain, suffering, embarrassment, loss of income past and future, loss of future earning capacity, loss of consortium, etc. The total amount of settlement for each of the plaintiffs was as follows: Martinez — $270,000, McDuffee —$150,000, Torres — $80,000. The court, pursuant to the stipulation of the parties allocated the total amount to the various sub-items of damage suggested by the parties.

Western, the insurance carrier for the doctors and hospital, then filed this action, a complaint in interpleader, wherein it alleged that Liberty had paid medical and compensation benefits to the three workmen as follows: Martinez — $22,060.99, McDuffee — $18,845.00, Torres — $15,188.37. The total sum of $56,094.36 was paid into court by Western. In the trial court the individual appellees contended that Liberty should have to pay attorney’s fees and collection costs from the sum deposited in court, even though their attorney had already collected his attorney’s fees and costs from the gross amount of the settlement. These appellees further contended that as to future payments which Liberty may be obliged to make under the Workmen’s Compensation Act, credit should be given to Liberty only as against those items of damage which represent medical expense, loss of past and future income and loss of future earning capacity.

Liberty’s position was that it could not be charged with any expenses of collecting the sums it had paid under the Workmen’s Compensation Act. Initially it also asked the court for a lien or credit as to all amounts recovered by the workmen but then dropped this claim on the grounds that the trial court had no jurisdiction to make such determination.

The trial court ordered that from the sum deposited in court, $45,245.30 be distributed to Liberty, $9,349.06 to W. Mercer Bouldin as and for attorney’s fees and $1,500 to W. Mercer Bouldin as and for costs and expenses. In addition, the court computed a credit against future liability under the Workmen’s Compensation Act to which Liberty would be entitled. In so doing, the court sustained the position of the individual appellees.

The appellant presents the following questions for review: (1) Does A.R.S. § 23-1023 (1968) as a matter of law provide that a Workmen’s Compensation carrier statutory lien can be depleted on the asserted ground that an injured employee should be reimbursed for attorney’s fees and costs? (2) Did the court below exceed its jurisdiction and invade the jurisdiction of the Industrial Commission ■ of Arizona when it went beyond resolving the dispute before the court as to the sum in-terplead and in addition made a determination as to the future liability of the insurance carrier in the Workmen’s Compensation claims of the three employees? (3) Does A.R.S. § 23-1023 as a matter of law prohibit the depletion of the Workmen’s Compensation carrier’s (and employer’s) statutory lien on the asserted grounds that certain items of the third party recovery are not compensated for by the Workmen’s Compensation Act?

A.R.S. § 23-1023(C) allows a workman who sues a third party to receive benefits under the Workmen’s Compensation Act at the same time. It provides:

“C. If he proceeds against such other person, compensation and medical, surgical and hospital benefits shall be paid as provided in chapters 6 and 7 and the insurance carrier or other person liable to pay the claim shall have a lien on the [366]*366amount actually collectable from such other person to the extent of such compensation and medical, surgical and hospital benefits paid. This lien shall not be subject to a collection fee. The amount actually collectable shall be the total recovery less the reasonable and necessary expenses, including attorneys’ fees, actually expended in securing such recovery. The insurance carrier or person shall contribute only the deficiency between the amount actually collected and the compensation and medical, surgical and hospital benefits provided or estimated by the provisions of chapters 6 and 7 for such case. Compromise of any claim by the employee or his dependents at an amount less than the compensation and medical, surgical and hospital benefits provided for shall be made only with written approval of the compensation fund, or of the person liable to pay the claim.” (Emphasis added)

We first note that Liberty has suspended payment of the benefits it was previously paying under the Workmen’s Compensation Act and that counsel stipulated before the Industrial Commission as follows:

“The defendant insurance carrier was entitled to suspend benefits and claim a lien or credit. The amount of the lien or credit and the length of suspension is not before the Industrial Commission at this time because of the pending Superior Court action and, therefore, the Industrial Commission declines to rule on any of these remaining issues. The Industrial Commission does, however, retain jurisdiction to consider any and all other issues upon being properly raised by any of the parties.”

The individual appellees claim it is inequitable and unfair for the insurance carrier not to contribute towards attorney’s fees and court costs for the collection of monies on which it may have a lien. The maxim that equity follows the law is strictly applicable whenever the rights of the parties are clearly defined and established by statutory provisions. Sult v. O’Brien, 15 Ariz.App. 384, 488 P.2d 1021 (1971). In Ruth v. Industrial Commission, 107 Ariz. 572, 490 P.2d 828 (1971), the court held that A.R.S. § 23-1023 (C) is clear and unambiguous and means that the insurer cannot be required to pay its fair share of the attorney’s fees and expenses. The court quoted with approval from Ruth v.

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519 P.2d 216, 21 Ariz. App. 363, 1974 Ariz. App. LEXIS 322, Counsel Stack Legal Research, https://law.counselstack.com/opinion/liberty-mutual-insurance-v-western-casualty-surety-co-arizctapp-1974.