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Struhs v. Protection Technolohies12/20/1999
e its right to subrogation.
D. Wausau's Subrogation Rights Are Not Restricted by the Agreement Between Struhs and the Army.
Struhs asserts that the terms of his settlement with the Army, which characterized the recovery as "general damages," barred Wausau from recovering reimbursement from the settlement monies.
It is a matter of first impression before this Court whether an agreement between a third-party tortfeasor and an injured employee can restrict the employer's subrogation rights. In automobile insurance cases, we have held that an insurer is not bound by a decision to which it was not a party. Vaught v. Dairyland Ins. Co., 131 Idaho 357, 361, 956 P.2d 674, 678 (1998); see also Anderson v. Farmers Ins. Co. of Idaho, 130 Idaho 755, 757, 947 P.2d 1003, 1005 (1997). Employers have a statutory right to subrogation, and any characterization of damages to which the employer is not privy cannot change the employer's statutory rights. A contrary holding could lead to situations where employees and third-party tortfeasors reached unilateral agreements that would give the employee a double recovery or result in the culpable party not shouldering its full responsibility for damages--results that would be diametrically opposed to the purposes of the subrogation statute. See Presnell v. Kelly, 113 Idaho at 3, 740 P.2d at 45. Therefore, we hold that an employee and third party's unilateral actions cannot restrict an employer's subrogation rights.
Other jurisdictions have reached a like result. In Minnesota, an employee may settle a tort claim with the third party without the employer's consent, but such a settlement cannot affect the employer's subrogation rights. Naig v. Bloomington Sanitation, 258 N.W.2d 891, 893 (Minn. 1977). Similarly, the Colorado Court of Appeals held that where worker's compensation benefits extended only to "economic" benefits, the surety was not bound by an employee's unilateral settlement with a third party that classified the settlement as one purely for non-economic damages. Sneath v. Express Messenger Serv., 931 P.2d 565, 568 (Colo. Ct. App. 1996).
For these reasons, we affirm the Industrial Commission's conclusion that Wausau could exercise its subrogation rights against Struhs' settlement with the Army.
E. Struhs' Rights Under the Idaho Constitution Are Not Impaired by Wausau's Recovery of Its Subrogated Interest.
Article I, Section 18 of the Idaho Constitution provides in part that "right and justice shall be administered without sale, denial, delay, or prejudice." Struhs asserts that I.C. § 72-223, if interpreted to allow Wausau to recover its subrogation interest, violates this provision by impairing Struhs' right to justice without prejudice. He contends that his right to a full tort recovery is prejudiced if Wausau can exercise subrogation against a settlement that Struhs and the Army characterized as general damages. Struhs may properly raise this issue for the first time on appeal, as he has done, because the Industrial Commission does not have jurisdiction to address constitutional challenges. Tupper v. State Farm Ins., 131 Idaho 724, 729, 963 P.2d 1161, 1166 (1998).
Idaho citizens enjoyed certain rights and remedies under the law at the time the Constitution was adopted, and the purpose of Article I, Section 18 is to secure these rights as they have been modified by the legislature. See Martinez v. State, 130 Idaho 530, 535, 944 P.2d 127, 132 (Ct. App. 1997) (quoting Moon v. Bullock, 65 Idaho 594, 603, 151 P.2d 765, 769 (1944), overruled on other grounds by Doggett v. Boiler Eng'g & Supply Co., 93 Idaho 888, 477 P.2d 511 (1970)). "Nothing in Art. I, § 18, either explicitly or
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