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Gutierrez v. City of Albuquerque8/25/1998
thod, among several, of applying Section 52-5-17 under the equitable principles of Montoya. See . We granted certiorari to determine whether and how the proceeds of a worker's third-party action are to be allocated for reimbursement under Section 52-5-17.
II. Discussion
{5} Section 52-5-17 of the Worker's Compensation Act is entitled "Subrogation" and provides in relevant part:
"The right of any worker . . . shall not be affected by the Workers' Compensation Act . . . but the claimant shall not be allowed to receive payment or recover damages for those injuries . . . and also claim compensation from the employer. In such case, the receipt of compensation from the employer shall operate as an assignment to the employer . . . to the extent of payment by the employer to or on behalf of the worker or employee for compensation or any other benefits to which the worker . . . was entitled under the Workers' Compensation Act . . . ." NMSA 1978, § 52-5-17 (1989, before 1990 amendments) (emphasis added).
In Montoya, we interpreted this provision to allow an injured worker who receives compensation to pursue a tort action against a non-employer third party who caused the injuries. . We noted that if the worker's tort suit is successful, the statute prevents the worker from receiving a windfall by granting the employer an interest in the tort recovery to reimburse it for compensation paid to the worker. . If the worker receives a full recovery in tort, the statute "give the employer so much of the negligence recovery as is necessary to reimburse him for his compensation outlay, and [gives] the employee the excess." See 6 Arthur Larson & Lex Larson, Larson's Workers' Compensation Law § 17.20, at 14-5 to 14-7 (1997) (footnote omitted) [hereinafter Larson's]. As Larson's explains:
"This is fair to everyone concerned: the employer, who, in a fault sense, is neutral, comes out even; the third person pays exactly the damages he would normally pay, which is correct, since to reduce his burden because of the relation between the employer and the employee would be a windfall to him which he has done nothing to deserve; and the employee gets a fuller reimbursement for actual damages sustained than is possible under the compensation system alone." Larson's § 71.20, at 14-5 to 14-13.
{6} In this case, however, "there is not enough to go around." . As the Court of Appeals acknowledged,
"Of $140,000 recovered in the tort settlement, Worker paid $47,530.70 for attorney fees and related costs. Worker owes another $15,221.78 for doctor's bills not covered by workers' compensation. From the balance (approximately $77,000), the City [Employer] seeks reimbursement for all the benefits it has paid out as well as a credit for any benefits it may owe in the future. That reimbursement may well equal or exceed all that is left of the tort settlement. If so, Worker will retain nothing at all or a marginal sum at best."
Therefore, we must determine what the legislature intended to be the extent of an employer's interest in a worker's fair, but partial, tort recovery to reimburse it for compensation paid to the worker.
{7} The Court of Appeals majority reasoned that an employer's interest is the amount the employer paid, regardless of the elements or the amount of the tort recovery. . Employer argues that it is entitled to the full amount it paid out to Worker in compensation because otherwise Worker would receive a windfall contrary to Section 52-5-17. Worker counters that the legislature intended Section 52-5-17 to give the employer a right of subrogation, an equitable right which allows the workers' compensation Judge to equitab
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