Ramsey v. Kohl

Talbot, J.

Plaintiff Charles Ramsey filed a worker’s compensation claim against his former employer, E. H. Rowley Company, where he had been employed from 1983 until 1986. In his claim, he alleged that his exposure at work to certain industrial chemicals resulted in a disabling medical condition that began in September 1986. The worker’s compensation claim was ultimately redeemed for $65,000 paid by E. H. Rowley’s insurer, the Accident Fund Company. Subsequently, plaintiffs hired the defendant law firms and lawyers to pursue a products liability claim against the manufacturers and sellers of certain chemicals that allegedly caused plaintiff to suffer medical injuries.¹ In February 1987, plaintiff filed suit in the products liability case. One year later, plaintiffs suit was dismissed because of defendants’ failure to properly serve the products liability complaint. Thereafter, in October 1994, plaintiff brought this action against defendants alleging legal malpractice.

The Accident Fund sought to intervene in order to protect its interest in any recovery by plaintiff from defendants.² The trial court denied its motion to intervene, indicating that the Accident Fund would be “protected in some way” if it was later determined that the Accident Fund had a right to some portion of the proceeds. Plaintiff eventually settled with defendants for a total amount of $335,000, and the action was dismissed. Counsel for the Accident Fund, present at the final settlement proceeding, requested that $40,000 from the settlement be put into an escrow account pending a determination of the Accident Fund’s right to take pursuant to a worker’s compensation lien. The trial court denied this request, noting that the Accident Fund was not a party and that it could start its own lawsuit to protect its claim.

On appeal, the Accident Fund first argues that the trial court erred in denying its motion to intervene. We disagree. A carrier’s right to intervene in a third-party action is contingent on its statutory right to assert a worker’s compensation lien. McKenny v Crum & Forster, 218 Mich App 619, 621-622; 554 NW2d 600 (1996). This is a question of law to be reviewed de novo. Id.

As a general matter, an employer or worker’s compensation insurance carrier that has paid benefits to an injured employee is entitled under MCL 418.827; MSA 17.237(827) to reimbursement from any recovery that the employee obtains in a third-party tort action.³ See Beaudrie v Anchor Packing Co, 206 Mich App 245, 247-248; 520 NW2d 716 (1994); Hearns v Ujkaj, 180 Mich App 363, 367; 446 NW2d 657 (1989). Reimbursement is allowed only where the injury, for which compensation is payable, was caused under circumstances creating legal liability in a third party, and only to the extent that the benefits were paid for the same injury. Powell v Keeler Brass Co, 135 Mich App 67, 72; 351 NW2d 896 (1984). Here, the third-party suit in which the Accident Fund wishes to assert its statutory lien is not a tort action against the party directly responsible for the worker’s injury, but rather a legal malpractice action against the attorneys who allegedly mishandled the injured worker’s original tort action. In its brief on appeal, the Accident Fund does not specifically address the issue whether an insurance carrier is entitled to assert a worker’s compensation lien against the proceeds of a legal malpractice settlement. Nor did the trial court rule directly on this issue. Nevertheless, we will review the issue because it is a question of law, the necessary underlying facts have been presented, and its resolution is essential to the question presented on appeal. See Atkinson v Detroit, 222 Mich App 7, 11; 564 NW2d 473 (1997); Carson Fisher Potts & Hyman v Hyman, 220 Mich App 116, 119; 559 NW2d 54 (1996).

The question whether an employer or its insurance carrier may assert a worker’s compensation lien against the proceeds of a legal malpractice action is one of first impression in Michigan. Courts in other jurisdictions considering similar provisions are split with regard to the question. Those foreign courts allowing employers or insurance carriers to assert worker’s compensation liens on legal malpractice recoveries have relied primarily on (1) the general policy of the reimbursement statutes, which is to prevent injured workers from receiving windfall double recoveries, and (2) the fact that the measure of damages in a legal malpractice action is equivalent to the amount the plaintiff would have otherwise recovered in the underlying tort action (i.e., the “suit within a suit”). See Williams v Katz, 23 F3d 190 (CA 7, 1994); Bongiorno v Liberty Mut Ins Co, 417 Mass 396; 630 NE2d 274 (1994); Frazier v New Jersey Manufacturers Ins Co, 142 NJ 590; 667 A2d 670 (1995); Toole v EBI Companies, 314 Or 102; 838 P2d 60 (1992). On the other hand, those foreign courts prohibiting employers or insurance carriers from asserting worker’s compensation liens on legal malpractice recoveries have relied primarily on the specific language of their respective reimbursement statutes and the notion that a court may not impose a lien in the absence of explicit contractual or statutory authority. See Travelers Ins Co v Breese, 138 Ariz 508; 675 P2d 1327 (1983); Woodward v Pratt, Bradford & Tobin, PC, 291 Ill App 3d 807; 266 Ill Dec 32; 684 NE2d 1028 (1997); Sladek v K Mart Corp, 493 NW2d 838 (Iowa, 1992). The analysis employed by these latter courts more closely reflects our own principles of statutory construction.

The primary goal of judicial interpretation of statutes is to ascertain the intent of the Legislature. Farrington v Total Petroleum, Inc, 442 Mich 201, 212; 501 NW2d 76 (1993). The first criterion in determining intent is the specific language of the statute. House Speaker v State Administrative Bd, 441 Mich 547, 567; 495 NW2d 539 (1993). The Legislature is presumed to have intended the meaning it plainly expressed. McFarlane v McFarlane, 223 Mich App 119, 123; 566 NW2d 297 (1997). If the plain language of the statute is clear, no further judicial interpretation is necessary. Lorencz v Ford Motor Co, 439 Mich 370, 376; 483 NW2d 844 (1992).

The clear language of MCL 418.827; MSA 17.237(827) limits the application of worker’s compensation liens to those third-party actions in which recovery is sought from persons liable for causing the injury for which compensation was payable. The first subsection of the statute provides that when “the injury for which compensation is payable under this act was caused under circumstances creating a legal liability in some person other than a natural person in the same employ or the employer to pay damages in respect thereof,” the injured employee may bring an action against the third party” in addition to receiving worker’s compensation benefits and, if the injured employee does not bring such an action within one year after the occurrence of the injury, then the employer or its insurance carrier “may enforce the liability of such other person.” MCL 418.827(1); MSA 17.237(827)(1) (emphasis added). The statute then provides that any recoveiy from the third-party “shall first reimburse the employer or carrier for any amounts paid or payable” as worker’s compensation. MCL 418.827(5); MSA 17.237(827)(5). In this case, defendants (plaintiff’s lawyers) did not cause the injury that led to the compensation payments. Put differently, the circumstances that allegedly caused plaintiff’s injury did not “create” a legal liability in the defendant lawyers. Accordingly, the statute does not provide for the imposition of a worker’s compensation lien on the proceeds of plaintiff’s legal malpractice claim against defendants. Cf. Woodward, supra, 291 Ill App 3d_; 684 NE2d 1033.

We are aware of the general, policy against double recoveries indicated by MCL 418.827; MSA 17.237(827), see Great American Ins Co v Queen, 410 Mich 73, 92; 300 NW2d 895 (1980); 6 Larson’s Workers’ Compensation Law, § 71.20. However, it is not for this Court to enforce the general policy suggested by a statute at the expense of the specific language of the statute. The wisdom of a statute is for the Legislature to decide and the law must be applied as written. Jennings v Southwood, 446 Mich 125, 142; 521 NW2d 230 (1994); Allstate Ins Co v Dep’t of Ins, 195 Mich App 538, 547; 491 NW2d 616 (1992).

Because MCL 418.827; MSA 17.237(827) does not provide for the imposition of a worker’s compensation lien in this case, we hold that the trial court did not err in denying the Accident Fund’s motion to intervene. McKenny, supra at 621-622. We need not address the Accident Fund’s argument that it is entitled to reimbursement from plaintiff’s recovery despite its failure to formally intervene or its argument that all of the appellees should be held liable for the lien.

Affirmed.

Hood, P.J., concurred.

1 Plaintiff Bonnie Ramsey’s sole claim in the tort action underlying the instant malpractice case was for the loss of the society of her husband, plaintiff Charles Ramsey. For the sake of clarity, we will refer to Charles Ramsey alone as plaintiff.

2 Although intervention is not necessary to assert a worker’s compensation lien, the better practice is to formally intervene. See Ohio Farmer’s Ins Co v Neff, 112 Mich App 53, 57-58; 315 NW2d 553 (1981).

3 MCL 418.827; MSA 17.237(827) provides in pertinent part:

(1) Where the injury for which compensation is payable under this act was caused under circumstances creating a legal liability in some person other than a natural person in the same employ or the employer to pay damages in respect thereof, the acceptance of compensation benefits or the taking of proceedings to enforce compensation payments shall not act as an election of remedies but the injured employee or his or her dependents or personal representative may also proceed to enforce the liability of the third party for damages in accordance with this section. If the injured employee or his or her dependents or personal representative does not commence the action within 1 year after the occurrence of the personal injury, then the employer or carrier, within the period of time for the commencement of actions prescribed by statute, may enforce the liability of such other person in the name of that person. ... Any party in interest shall have a right to join in the action.

(5) In an action to enforce the liability of a third party, the plaintiff may recover any amount which the employee or his or her dependents or personal representative would be entitled to recover in an action in tort. Any recovery against the third party for damages resulting from personal injuries or death only, after deducting expenses of recovery, shall first reimburse the employer or carrier for any amounts paid or payable under this act to date of recovery and the balance shall immediately be paid to the employee or his or her dependents or personal representative and shall be treated as an advance payment by the employer on account of any future payments of compensation benefits.