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McCarthy v. Environmental Transportation Services1/25/2005
This case came before the Supreme Court on December 7, 2004, pursuant to a petition for certiorari filed by the petitioners, George and Nancy McCarthy (petitioners), co-administrators of the estate of John M. McCarthy (John or decedent). The petitioners sought review of a decree of the Appellate Division of the Workers' Compensation Court (Appellate Division or panel) that affirmed a decision of the trial court rejecting the decedent's petition for review of a benefits determination made by the respondent, Environmental Transportation Services, Inc. (respondent). The petitioners challenge the Appellate Division's determination that the suspension of benefits under G.L. 1956 § 28-35-58 is based on the gross settlement received by an employee from a responsible third party. For the reasons set forth herein, we grant the petition and quash the decree of the Appellate Division.
Facts and Travel
It is uncontested that on September 14, 1988, decedent was injured while working as a truck driver for respondent at a Stop & Shop facility in Massachusetts (Stop & Shop). A memorandum of agreement dated March 13, 1989, sets forth the location of the injury as John's right shoulder, back, and ribs. John's weekly compensation rate was set at $360, plus a $9 dependency benefit. John also sued Stop & Shop for negligence. A jury awarded him $226,495.50 in damages, from which he paid attorney's fees amounting to $73,165, litigation costs of $9,740.80, and $49,034 to satisfy the lien of respondent's workers' compensation insurance provider. As a result of the Stop & Shop judgment, on June 19, 1991, the Workers' Compensation Court decreed that John's weekly compensation benefits be suspended in accordance with § 28-35-58.
On April 14, 1993, the Workers' Compensation Court awarded John specific compensation amounting to $7,300.80 for a 26 percent loss of use of his right arm. The respondent appealed to the Appellate Division, which found that an employee may not receive specific compensation benefits while weekly compensation benefits are suspended in accordance with § 28-35-58. Because John already had been paid the specific compensation award, the Appellate Division ordered that the amount of the award be added to the excess proceeds of his recovery from Stop & Shop for purposes of expanding the benefits suspension period. This ruling is not before us.
On March 29, 2000, John filed a petition with the Workers' Compensation Court seeking termination of the suspension period and resumption of his weekly compensation benefits. John asserted that, under a proper interpretation of § 28-35-58, the suspension period should have been calculated based on his net recovery, after payment of attorney's fees and costs, and not on his gross recovery. The court denied and dismissed his petition, finding that § 28-35-58 requires that the period of suspension of weekly compensation benefits after an employee's recovery from a responsible third party is based on the employee's gross recovery.
John filed a timely claim of appeal but died on February 2, 2003, before the Appellate Division heard his appeal. The petitioners were substituted as proper parties.
On appeal to the Appellate Division, petitioners argued that this Court's decision in Rison v. Air Filter Systems, Inc., 707 A.2d 675 (R.I. 1998), allows for the use of an employee's net recovery when calculating the period of suspension. Further, petitioners asserted that calculating suspension periods based upon the gross amount of compensatory damages works a hardship on injured employees that was not intended by the Legislature. The Appellate Division denied and dismissed petitioners' appeal,
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