Vaeao v. Samoa Air, Inc.

20 Am. Samoa 2d 37
CourtHigh Court of American Samoa
DecidedNovember 12, 1991
DocketCA No. 57-89
StatusPublished

This text of 20 Am. Samoa 2d 37 (Vaeao v. Samoa Air, Inc.) is published on Counsel Stack Legal Research, covering High Court of American Samoa primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Vaeao v. Samoa Air, Inc., 20 Am. Samoa 2d 37 (amsamoa 1991).

Opinion

FACTS

[38]*38The plaintiffs were all injured when a Samoa Air aircraft crashed on Manu‘a. Four of the plaintiffs were at the time working for the American Samoa Government. Two of the injured government employees, Alapati Taumata and Tolovae Potoa’e, have settled their claims against Samoa Air, for $210,000 and $17,000 respectively. Prior to the settlements, Continental Insurance Co., as the workmen’s compensation carrier for the American Samoa Government, paid to $75,961.97 to Taumata and $1,329.92 to Potoa’e in the way of compensation benefits under the Workmen’s Compensation Act (the Act), A.S.C.A. §§ 32.0501.et seq.1 Continental has intervened in this action, claiming that it is subrogated to the rights of the plaintiffs in the amount of the payments it has made and that it is therefore entitled to be reimbursed in this amount from any recovery in this action.

Taumata and Potoa’e, on the other hand, argue that the insurer is not subrogated to their rights because they had not accepted "compensation under an award in a compensation order," as provided for under A.S.C.A. § 32.0669(a).2 Alternatively, they claim that if the insurer does have a right to reimbursement, the insurer should be assessed a proportionate cost of the litigation expenses. In opposing [39]*39motions, these two plaintiffs and the insurer have moved for summary judgment on these issues.

DISCUSSION

I. Subrogation

The Act was essentially modeled on the federal Longshoremen and Harbor Workers Compensation Act (LHWCA), 33 U.S.C. §§ 901 et seq.3 Like its federal counterpart, the Act does not explicitly provide for a right of subrogation in the situation where an employee to whom compensation payments have been made without a formal award recovers damages from a third party. Although this subrogation issue appears to be one of first impression in the territory, the federal experience in this regard has been considerable.

The leading case is The Etna. 138 F.2d 37 (3d Cir. 1943). In that case, as in the present case, the employee recovered damages from a third party after receiving LHWCA benefits from his employer. The plaintiff in The Etna, again like the present plaintiffs, submitted that the employer had no right of subrogation because no compensation was paid "under an award in a compensation order" (quoting 33 U.S.C. § 933; 33 U.S.C. §933(a) and (b) from the LHWCA counterpart of A.S.C.A. § 32.0669(a)).

The court held that the equitable right of subrogation was not statutorily precluded by the enactment of the assignment provision, 33 U.S.C. § 933(b). The court observed that:

the right to subrogation . . . under equitable principles, attaches where one, not acting officiously, pays money on account of a legal obligation resting upon him for the imposition whereof another is held pecuniarily responsible.

The Etna, supra, at 39. In light of the legal obligation imposed upon the employer by 33 U.S.C. § 914(a) — the LHWCA counterpart of A.S.C.A. § 32.0660(a), whereby the employer is required to pay compensation promptly without an award unless it controverts liability — the court concluded that equitable subrogation therefore applied to allow [40]*40reimbursement.

The Etna court further held that the assignment provision allows the employee to recover under either the LHWCA or a third- party action at common law, but it does not provide the option of recovering under both: this, the court stated, was an "implicit recognition that the employer has a right to reimbursement for his outlay under the Compensation Act out of his employee’s adequate recovery from a third person in all cases," regardless of any "award in a compensation order." The Etna, supra, at 40. Thus, the employee does not receive a "double recovery" in the way of common-law damages plus worker’s compensation, which was designed to replace common-law damages.

Although Congress has never added an explicit subrogation right for the employer when the employee sues, the Etna interpretation, almost fifty years old, persists today in the federal courts. "The courts, at least since the Etna, 138 F.2d 37 (3d Cir. 1943), have uniformly held . . . that the employer has a subrogation right to be reimbursed from the worker’s net recovery from a third party for the full amount of compensation benefits already paid." Peters v. North River Ins. Co., 764 F.2d 306, 312 (5th Cir. 1985). The United States Supreme Court, while noting that Congress has never provided an explicit reimbursement right when the employee recovers from the third party, recognized that lower courts had correctly understood that Congress had not contemplated "double recovery" by the employee and that the employer therefore did not lose the right to reimbursement by making compensation payments without an award in a compensation order. Bloomer v. Liberty Mutual Ins. Co., 445 U.S. 74, 79 (1980). The Bloomer Court, like the Etna court, approved this reimbursement whether the recovery was from a judgment or a settlement. Id. at 75, 78.

The cases have in addition pointed to the legislative history of the LHWCA; "'an employer must be reimbursed for any compensation paid to the employee out of the net proceeds of the recovery. ’" Id. at 81 (quoting S. Rep. No. 428, 86th Cong., 1st Sess. 2 (1959)). Thus, both the courts and the legislature have recognized that, under the LHWCA, the employer is entitled to be reimbursed from the net recovery from a third party.

The federal interpretation, adopted by the courts and accepted by Congress, is compelling. First, the language of 33 U.S.C. § 933(a), (b) is virtually the language employed by the Fono in the enactment of [41]*41A.S.C.A. § 32.0669(a). Second, the Act incorporates the same underlying policy objectives found in the LHWCA. We conclude that the employer has an equitable right of subrogation and that the employer is entitled to be reimbursed from an employee’s net recovery, whether by judgment or settlement, from a third party.

II. Litigation Expenses

In Bloomer v. Liberty Mutual Ins. Co., supra, the Supreme Court settled a split in the Circuits4 and held that an employer is entitled to full reimbursement from an employee’s net third party recovery without being required to bear a proportionate share of the litigation expenses and attorney’s fees incurred by the employee.

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20 Am. Samoa 2d 37, Counsel Stack Legal Research, https://law.counselstack.com/opinion/vaeao-v-samoa-air-inc-amsamoa-1991.