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Paradiso v. Tipps Equipment11/20/2003
of the liability of that party. In such a contest, it is for the to decide the employer's right to reimbursement and credit, if any, against liability for future compensation and related benefits.
Montoya, 114 N.M. at 358, 838 P.2d at 975.
In Gutierrez, the Supreme Court revisited Section 52-5-17 and Montoya. Gutierrez, 1998-NMSC-027, 1. The Court stated Montoya's holding to be "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." Id. Gutierrez refined this Montoya holding by limiting the amount of reimbursement to which an employer is entitled to "that portion of the settlement proceeds which duplicates compensation benefits paid under the Act." Id.
Gutierrez created a formula for the WCJ to use in performing the judge's duty to "equitably allocate the proceeds." Id. 7. The broad statement of the formula was that:
he employer's extent of reimbursement for compensation paid is determined by identifying the nature and purpose of the payments made by the employer, and comparing the elements of the tort recovery with those which are duplicative of the employer's compensation payments. The total of the duplicative payments is the amount which must be reimbursed.
Id. 8. The Court's rationale for use of this formula was that " windfall [to the employee] occurs only to the extent that the tort recovery duplicates the elements of damage covered by compensation benefits." Id. 10. Because a worker 's "fair but partial tort recovery" may not duplicate compensation benefits, the WCJ must "analyze and compare the worker's two recoveries in order to determine the extent of duplication, and thus determine the extent of the employer's reimbursement." Id. 13.
Gutierrez set out a specific formula. The first determination is the amount of damages needed to make the plaintiff in the tort action whole, broken down into each separate element of damage, with a comparison then of each of these elements to the elements of workers' compensation benefits received by the worker in his WCA proceeding. Id. 15-16. Through this comparison, the WCJ in Gutierrez was to determine, with respect to each separate duplicate element, whether the compensation payments covered the entire damage amount. If not, a determination was to be made as to what percentage the payments covered the damage amount, as to each separate duplicate element. The employer then can be reimbursed that percentage of the damage amount attributed to the duplicate elements. Of course, where there exists no duplication, as when tort recovery is for the element of pain and suffering for which there exists no duplicate element under the Act, the employer gets no reimbursement. Id. 17-19. The employer's reimbursement is reduced further based on its pro rata share of attorney fees and costs. Id. 19. In this manner, the Court held, "an employer is entitled to recoup the amount of a worker's duplicative recovery." Id. 28.
1. Insurer's Reliance on Montoya
Insurer argued in district court that under Montoya, "if a third-party recovery is contested, it is the WCJ who must hold a hearing to determine (1) whether the amount paid is proportionate to the fault of the third-party and therefore, a reasonable compromise of liability, and (2) whether the Estate has been made whole and [Insurer's] right to reimbursement and credit for future compensation -related benefits has been protected."
Insurer contends on appeal that,
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