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Kerperien v. Lumberman's Mutual Casualty Insurance6/18/2002
. banc 1973). I write separately to urge the General Assembly to amend the language of section 287.150 to more properly reflect what I believe their original intent must have been.
Section 287.150(3) requires a two-step procedure for allocating a third party recovery. First, the employer is required to pay a proportionate share of the expenses of the third party recovery from its share of that recovery. Then the "balance" of the recovery is "apportioned" between the employer and the employee. This is impossible to do because the employer's share of the expenses cannot be known until we know its share of the recovery. The statute is also impossible to follow because its method for apportioning the balance assumes we know "the amount due the employer," which is precisely what the formula is supposed to tell us.
Because the statute is incoherent, the Ruediger court urged the General Assembly to re-examine it. Ruediger, 501 S.W.2d at 60. Despite modifying the statute to accommodate Missouri's adoption of comparative fault, the General Assembly has done nothing to alter the basic subrogation formula.
Ruediger reduces the section 287.150(3) subrogation principle to the following formula: Subtract the employee's attorneys' fees and expenses (AF) from the total settlement amount or "gross recovery" (GR) to arrive at the "net recovery" (NR). (GR-AF = NR). Divide the total amount of worker's compensation actually paid by the employer (WC) by the gross recovery realized from the third party. This yields a ratio (R). (R = WC/GR). Then multiply the net recovery by this ratio to arrive at the subrogation payment owed to the employer (S). (R x NR = S).
If courts followed the letter of the Ruediger formula, employees who settle or are awarded amounts less than the amount they have received in workers' compensation would owe more to their employer than they received from the third party tortfeasor. But the unfairness of the rule has led courts to adjust the formula in these circumstances to avoid unconscionable results. See Barker v. H & J Transporters, Inc., 837 S.W.2d 537, 541 (Mo.App. W.D. 1992)(modifying the Ruediger formula to allow employees to recover when the amount recovered from a third party is less than the workers' compensation benefits).
The Ruediger formula assumes that until the employee has settled or obtained a judgment for an amount in excess of her workers' compensation benefits any recovery from a third party would be a "double recovery." But the "no double recovery" mantra does not withstand analysis. First, the workers' compensation statute does not purport to make injured employees whole. It provides nothing for pain and suffering. Second, several reasons (having nothing to do with the damages the employee sustained) may explain why the damages actually recovered from a third party may be less than the amount the employee received in workers' compensation benefits. See Allstate Ins. Co. v. Clarke, 527 A.2d 1021, 1025, n.4 (Pa. Super. Ct. 1987); Roger M. Baron, Subrogation on Medical Expense Claims: The "Double Recovery" Myth and the Feasibility of Anti-Subrogation Laws, 96 Dick. L. Rev. 581, 585-98 (1992).
Because the workers' compensation statute does not fully compensate the employee for her injuries, the Ruediger formula works to provide employers a windfall paid directly by the pain and suffering of injured employees. See Larson, The Law of Workmen's Compensation section 71.23(h) (1996)("There can be no conceivable policy objection to allowing an injured person to retain two recoveries that, when combined, still do not make him whole."). Several states, recognizing this, have adopted subrogation formulae that more justly refl
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