Transamerica Insurance v. Sydow , 97 N.M. 51 ( 1981 )

OPINION

WALTERS, Judge.

The trial court granted plaintiff’s motion to dismiss Transamerica’s “Complaint for Reimbursement” for failure to state a claim. Transamerica appeals; we reverse.

Transamerica, in a singularly terse complaint, asserted its right to reimbursement for workmen’s compensation benefits paid to appellee Sydow. It claimed that after settling with Transamerica, Sydow had filed and settled a separate malpractice claim against the doctor who treated him for the work-related injury.

Attached to the complaint as an exhibit was a letter from Sydow’s counsel to appellant acknowledging awareness of Transamerica’s “interest in [Sydow malpractice] case and [Sydow’s counsel’s readiness] to protect that interest at this time out of any settlement or judgment.” That exhibit confirmed Transamerica’s allegations that it did not intervene in Sydow’s malpractice suit because of assurance that its interest would be protected. The complaint alleged further that the malpractice suit was settled; that Sydow’s counsel had refused to account, to advise of the settlement reached, or to reimburse Transamerica for any amounts Transamerica “may have paid.”

Transamerica prayed for reimbursement of all compensation and medical payments which it had not recovered from other sources. At oral argument, Transamerica admitted that it was not entitled to be reimbursed for payments of Sydow’s medical expenses and compensation benefits covering the period before the medical injury was inflicted by the doctor’s treatment.

After Sydow’s deposition was taken by Transamerica, Sydow moved to dismiss the suit for failure to state a claim upon which relief could be granted, citing Security Ins. Co. v. Chapman, 88 N.M. 292, 540 P.2d 222 (1975). That case, the deposition produced at the hearing on the motion to dismiss, and the uncontested representations made at oral argument, lead us to consideration of §§ 52-1-49B and 52-1-56C, N.M.S.A.1978, of the Workmen’s Compensation Act, discussed in Chapman, for a resolution of this appeal.

The pertinent portion of § 52-1-49B provides:

[T]he employer furnishing . . . surgical, medical and hospital services and medicines shall be liable to the workman for injuries resulting from neglect, lack of skill or care on the part of any person . . . employed by the employer to care for the workman. In the event, however, that any employer becomes so liable to the workman, it shall be optional with the workman injured in such a manner to accept the foregoing provisions and hold the employer liable for the injuries, or to reject these provisions and retain the right to sue the person . . . employed by the employer who injures the workman through neglect, lack of skill or care. Election to accept or reject the provisions in this section shall be made by a notice in writing, signed and dated, given by the workman to his employer; and, if the workman elects to hold the employer liable for the injuries, the cause of action of the workman against the third person . . . shall be assigned to the employer, who may institute proceedings thereon in any court having jurisdiction, in the workman’s name.

Section 52-1-56C, in its relevant portion, states:

The right of any workman . . . entitled to receive payment or damages for injuries occasioned to him by the negligence or wrong of any person other than the employer or any other employee of the employer . . . shall not be affected by the Workmen’s Compensation Act, but he . . . shall not be allowed to receive payment or recover damages therefor and also claim compensation from the employer, and in such case the receipt of compensation from the employer shall operate as an assignment to the employer . . . of any cause of action, to the extent of payment by the employer to the workman for compensation, surgical, medical, osteopathic, chiropractic, and hospital services and medicine occasioned by the injury which the workman or his legal representative or others may have against any other party for the injuries or death.

The complaint and defendant’s deposition establish a sequence of events, confirmed by counsel during oral argument, occurring after the injury for which Sydow’s compensation claim was made:

(1) Defendant Sydow sued for workman’s compensation for an on-the-job injury suffered when the concrete chute of a cement truck (owned by a contractor other than defendant’s employer) struck him in the back.

(2) Defendant was treated for that accident and injury by Drs. Lehman, Hollinger, Rock, Marón and Francis; Dr. Hollinger performed a laminectomy on Sydow after diagnosing a ruptured disc caused by the concrete chute accident.

(3) Sydow thereafter brought a third-party suit against the company whose employee had struck him with the chute. That case was settled; Transamerica was reimbursed in an amount less than $1,000 (the complaint alleges $878.34) from Sydow’s settlement with that third party.

(4) Dr. Hollinger’s deposition was taken in the third-party action, before settlement with Transamerica of Sydow’s workmen’s compensation claim. Following the workman’s compensation settlement, and following Sydow’s suit against the third-party tortfeasor, Mr. Sydow reviewed Dr. Hollinger’s deposition and determined that he had a malpractice claim against the doctor for operating at the wrong level. Sydow obtained a settlement from Dr. Hollinger after filing a malpractice suit against him.

(5) During the pendency of Sydow’s suit against the doctor, his counsel wrote to Transamerica’s attorney (as outlined above), agreeing to protect Transamerica “out of any settlement or judgment” and expressing his “desire that you accept this letter as a letter of protection and not intervene in the [malpractice] case. As you can see, if we can proceed on this basis, I would appreciate it very much.” (Exhibit A to the complaint.)

This background of information is crucial to an interpretation of the statutes we have quoted above, because it sets the time frame and elucidates an understanding of Transamerica’s claim.

Section 52-1-49B holds the employer furnishing medical attention liable for any injuries caused the workman by such care. However, it also gives the workman the option to pursue a claim for those injuries against the employer or the person responsible, if he notifies his employer in writing of the election he intends to make. The employee gave his employer no such notice in this case, but he proceeded with an independent malpractice action against the physician who performed surgery for the work-related injury, after he had settled his claim against his employer. It is clear, as Transamerica has argued and defendant admits in his Answer Brief, that Dr. Hollinger’s surgery occurred during treatment for the original injury. It is thus fair to assume that at the time Transamerica settled with defendant, the disabling condition for which Transamerica paid had been partially contributed to by the doctor’s alleged malpractice. Therefore, argues Transamerica, at least some portion of the total amount paid by Transamerica would have been for a condition of disability caused partially by the original injury and partially as exacerbated by the doctor’s treatment.

All pertinent sections of the Workmen’s Compensation Act must be read in a manner that will give effect to the legislative intent, and should not be construed in such a way as will nullify certain of its provisions. Security Trust v. Smith, 93 N.M. 35, 596 P.2d 248 (1979). Section 52-1-56C operates to prevent the workman from recovering damages from the wrongdoer as well as from the employer for “the negligence or wrong of any person other than the employer.” The receipt of any such amounts for that kind of damage from the employer “shall operate as an assignment to the employer ... to the extent of payment by the employer . . . for surgical, medical . . . hospital services and medicine occasioned by the injury” inflicted by the person other than the employer.

The Chapman case argued by Sydow in his motion for dismissal is not analogous. The Supreme Court there noted, at 88 N.M. 298, 540 P.2d 228, that the employee “was paid merely for a period and payments then discontinued altogether.... Any payments made by [the workmen’s compensation carrier] to the employee must be presumed to be benefits for his original injury.” That presumption does not follow in the case now before us, because Transamerica did not terminate benefits but, instead, settled all of plaintiff’s claims to entitlement under the Act. The fact of settlement presupposes a negotiated payment for compensation on a basis of total or partial disability (§§ 52-1-41, 52-1-42), for medical and related benefits (§ 52-1-49), and for vocational rehabilitation benefits (§ 52-1-50). The degree of defendant’s disability for which settlement was made is thus presumed to have been that degree agreed upon between the parties as of the date settlement was made. The parties concede that the doctor’s treatment, which impliedly contributed to defendant’s ultimate disabled condition, occurred before the compensation claim was settled. It stands to reason, therefore, that the insurer was contending that it paid more than benefits for the original injury, and that the settlement had to include payment for some degree of disability occasioned by the doctor’s maltreatment over and above the disability caused by the original injury.

A motion to dismiss is properly granted if, “under any state of facts provable under the claims made,” plaintiff cannot recover. Delgado v. Costello, 91 N.M. 732, 734, 580 P.2d 500 (Ct.App.1978). A complaint need only make a short and plain statement of the claim showing that the pleader is entitled to relief. Id.; N.M.R.Civ.P. 8(a)(2), N.M.S.A.1978. “The office of the pleadings is to give the parties fair notice of both claims and defenses and the grounds upon which they rest.” Seasons, Inc. v. Atwell, 86 N.M. 751, 527 P.2d 792 (1974).

Plaintiff’s complaint was clearly labeled one “for Reimbursement”; the exhibit attached clearly disclosed an understanding between the parties of the claim underlying the complaint; defendant’s motion to dismiss and his expressed reliance therein on the Chapman case to support the motion, clearly remove any doubts regarding defendant’s notice of plaintiffs’ asserted claim. If defendant understood the claim made by plaintiff, we are in no position to say that the complaint was insufficient.

Moreover, as we have noted, plaintiff’s complaint alleged that defendant’s counsel agreed in writing to protect Transamerica’s interests in any recovery against the doctor for malpractice, in return for Transamerica’s promise not to intervene in that case. The letter attached as Exhibit “A” to plaintiff’s complaint supports the allegation which, in essense, alleges the existence of an agreement and its breach. Those alleged facts are sufficient to state a valid cause of action for breach of contract.

The established policy of the Rules of Civil Procedure require that the rights of litigants be determined by an adjudication on the merits rather than upon the technicalities of procedure and form. Las Luminarias of the N.M. Council of the Blind v. Isengard, 92 N.M. 297, 587 P.2d 444 (Ct.App.1978); Carroll v. Bunt, 50 N.M. 127, 172 P.2d 116 (1946). “All pleadings shall be so construed as to do substantial justice.” N.M.R.Civ.P. 8(f), N.M.S.A.1978. Under the facts of this case and the record submitted the pleadings withstand the attack made by the motion to dismiss.

We think there is a second reason why defendant’s motion should not have been granted: The deposition was a part of the record at the time of dismissal; both parties refer to evidence contained in the deposition in their briefs. In its order of dismissal, the trial court said: “. . . the Court having heard evidence and being otherwise advised. . . . ” In view of the state of the record as well as because of references to the deposition in counsel’s appellate briefs, we are permitted to consider Sydow’s motion as one for summary judgment under Rule 56, N.M.R.Civ.P., rather than for dismissal under Rule 12(b)(6), supra. When matters outside the pleadings are considered on a motion to dismiss, the motion will be treated as one for summary judgment. Wheeler v. Board of Co. Commr’s, 74 N.M. 165, 391 P.2d 664 (1964); Rule 12(c), N.M.R.Civ.P., N.M.S.A.1978. So viewing the motion filed, an issue of fact exists whether Transamerica’s settlement amount included some payment for a disability caused or increased by the doctor’s treatment, or was payment for a disability resulting from the original injury only. The resolution of that question determines whether Transamerica is entitled to any reimbursement under § 52-1-56C’s prohibition of double recovery to the workman.

Considering this appeal most favorably in support of a right to trial on the issues, as we must, and looking at the whole record to note evidence which puts a material fact in issue, C & H Constr. & Paving Co. v. Citizens Bank, 93 N.M. 150, 597 P.2d 1190 (Ct.App.1979), we hold summary judgment improper in this case. The complaint is sparse in its allegations, but the record as a whole sufficiently amplifies the theory of liability and plaintiff’s claim for relief.

The order of dismissal is reversed, and the matter is remanded for trial on the merits.

It is so ordered.

DONNELLY, J., concurs. SUTIN, J., dissents.