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Meyers v. Western Auto6/6/2002
1-28.1 is Cruz v. Liberty Mutual Insurance Co., 119 N.M. 301, 304, 889 P.2d 1223, 1226 (1995). In evaluating the effect of this statute on bad faith claims, the Supreme Court specifically considered the size of the award available to Worker and stated:
Further, Section 52-1-28.1 provides an adequate remedy. The purpose of the bad-faith action in the Act is to secure benefits for the employee and penalize the employer or insurer. Under Section 52-1-28.1, the employee receives all compensation for benefits due and owing and "shall receive" an extra "benefit penalty" of up to twenty-five percent of the claim. Section 52-1-28.1(B). Although this penalty may not be a great amount when the amount of the claim is small, it provides sufficient deterrence to prevent an insurer from denying benefits in bad faith and enforces the public policy against the bad-faith handling of workers' compensation claims. In addition, although this Section may not provide a recovery for emotional distress or an award of punitive damages, we previously have held that "the employer or insurer's liability is limited to that set forth in the Act." Dickson v. Mountain States Mut. Cas. Co., 98 N.M. 479, 481, 650 P.2d 1, 3 (1982) (barring recovery of emotional distress damages under the Act). Cruz, 119 N.M. at 304, 889 P.2d at 1226.
This language in Cruz undercuts Worker's argument in two respects. First, the amount of the award in this case does not "shock the conscience," as Worker contends. Instead, the amount of bad faith penalties available must be viewed in the context of the Act's overall compromise of securing benefits and limiting issues of liability and monetary awards. See Coates v. Wal-Mart Stores, Inc., 1999-NMSC-013, 22, 127 N.M. 47, 976 P.2d 999 (noting that in return for loss of accident-related tort claims, Act provides compensation to workers during recovery). Second, Cruz affirms the adequacy of awards under Section 52-1-28.1 even though emotional distress and punitive damages are no longer available. Additionally, Worker has not cited any decisions from other jurisdictions that would provide such generous bad faith benefits in a workers' compensation proceeding, and we have been unable to find any support for his position. See generally 8 Arthur Larson & Lex K. Larson, Larson's Workers' Compensation Law ยง 135.01D (2001) (noting various approaches).
Worker's claim that his bad faith penalty should reflect a percentage of all restored benefits, including future medical benefits, is the same argument that has been made and rejected in the attorney fees context. Consistent with the Act's prohibition against allowing a present (i.e., lump sum) award for future medical benefits, a worker's attorney fees award should not be calculated on a percentage of the projected value of these benefits. See Bd. of Educ. v. Quintana, 102 N.M. 433, 435, 697 P.2d 116, 118 (1985) (stating prohibition and that, similarly, future medical expenses should not be considered for purposes of determining attorney fees). As discussed in Buckingham v. Health S. Rehab. Hosp., 1997-NMCA-127, 16, 124 N.M. 419, 952 P.2d 20, the legislature subsequently codified this prohibition. See Section 52-1-54(H) ("The value of future medical benefits shall not be considered in determining attorneys' fees."). In Buckingham, the majority opinion reiterated that an award of attorney fees may not be based on a valuation of future benefits. Id. 30-40. The majority agreed that the value of future benefits could never be used, although the fact that the benefits were secured could be considered as a factor in analyzing the propriety of the attorney fees award. Id. 35, 39; see generally Fryar v. Johnsen, 93 N.M. 485, 485-88, 601 P.2d 718
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