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Kerperien v. Lumberman's Mutual Casualty Insurance6/18/2002
termining subrogation entitlement, the appropriate consideration is the amount actually received by the employee in the third party action, and not the total amount of the judgment in a third party case. (The employee there recovered a very large, but apparently uncollectible, default judgment.) There is also collateral support in Rose v. Falcon Communications, Inc., 6 S.W.3d 429 (Mo.App. S.D. 1999), holding that, in a case in which the employee negotiated a settlement with a third party without the benefit of counsel, the court would not impute a phantom attorney's fee in computing the insurer's subrogation entitlement, but would require a sharing only of expenses actually paid. Id. at 430.
The governing principles are reflected in the leading case of Ruediger v. Kallmeyer Brothers Service, 501 S.W.2d 56 (Mo. banc 1973). Worker's Compensation provides a remedy for an employee who suffers injury arising out of and in the course of his employment, without requiring any showing of fault on the part of the employer. The employer is relieved of the open-ended liability of a tort action through limitations on the recovery. The employee, moreover, is free to proceed against third parties, strangers to the employment relationship, whose negligence or fault may have caused or contributed to the injury, and may recover whatever the jury awards.
There is, however, an established principle against a double recovery, and so the employer, or insurer paying workers' compensation, is entitled to reimbursement out of the award for the compensation benefits paid. Although the reimbursement at one time may have been total, the governing statutes were amended in 1955 to require the subrogee to bear a proportionate share of the employee's expenses in prosecuting the employee's third party action.
We conclude that the insurer's entitlement in this action should be determined by the same calculation that would be applied if the parties had settled before the trial for $1,175,000, or if the jury had returned an unencumbered verdict in that amount which had been paid. The original judgment for $1,875,000 was annulled by the agreement of the parties, and the annulment extended to the finding of 25% contributory fault. The initial judgment was not final and was subject to the court's subsequent action, which might result in a totally new trial, an order for remittitur, a partial new trial either on liability or damages, or, conceivably, a judgment for the defendant notwithstanding the verdict. Those possibilities would all be present if there were appeals. The parties by their settlement made certain what had been previously uncertain. The use of the settlement figure strictly complies with the statute.
The calculus is provided by Ruediger at page 59.
(1) The attorney's fees of $470,000 and litigation expenses of $31,505 are deducted from the settlement amount of $1,175,000, leaving a net recovery of $673,495 (the parties' agreed net figure appears to be short by $5,000).
(2) The ratio of the insurer's payments of $116,192.53 to the settlement amount is computed, yielding a ratio of .098887.
(3) The insurer's entitlement is determined by multiplying the net recovery amount of $673,495 by the ratio of .098887, producing a figure of $66,599.90.
The judgment is reversed and the case remanded with directions to enter judgment for the defendant-appellant insurer for $66,599.90.
Separate Opinion:
Concurring Opinion by Chief Judge Dowd:
I concur because the conclusion reached by the majority opinion appears to be required by Section 287.150 and Ruediger v. Kallmeyer Brothers Service, 501 S.W.2d 56 (Mo
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