Tonya Huff v. The Jones Financial Companies LLP

(Modifying Award and Decision of Administrative Law Judge)

Injury No.: 06-080670

Employee: Tonya Huff

Employer: The Jones Financial Companies LLP

Insurer: Zurich American Insurance Company

This workers' compensation case is submitted to the Labor and Industrial Relations Commission (Commission) for review as provided by $\S 287.480$ RSMo. We have read the briefs, reviewed the evidence, heard the parties' arguments, and considered the whole record. Pursuant to $\S 286.090$ RSMo, we modify the award and decision of the administrative law judge. We adopt the findings, conclusions, decision, and award of the administrative law judge to the extent that they are not inconsistent with the findings, conclusions, decision, and modifications set forth below.

Under § 287.150 RSMo, an employer has a subrogation interest to recoup its workers' compensation outlay where the employee makes a recovery against a third party for the work injuries, and there is a well-settled formula for applying the statute in cases (such as this one) where there is both a determination of comparative fault and a post-verdict settlement in the third-party action. See Kerperien v. Lumberman's Mut. Cas. Co., 100 S.W.3d 778 (Mo. 2003). The parties herein do not dispute the administrative law judge's math in calculating the amount of employer's credit pursuant to the Kerperien formula, but rather the way in which she applied employer's credit against the past-due compensation that she awarded.

Section 287.150.3 RSMo provides, as follows:

Whenever recovery against the third person is effected by the employee or his dependents, the employer shall pay from his share of the recovery a proportionate share of the expenses of the recovery, including a reasonable attorney fee. After the expenses and attorney fee have been paid, the balance of the recovery shall be apportioned between the employer and the employee or his dependents in the same ratio that the amount due the employer bears to the total amount recovered if there is no finding of comparative fault on the part of the employee, or the total damages determined by the trier of fact if there is a finding of comparative fault on the part of the employee. Notwithstanding the foregoing provision, the balance of the recovery may be divided between the employer and the employee or his dependents as they may otherwise agree. Any part of the recovery found to be due to the employer, the employee or his dependents shall be paid forthwith and any part of the recovery paid to the employee or his dependents under this section shall be treated by them as an advance payment by the employer on account of any future installments of compensation in the following manner:

(1) The total amount paid to the employee or his dependents shall be treated as an advance payment if there is no finding of comparative fault on the part of the employee; or

(2) A percentage of the amount paid to the employee or his dependents equal to the percentage of fault assessed to the third person from whom recovery is made shall be treated as an advance payment if there is a finding of comparative fault on the part of the employee.

On page 26 of her Award, the administrative law judge applied employer's credit to the past due medical expenses, mileage, permanent total disability, and disfigurement benefits that she awarded, rather than ordering employee to treat the credit as "an advance payment by the employer on account of any future installments of compensation." § 287.150.3 (emphasis added). Employee argues that this was incorrect, and that employer should be ordered to pay her the past due expenses at this time, and the credit should then apply to future payments of permanent total disability benefits and medical expenses. Employer, meanwhile, cites case law that is not on point and responds as if employee is suggesting it should be deemed to have forfeited its credit with respect to past due benefits. But employer will receive the benefit of its credit either way; practically speaking, the only issue is whether $\S 287.150 .3 requires that employer must pay employee a large lump sum now (\ 238,471.93) for past due benefits while paying nothing for permanent total disability or future medical expenses until its rather large $(\ 228,838.87) credit is exhausted, or whether employer must pay employee a smaller lump sum now $(\ 9,633.06) but also begin immediate payments of permanent total disability benefits and future medical expenses.

As the parties are undoubtedly well aware, § 287.800.1 RSMo requires that we "strictly construe" the provisions of the Missouri Workers' Compensation Law. Where the plain language of $\S 287.150 .3$ unequivocally states that employer's credit shall be treated as an advance payment against "future installments of compensation," we conclude that it is inappropriate to apply employer's credit to the past due benefits awarded herein.

We note that the Missouri Court of Appeals, Southern District, issued a decision with respect to this issue in Demore v. Demore Enters., Inc., No. SD32351 \& SD32361 (July 15, 2013). At page 3 of the decision, the Demore court held that a third-party subrogation credit "offsets future payments, not unpaid past benefits." Although not precedential in light of a subsequent transfer to the Missouri Supreme Court and voluntary dismissal of the appeal, the Demore court's reasoning lends some persuasive support to our conclusion herein.

Accordingly, we modify the administrative law judge's award with respect to the issue of employer's credit under $\S 287.150 .3. We order employer to pay employee her past due benefits in the amount of \ 238,471.93. Meanwhile, employee shall treat her portion of the third-party recovery as an advance payment by employer of any future installments of compensation.

In her award, the administrative law judge thoroughly and commendably handled each of the numerous disputed issues identified by the parties in this factually complex case. Because the award contains some minor errors, however, we provide the following corrections. On page 5 of her award, the administrative law judge states that employee

paid a $\ 56.00 premium for her insurance through employer. After a thorough review of the record, we were unable to locate any evidence to support this finding. Accordingly, we must disclaim this finding by the administrative law judge. We note, however, that the language of the insurance policy in question declares in multiple provisions that employee had to pay copayments, coinsurance, and meet deductibles in order to participate in the healthcare plan. See Transcript, pages 2280-84, 2295-96, and 2305. We find that employee paid copayments, coinsurance, and deductibles for her insurance through employer, and that the insurance policy was not fully-funded by the employer.

On pages 20 and 24 of her award, the administrative law judge states that employee was found to be 25 % at fault in the third-party action. This is incorrect. Employee was found to be 32 % at fault in the third-party action. Accordingly, we must hereby correct the award on this point.

We modify the award of the administrative law judge as to the issue of how employer's credit should be applied under § 217.150.3 RSMo. Employer is ordered to pay employee $\ 238,471.93 in past due medical expenses, mileage, permanent total disability and disfigurement benefits, while employee shall treat her $\ 228,838.87 portion of the third-party recovery as an advance payment by the employer on account of any future installments of compensation.

The award and decision of Administrative Law Judge Margaret Ellis Holden, issued March 14, 2013, is attached and incorporated by this reference to the extent it is not inconsistent with our modifications and supplemental findings and conclusions herein.

We approve and affirm the administrative law judge's allowance of attorney's fee herein as being fair and reasonable.

Any past due compensation shall bear interest as provided by law.

Given at Jefferson City, State of Missouri, this $26^{\text {th }}$ day of February 2014.

LABOR AND INDUSTRIAL RELATIONS COMMISSION

John J. Larsen, Jr., Chairman

James G. Avery, Jr., Member

Curtis E. Chick, Jr., Member

Attest:

Employee: Tonya Huff

Injury No. 06-080670

Dependents: N/A

Employer: The Jones Financial Companies LLP

Additional Party: N/A

Insurer: Zurich American Insurance Company

Hearing Date: $\quad 11 / 15 / 12$ \& 12/15/12

Checked by: MEH

1. Are any benefits awarded herein? YES
2. Was the injury or occupational disease compensable under Chapter 287? YES
3. Was there an accident or incident of occupational disease under the Law? YES
4. Date of accident or onset of occupational disease: $8 / 8 / 06$
5. State location where accident occurred or occupational disease was contracted: WEBSTER COUNTY, MO
6. Was above employee in employ of above employer at time of alleged accident or occupational disease? YES
7. Did employer receive proper notice? YES
8. Did accident or occupational disease arise out of and in the course of the employment? YES
9. Was claim for compensation filed within time required by Law? YES
10. Was employer insured by above insurer? YES
11. Describe work employee was doing and how accident occurred or occupational disease contracted: MOTOR VEHICLE ACCIDENT.
12. Did accident or occupational disease cause death? NO Date of death? N/A
13. Part(s) of body injured by accident or occupational disease: BODY AS A WHOLE
14. Nature and extent of any permanent disability: PERMANENT AND TOTAL DISABILITY
15. Compensation paid to-date for temporary disability: $\ 7,830.31
16. Value necessary medical aid paid to date by employer/insurer? $\ 15,369.88

1. Value necessary medical aid not furnished by employer/insurer? $\ 161,524.38
2. Employee's average weekly wages: $\ 459.38
3. Weekly compensation rate: $\ 306.25
4. Method wages computation: BY AGREEMENT

1. Amount of compensation payable:

Unpaid medical expenses: $\ 161.524 .38

0 weeks of temporary total disability (or temporary partial disability)

0 weeks of permanent partial disability from Employer

4 weeks of disfigurement from Employer

Permanent total disability benefits from Employer beginning 11/8/08, for Claimant's lifetime

Travel expenses of $\ 10,141.30

1. Second Injury Fund liability: Yes No X Open

0 weeks of permanent partial disability from Second Injury Fund

Uninsured medical/death benefits: N/A

Permanent total disability benefits from Second Injury Fund:

weekly differential ( 0 ) payable by SIF for 0 weeks, beginning N/A

and, thereafter, for Claimant's lifetime

TOTAL: SEE AWARD

1. Future requirements awarded: FUTURE MEDICAL TREATMENT AND PTD

Said payments to begin immediately and to be payable and be subject to modification and review as provided by law.

The compensation awarded to the claimant shall be subject to a lien in the amount of 25 % of all payments hereunder in favor of the following attorney for necessary legal services rendered to the claimant:

JAY CUMMINGS

Employee: Tonya Huff

Injury No. 06-080670

Dependents: N/A

Employer: The Jones Financial Companies LLP

Additional Party: N/A

Insurer: Zurich American Insurance Company

Hearing Date: 11/15/12 \& 12/15/12

Checked by: MEH

The parties appeared before the undersigned administrative law judge on November 15, 2012, for a final hearing. The record was left open for 30 days and closed on December 15, 2012. The claimant appeared in person represented by Jay Cummings. The employer and insurer appeared represented by Josh Mareschal. Memorandums of law were filed by January 14, 2013.

The parties stipulated to the following facts: On or about August 8, 2006, The Jones Financial Companies, LLP was an employer operating subject to the Missouri Workers' Compensation Law. The employer's liability was fully insured by Zurich American Insurance Company. On the alleged injury dat