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Tomlinson v. Continental Casualty Company9/2/2003
judgment in favor of Tomlinson and held that Transcontinental was not entitled to any subrogation in this case and awarded the escrowed funds to Tomlinson.
Transcontinental asserts it is entitled to reimbursement from the third-party settlement for workers' compensation benefits it had paid. Transcontinental relies on 85 O.S.2001 §44 and Prettyman, supra. In Prettyman, the Oklahoma Supreme Court was faced with determining the effect of an amendment to §44 which added the language beginning with "(w)henever recovery against such other person is effected without compromise settlement . . . ." In Prettyman, the workers' compensation insurer sought to recover the compensation paid to the claimant after the claimant settled with the third-party tortfeasor. Id. at 574. The settlement was for more than the workers' compensation benefits paid, but was for less than the amount the claimant had sought from the third-party tortfeasor. Id. Based on that fact, the trial court compelled the insurer to accept a reduced amount as full satisfaction of its subrogation claim. Id.
In Prettyman, the plaintiff had argued to the trial court that since he settled with the third-party tortfeasor for 33% of what he had requested, the compensation insurer should likewise be reimbursed only for 33% of the compensation it had paid. Id. at 576. The plaintiff based this argument on his assertion that his settlement with the third party was a "compromise settlement" under §44, which required the compensation reimbursement to be reduced and which required the compensation carrier to contribute to the plaintiff's costs and attorney fees. Id. The Supreme Court explained, however, that the term "compromise settlement" in §44 does not mean settling the third-party claim for less than the amount requested, but rather settling the third-party claim for less than the amount of compensation provided under the Workers' Compensation Act. Id. at 579. The court reiterated its earlier holding that the employer or insurer is only liable for any deficiency between the amount received from the third-party tortfeasor and the compensation allowed under the Act. Id. at 580, citing Weiss v. Salvation Army, 1976 OK 139, 556 P.2d 598, 601.
After determining that a settlement with the third party for more than the compensation allowed by the Act, but for less than the amount prayed for, is not a compromise settlement, the court noted that under §44 the insurer's subrogation interest is not reduced where there has not been a compromise settlement. The court explained:
The certain goal of the legislature is to provide for payment of a proportionate share of expenses and attorney fees incurred in effecting recovery of the fund from which the insurer will recoup its subrogated compensation payment in those instances where recovery is not made by compromise settlement; where the worker does not receive less than the compensation provided or estimated by the Act. . . . The entire purpose of §44 would be destroyed if the statute were interpreted in the manner urged by plaintiff. To force the insurer to accept $29,000 as a "compromise" or "apportionment" of its $152,000 subrogated claim when the employee has recovered a much greater sum from the tortfeasor would defeat the underlying intent of §44: the protection of the employer's right of full subrogation and the prevention of double recovery of the employee.
Id. at 581. The court also noted its earlier holding in Carter v. Wooley, 1974 OK 45, 521 P.2d 793, that where the claimant received a third-party settlement for more than the amount of workers' compensation benefits, the compensation insurer was entitled to recover the full amount of benefits it had paid.
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