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Gutierrez v. City of Albuquerque8/25/1998
ly allocate the proceeds between a worker and an employer as the Judge did in this case. While we agree that the Judge may equitably allocate the proceeds, the method used must be consistent with legislative intent.
{8} Here, the methods of allocation urged by the Judge, the parties, and amici were inconsistent to some degree with legislative intent. Specifically, there was a failure to analyze the "extent of payment by the employer . . . for compensation" called for in Section 52-5-17 in determining the amount of Employer's reimbursement. We hold that the 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.
A. Background of Section 52-5-17
{9} Section 52-5-17 sits at the intersection of workers' compensation law and tort law. The legislature's broader objective under 52-5-17 was "to achieve an equitable distribution of the risk of loss" and an "equitable allocation of responsibility." . The legislature intended Section 52-5-17 to facilitate, not chill, actions in tort against third parties. See generally Larson's § 71.00, at 14-1 ("The concept underlying third party actions is the moral idea that the ultimate loss from wrongdoing should fall on the wrongdoer."); . The tort remedy only assists an equitable allocation of responsibility when injured parties have an incentive to and actually pursue negligent tortfeasors. See generally (discussing important social functions served by tort system). Likewise, the workers' compensation system, as a form of social insurance, see generally W. Page Keeton et al., Prosser and Keeton on the Law of Torts § 80, at 568, works best and most efficiently when it is not required to bear the expense of injuries caused by third-party tortfeasors. Larson's § 71.10 at 14-1; Kandelin v. Lee Moor Contracting Co., 37 N.M. 479, 486, 24 P.2d 731, 735 (1933) ("We find in the nothing which indicates an intention to lessen the common-law liability of a third person whose negligence caused the injury ."(quoting McArthur v. Dutee W. Flint Oil Co. Inc., 146 A. 484, 486 (R.I. 1929)). Therefore, a worker's successful pursuit of negligent third parties benefits both the worker and her employer by helping to ensure that the workers' compensation system does not bear the loss. When successful, a third-party suit shifts the cost to the wrongdoer and not ultimately to the consumers who may have to pay more for the goods or services sold by the employer because of increased compensation expenses.
B. Employer's Interest in Tort Recovery
{10} The legislature intended an employer's interest in the tort recovery, whatever that interest is called, to be a function of the prohibition in Section 52-5-17 against a worker keeping duplicative recoveries from both systems. Section 52-5-17 provides that where a worker recovers both tort damages and compensation benefits, "the receipt of compensation from the employer shall operate as an assignment to the employer . . . to the extent of payment by the employer," because the worker should not be allowed to "recover damages for those injuries . . . and also claim compensation." Accordingly we recognized in Montoya that the employer's reimbursement is bottomed on the principle that a worker must not receive a windfall. . A windfall occurs only to the extent that the tort recovery duplicates the elements of damage covered by compensation benefits. "The underlying concern with third[-]party actions is that the claimant will r
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