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Struhs v. Protection Technolohies12/20/1999
Pocatello, August 1999 Term
1999 Opinion No. 129
Appeal from the Industrial Commission, State of Idaho.
The order of the Industrial Commission is affirmed.
Marvin Struhs appeals from a decision by the Industrial Commission awarding his employer's insurance company a subrogated interest in Struhs' third-party settlement for injuries sustained in a work-related automobile accident. We affirm.
I. FACTS AND PROCEDURAL HISTORY
A. Facts.
Marvin Struhs worked for American Protective Services (APS). APS and its successor, Protection Technologies, Inc., provided security services at the Idaho National Engineering Laboratory (INEL) (now INEEL). A member company of the Wausau Insurance Companies (Wausau) provided worker 's compensation coverage for all INEL subcontractors, including APS.
The United States Department of Energy (DOE) contracted with EG&G;Idaho, Inc. (EG&G; to operate INEL facilities. EG&G;paid worker 's compensation premiums for all INEL contractors. The contract was an "allowable cost and fee contract" under which DOE monitored EG&G;expenses to determine if they were reasonable and allowable under the terms of the contract. DOE paid actual costs for EG&G;expenses, which included any payments EG&G;made to Wausau Insurance Company for worker 's compensation premiums.
On September 30, 1988, Struhs was driving a U.S. government vehicle at INEL in the course of work. Struhs was injured when a U.S. Army (Army) vehicle did not yield the right of way. Wausau paid Struhs $21,743.33 in worker 's compensation benefits for his injuries.
Through his attorney Michael McBride, Struhs filed a notice of tort claim with the Army in September 1990. Wausau did not file a separate notice of tort claim. In September 1991, McBride wrote to Wausau. He advised Wausau that he was representing Struhs in a third-party claim against the Army and offered to represent the company for a 1/3 contingency fee. Soon afterwards, Wausau's Lawrence Spjute accepted McBride's offer of representation and the fee arrangement.
On March 12, 1992, the Army sent McBride a letter stating: Because the United States was reimbursing the cost of workmens' compensation benefits pursuant to the government contract with Mr. Struhs' employer, the United States, as a "statutory employer", is entitled to a reduction of damages equal to the amount of workmens' compensation benefits received by Mr. Struhs from the insurer (Wausau Insurance) of Mr. Struhs' direct employer, . Runcorn v. Shearer Lumber Products, Inc., [107 Idaho 389,] 690 P.2d 324 (Idaho 1984).
On March 30, 1992, McBride sent a copy of the Army's letter to Spjute. McBride asked Wausau's opinion on the Army's contention that it was entitled to reduce damages by the amount of worker 's compensation benefits paid. To "push the file along," McBride set an arbitrary deadline of April 17, 1992, for Wausau's response. Spjute had retired in February 1992, however, and no one at Wausau answered McBride's letter. McBride himself did no independent research to determine whether the "statutory employer" exception of Runcorn applied to Struhs' case.
For the next three months, while a settlement with the Army was pending, McBride did not contact Wausau. He later testified that he did not believe that Wausau was interested in further action on the settlement. Nevertheless, McBride did not ask if Wausau wished to have him continue to represent it. On June 18, 1992, the Army paid Struhs $45,000 in full satisfaction of his claims.
McBride inserted language into the settlement agreement that indicated that the
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