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Martinez v. Industrial Commission5/28/1991
In this special action review of an Arizona Industrial Commission award, we consider the extent of a compensation carrier's lien against amounts recovered by an injured worker and his dependents from a third person who injured the worker while he was on the job . We then consider the application of the carrier's credit against future compensation payments it may owe to an injured worker and his dependents.
We hold that the carrier's lien for compensation payments made extends to the entire third party recovery received by the worker and his dependents, including proceeds
attributable to a spouse's loss of consortium claim. We also hold that the carrier's credit attributable to the spouse's recovery for loss of consortium may be offset only against any death benefits the carrier may be required to pay to the injured worker's spouse.
I.
In August 1987, petitioner Jesus Martinez (petitioner) suffered an industrial head injury caused by a negligent third party. Respondent carrier (Continental) accepted petitioner's workers' compensation claim. Petitioner, joined by his wife and two minor children, who claimed damages for their respective losses of consortium, then filed a civil suit against the third party.
In August 1989, the Martinez family settled the civil action for $1,000,000.00. The terms of the release are not of record. Continental approved the settlement and stipulated that the reasonable value of the third party claims was $590,000.00 for petitioner, $400,000.00 for his wife, and $5,000.00 for each of his children.
From the settlement proceeds, petitioner reimbursed Continental for those sums Continental already had paid for medical and disability benefits as of the time of settlement. Continental subsequently issued a notice of claim status claiming a credit against its future compensation liability of $551,894.90, the approximate total of the third party recovery by petitioner and his wife, less attorneys' fees and costs. Petitioner timely protested this notice.
The parties submitted legal memoranda in lieu of a hearing. Petitioner contended that Continental's credit against future compensation benefits should be limited to the settlement value of his segregated third party claim less proportionate attorneys' fees and costs and previously-paid compensation benefits. Continental, citing Liberty Mutual Insurance Co. v. Western Casualty & Surety Co., 111 Ariz. 259, 527 P.2d 1091 (1974), and Mannel v. Industrial Comm'n, 142 Ariz. 153, 688 P.2d 1045 (App. 1984), asserted that Arizona case law unambiguously supported extending the claimed credit against future liability to the entire recovery.
The administrative law judge concluded that judicial decisions interpreting A.R.S. ยง 23-1023 (the lien statute) established Continental's current entitlement to the claimed credit against the entire recovery, including the amount separately awarded for loss of consortium. After the administrative law judge affirmed the award on administrative review, petitioner brought this special action.
II.
The first issue raised by this appeal is whether a compensation carrier's lien extends to damages for loss of consortium paid by a third party to the spouse of an injured worker. Although petitioner advances arguments to the contrary, at oral argument he virtually conceded that the lien statute and prior judicial decisions require a conclusion that the lien extends to such damages.
The extent of the lien afforded a compensa
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