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Gutierrez v. City of Albuquerque8/25/1998
{1} This case requires us to revisit a provision of the Workers' Compensation Act, NMSA 1978, § 52-5-17 (1987), and our decision in . In Montoya, we held 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. The question presented here is whether an employer is entitled to full reimbursement from a worker's fair, but partial, third-party tort recovery, even though the worker will probably receive nothing after the reimbursement. The Court of Appeals held that the employer was entitled to full reimbursement. See ), cert. granted, 120 N.M. 828, 907 P.2d 1009 (1995). We reverse the Court of Appeals, and hold that the employer is entitled to be reimbursed only from that portion of the settlement proceeds which duplicates compensation benefits paid under the Act. We accordingly remand the case to the workers' compensation Judge for an allocation of the proceeds consistent with this opinion.
I. Facts and Proceedings
{2} Connie Gutierrez (Worker) was employed as a plumbing inspector for the City of Albuquerque (Employer) until she was injured on July 9, 1987. On that day she was inspecting a construction site and fell over materials left at the site by Thermal Control, Inc. She received workers' compensation disability and medical benefits totaling $52,163.37 from Employer from July 1987 through September 1992. In April 1990, Worker filed a workers' compensation claim contesting the amount of her entitlement, and thereafter filed a third-party negligence suit against Thermal Control. In January 1992, Worker and Thermal Control settled the tort action for $140,000, which Worker and Employer agreed, and the workers' compensation Judge expressly found, was a reasonable compromise of the third party claim. Employer then asserted that Section 52-5-17 entitled it to reimbursement from Worker's settlement proceeds for the full amount of compensation benefits it had paid, minus its proportionate share of the legal fees and costs incurred in her third party suit. See ) (expenses of third-party action to be prorated between the employer and the worker).
{3} The workers' compensation Judge heard evidence on the extent of Worker's tort damages proximately caused by Thermal Control, and determined that she had sustained $367,609.13 in actual tort damages, the elements being $24,969.13 in medical expenses (entirely paid by workers' compensation), $220,604.00 in total lost wages (only a portion paid by workers' compensation), and $122,000.00 in pain and suffering (none paid by workers' compensation). . The Judge concluded that Worker's $140,000 tort settlement covered 38% of these damages. Apparently reasoning that Employer should equitably share the loss sustained by Worker under the principles enunciated in Montoya, the Judge ruled that Employer was entitled to be reimbursed only to the same extent: 38% of the $52,163.37 it paid on behalf of Worker, or $19,822.08. Employer appealed to the Court of Appeals. See NMSA 1978, § 52-5-8 (1986) (providing for judicial review of final order of workers' compensation Judge in court of appeals).
{4} In a divided decision, the Court of Appeals reversed, holding that Employer was entitled to full reimbursement of the benefits it had paid to Worker. See . The majority acknowledged that under its holding Worker was likely to receive nothing,, but concluded that the "plain meaning" of Section 52-5-17 compelled a "pro tanto reimbursement" equal to the amount paid by the employer. . Judge Bosson, in Dissent, would have affirmed the Judge's order as a reasonable me
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