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Spangler5/25/2000
What fee must an employer or its worker's compensation insurance carrier pay the attorney who represents an injured employee in a suit against third-party tortfeasors? The Indiana law firm of Spangler, Jennings & Dougherty appears to desire one-third of the amount already paid by the carrier, plus one-third of the amount collected from third-party tortfeasors but not reimbursed to the carrier, plus one-third of future medical expenses the carrier would have paid but for the tort recovery. We conclude otherwise.
I. Factual Background and Procedural History
In December 1988, Kirk Weidenaar was rendered a quadriplegic during the course of his employment at Korellis Roofing. The worker's compensation carrier for Korellis, Indiana Insurance Company, paid Weidenaar's medical expenses and weekly wage replacement until Weidenaar filed a claim for worker's compensation benefits. After he claimed benefits, Weidenaar and Indiana Insurance stipulated that the carrier was obligated to pay Weidenaar 500 weeks of worker's compensation benefits and "any additional medical as pursuant to the provisions of the Worker's Compensation Act." (R. at 25, 98.) They presented this stipulation to the Worker's Compensation Board, which approved and incorporated it into the Board's award on July 6, 1992.
Weidenaar thereafter hired Spangler, Jennings & Dougherty, P.C. to sue Amoco Oil Company and Northern Indiana Public Service Company (NIPSCO) as tortfeasors who contributed to his injury. The suit resulted in a jury verdict against both companies. Spangler then negotiated a post-judgment settlement. Indiana Insurance paid Weidenaar's medical expenses until it received notice of the settlement.
In dispersing the proceeds of the settlement with Amoco and NIPSCO, Weidenaar paid one-third of the settlement to Spangler as attorney's fees. He also reimbursed Indiana Insurance for the benefits it had already paid him. The record does not make clear the order of these payments. (Compare Appellee's Trans. Br. at 2-3 n.5 with Appellant's Trans. Br. at 2-3.) It is likewise unclear whether a Spangler fee was deducted from the lien the carrier held against Weidenaar's tort recovery.
In any event, Spangler sued Indiana Insurance for attorney's fees, claiming the carrier owed the law firm one-third of the amount of the medical expenses Indiana Insurance would have paid but was saved due to Spangler's work on the third-party suit. (R. at 7-8; Appellant's Br. at 7.)
On cross-motions for summary judgment, the trial court granted judgment to Indiana Insurance, and Spangler appealed. The Court of Appeals reversed and remanded, with instructions to grant summary judgment in Spangler's favor instead. Spangler, Jennings & Dougherty v. Indiana Ins. Co., 685 N.E.2d 705 (Ind. Ct. App. 1997). We granted transfer.
II. Indiana's Worker's Compensation System
Indiana's present worker's compensation system was "essentially established the Workmen's Compensation Act of 1929." Evans v. Yankeetown Dock Corp., 491 N.E.2d 969, 971 (Ind. 1986). Prior to worker's compensation, workers were faced with harsh common law. Frampton v. Central Indiana Gas Co., 297 N.E.2d 425, 427 (Ind. 1973). "The employee's only remedy was an action in tort against the employer[,] . . . which w rarely successful" due to employer-friendly common law defenses. Id.
A. Purpose of Worker's Compensation.
With the enactment of the worker's compensation system, "workers who were previously precluded from recovery under common law theories are guaranteed compensation." Walker v. State, 694 N.E.2d 258, 268 (Ind. 1998). Employers must "provide limited compen
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