McGranahan v. McGough

802 P.2d 593, 15 Kan. App. 2d 24, 1990 Kan. App. LEXIS 863
CourtCourt of Appeals of Kansas
DecidedNovember 30, 1990
Docket63,999
StatusPublished
Cited by4 cases

This text of 802 P.2d 593 (McGranahan v. McGough) is published on Counsel Stack Legal Research, covering Court of Appeals of Kansas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
McGranahan v. McGough, 802 P.2d 593, 15 Kan. App. 2d 24, 1990 Kan. App. LEXIS 863 (kanctapp 1990).

Opinions

Stewart, J.;

This is an appeal from a district court decision that Harold L. McGranahan could structure a settlement in a work-related tort action against a third party to avoid subrogation by Bettis Asphalt, his employer, and National Indemnity Company, its workers compensation carrier.

Harold L. McGranahan was in a pickup truck when his vehicle was struck by an Umthun Trucking Company truck driven by Donald W. McGough. At the time of the accident, McGranahan was working and on the job for Bettis Asphalt Company. McGranahan suffered injuries to his right knee. He filed a workers compensation claim and received benefits, which included temporary disability compensation, medical expenses, and permanent partial disability compensation.

McGranahan also sued McGough and Umthun Trucking Com[25]*25pany. Bettis Asphalt and National Indemnity Company moved to intervene, and the motion was granted.

McGranahan settled with McGough and Umthun Trucking for an amount that included medical expenses, loss of service for his wife, and pain and suffering. The district court found the settlement “fair, just and equitable” and entered the judgment. The district court later resolved the subrogation issue when it allowed Bettis Asphalt and its insurer to recover only the medical expenses less attorney fees. Bettis Asphalt and National Indemnity Company appeal on the subrogation issue as it pertains to the recovery for pain and suffering and loss of services.

To resolve the issues in this case, this court must determine the legislative intent of the workers compensation subrogation statute, K.S.A. 1989 Supp. 44-504.

“The fundamental rule of statutory construction is that the purpose and intent of the legislature governs when the intent can be ascertained from the statute. In construing statutes, the legislative intention is to be determined from a general consideration of the entire act. Effect must be given, if possible, to the entire act and every part thereof. To this end, it is the duty of the court, as far as practicable, to reconcile the different provisions so as to make them consistent, harmonious, and sensible.” State v. Adee, 241 Kan. 825, 829, 740 P.2d 611 (1987).

Since the statute at issue is a part of the Workers Compensation Act an additional rule of construction must be remembered. “[W]hen a workers’ compensation statute is subject to more than one interpretation, it must be construed in favor of the worker if such construction is compatible with legislative intent.” Houston v. Kansas Highway Patrol, 238 Kan. 192, 195, 708 P.2d 533 (1985).

The question here concerns the extent of an employer’s subrogation rights to an employee’s recovery in a third-party action. “The extent and nature of the subrogation rights of an employer under the workmen’s compensation statutes are matters for legislative determination.” Negley v. Massey Ferguson, Inc., 229 Kan. 465, 469, 625 P.2d 472 (1981). Since 1927, the legislature’s determination has been expressed in one version or another of K.S.A. 44-504, which now says in part:

“(a) When the injury or death for which compensation is payable under the workers compensation act was caused under circumstances creating a [26]*26legal liability against some person other than the employer or any person in the same employ to pay damages, the injured worker or the worker’s dependents or personal representatives shall have the right to take compensation under the workers compensation act and pursue a remedy by proper action in a court of competent jurisdiction against such other person.
“(b) In the event of recovery from such other person by the injured worker or the dependents or personal representatives of a deceased worker by judgment, settlement or otherwise, the employer shall be subrogated to the extent of the compensation and medical aid provided by the employer to the date of such recovery and shall have a lien therefor against such recovery and the employer may intervene in any action to protect and enforce such lien. Whenever any judgment in any such action, settlement or recovery otherwise is recovered by the injured worker or the worker’s dependents or personal representative prior to the completion of compensation or medical aid payments, the amount of such judgment, settlement or recovery otherwise actually paid and recovered which is in excess of the amount of compensation and medical aid paid to the date of recovery of such judgment, settlement or recovery otherwise shall be credited against future payments of the compensation or medical aid.” K.S.A. 1989 Supp. 44-504.

“The applicable language in K.S.A. 44-504 is clear and unambiguous — and not capable of two interpretations. The statute unequivocally states ‘in the event of recovery from such other person . . . by . . . settlement . . . the employer shall be subrogated to the extent of the compensation and medical aid. . . ” Houston v. Kansas Highway Patrol, 238 Kan. 192, 195-96, 708 P.2d 553 (1985). See Negley v. Massey Ferguson, Inc., 229 Kan. at 468. Further, K.S.A. “44-504 expressly gives the employer a lien on the first proceeds recovered by the injured workman from a negligent third party.” Houk v. Arrow Drilling Co., 201 Kan. 81, 92, 439 P.2d 146 (1968).

Workers compensation laws have always been at best a compromise.

“There is thus a sort of balancing of benefits in the common interest. Some employees may receive less compensation for injuries received than they would have been able to recover in a common-law action, while many other employees will receive benefits which they otherwise would not be able to receive because of the inability to establish the employer’s negligence.” Hormann v. New Hampshire Ins. Co., 236 Kan. 190, 192, 689 P.2d 837 (1984).

The terms of this compromise are incorporated in employment contracts, and the parties to those employment contracts are [27]*27bound by the remedies provided by the act. 236 Kan. at 193. Further, “[t]he Act is considered to be substitutional rather than cumulative and supplemental, and, therefore, provides the exclusive remedy for the injured worker.” 236 Kan. at 193.

Until the Supreme Court’s decision in Houston v. Kansas Highway Patrol, 238 Kan. 192, there was little question about the extent of employers’ subrogation rights in workers compensation cases. In fact, the majority in Houston adopted, in effect, the traditional position on subrogation rights. That case involved a state highway patrol sergeant who was injured while writing a ticket on a highway. The injury occurred when a driver struck the officer’s car, which then struck him.

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Related

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820 P.2d 719 (Court of Appeals of Kansas, 1991)
McGranahan v. McGough
820 P.2d 403 (Supreme Court of Kansas, 1991)
McGranahan v. McGough
802 P.2d 593 (Court of Appeals of Kansas, 1990)

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Bluebook (online)
802 P.2d 593, 15 Kan. App. 2d 24, 1990 Kan. App. LEXIS 863, Counsel Stack Legal Research, https://law.counselstack.com/opinion/mcgranahan-v-mcgough-kanctapp-1990.