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Davidson v. Travelers Insurance Co.9/14/2001
VACATING AND REMANDING
Letha C. Davidson appeals a trial court order allocating certain settlement proceeds and awarding subrogation credits in favor of Travelers Insurance Company ("Travelers"). We vacate and remand for further proceedings.
Upon entering Louisville's Humana Hospital Southwest ("Humana") on August 28, 1989, Davidson, a nurse, slipped and fell on a rubber mat. She sustained severe personal injuries. Since Davidson was working within the scope of her employment with Home Care Partners, Inc. ("HCP") at the time of her fall, she filed a workers' compensation claim. As a result, she was paid benefits totaling approximately $110,000.00 by Travelers, the workers' compensation insurance carrier for HCP. Davidson also filed this negligence action against Humana and Rugged Carpet Rental, Inc., ("Rugged Carpet"), manufacturer of the door mat. Travelers intervened in the civil action to recoup medical expenses and income benefits that it had paid and would yet pay to Davidson as workers' compensation benefits.
In 1992 and 1993, Davidson agreed to settle her personal injury claims against Humana and Rugged Carpet. The combined settlement of $850,000.00 did not provide for attorneys' fees or expenses. The proceeds were not expressly allocated among the several types of damages that Davidson sought to recover.
Under the settlement terms, the tortfeasors did not assume responsibility for any subrogation rights of the employer or insurance carrier under the workers' compensation statutes. By separate agreement, Travelers settled its intervening claims against Humana and Rugged Carpet directly, specifically retaining its claims for any workers' compensation benefits paid to Davidson after November 5, 1992. Travelers notified Davidson that it intended to pursue its subrogation rights against her settlement proceeds for any workers' compensation benefits paid after November 5, 1992.
Davidson agreed that Travelers would be entitled to a credit for those sums that she had received in settlement of her tort action which would duplicate future workers' compensation benefits, but the parties could not agree as to the extent of Travelers's subrogation interest. Pursuant to Mastin v. Liberal Markets, Ky., 674 S.W.2d 7 (1984), and Hillman v. American Mutual Liability Ins. Co., Ky., 631 S.W.2d 848 (1982), the parties asked the trial court to allocate the settlement proceeds between categories of compensable and non-compensable damages items under the workers' compensation statutes and to award Travelers a credit against its future obligation if necessary.
The trial court correctly held that Travelers may recover a subrogation credit only to the extent that Davidson had recovered for the same items of damage that Travelers has already paid or will be liable to pay. Davidson presented sufficient evidence to enable the court to allocate the damages properly. She presented the court with testimony from a vocational expert, who calculated the impairment of her ability to labor and to earn money to be $391,000.00; loss of replacement services was reported as $229,000.00. She claimed $350,000.00 in medical expenses and presented medical evidence tending to show that she would probably require four additional knee surgeries. Davidson claimed that she endured severe pain and suffering compensable at $2,000,000.00. She also sought punitive damages from the tortfeasors.
In view of the evidence presented, the trial court found as follows: "of the settlement amounts received, $391,000.00 is apportioned to future lost wages (impairment to labor and earn money) and $150,000.00 is apportioned to future medical expenses." The trial court conc
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