Graham v. Industrial Commission , 26 Utah 2d 424 ( 1971 )

ELLETT, Justice:

Plaintiff’s husband while temporarily in California and while in the course of his employment lost his life in a head-on collision. Although he lost his life in California, he was employed in Utah, and his dependents are entitled to compensation according to the law of Utah.¹ The plaintiff on behalf of herself and her six minor children is entitled to an award under the compensation insurance laws of Utah of approximately $20,000 against the insurance carrier of deceased’s employer, to wit, the Travelers Insurance Company.²

Prior to filing a claim with the defendant Industrial Commission, the plaintiff herein retained counsel and settled her case against the driver of the vehicle which was involved in the fatal accident for $95,000. The Industrial Commission then refused to make an award upon the-grounds that plaintiff had already received from the third-party tortfeasor a sum of. money in excess of any possible award to which she would be entitled under the Utah law. 1

Had the Commission first made an award to the plaintiff, the Travelers Insurance Company would have paid the same, and then either it or the heirs or personal representatives of the deceased could have sued the third-party tortfeasor for the wrongful death of plaintiff’s husband. Any money recovered from the third-party tortfeasor would be disbursed according to the following statutory provisions :³ i

(1) The reasonable expense of the action, including attorneys’ fees, shall be paid and charged proportionately against the parties as their interests may appear.

(2) The person liable for compensation payments shall be reimbursed in full for all payments made.

. (3) The balance shall be paid to the injured employee or his heirs in case of death, to be applied to reduce or satisfy in full any obligation thereafter accruing against the person liable for compensation.

This court has heretofore held that subsection (1) above requires each party to bear its share of attorney’s fee and expenses before making the distribution of the funds.⁴

, It is clear that had the Industrial Commission made the award required by the statute, the insurance carrier would have been obligated to pay its share of expenses before it could be reimbursed for the money it had paid plaintiff.

Under the rulings made by the Industrial Commission in this case, the plaintiff by her efforts caused an undeserved windfall to the insurance carrier in that it was required to pay nothing whatsoever on its obligation to the plaintiff — not even a proportionate share of the expenses incurred by the plaintiff for the carrier’s benefit.

We can see no reason why there should be any difference in the final result whether the third party pays before or after an award is made.

The matter is remanded to the Industrial Commission with directions to determine the proper award to be made to plaintiff. If the parties cannot agree that the fee charged by plaintiff’s attorney⁵ is reasonable, then the Commission should not release the money to the plaintiff for 30 days in order that the insurance carrier would have an opportunity to bring an appropriate action in the District Court to determine the proper amount of legal expenses in connection with the settlement with the third-party tortfeasor.

If the interested parties can agree on the reasonableness of the fee and expenses incurred in connection with recovery from the third party, then the award minus any amount heretofore paid to plaintiff less the proportionate share of plaintiff’s expenses should he released to plaintiff. In other words, the net award to the plaintiff would be the amount of the total expenses multiplied by a fraction, the numerator of which would be the award and the denominator of which would be $95,000, less any amount heretofore paid to plaintiff. The insurance carrier would thus be out of pocket exactly the same amount of money as it would have been had the award been made béfore the recovery from the third-party tortfeasor, i. e., its proportionate share of the expenses necessarily incurred in securing a recovery from the tortfeasor.

The plaintiff is entitled to costs including a reasonable attorney’s fee pursuant to Section 35-1-87, U.C.A.1953.

TUCKETT and CROCKETT, JJ., concur.

1 . Section 35-1-54, U.C.A.1953.

2 . Section 35-1-45, U.C.A.1953.

3 . Section 35-1-62, U.C.A.1953.

4 . Worthen v. Shurtleff and Andrews, Inc., 19 Utah 2d 80, 426 P.2d 223. (1967).

5 .Contingent fee of 25 per cent.