HARTFORD, Conn. (Legal Newsline) – A question of who gets the money paid from Workers' Compensation when a third party is involved in an accident was settled by the Connecticut Supreme Court on July 31.
A law passed by the state legislature invoking a moratorium on filing for additional benefits by both employee and employer had caused some confusion.
“We conclude that the moratorium should not apply to the one-third reduction. We therefore reverse the decision of the board and direct it to deny the defendant employer’s request for a moratorium on the plaintiff employee’s workers’ compensation benefits,” Justice Gregory T. D’Auria wrote in the opinion.
According to opinion, plaintiff Patrick Callaghan was injured in a work-related automobile collision while working for the defendant, Car Parts International. He filed an action for damages against a third party who was also involved in the accident. He also applied for and received about $74,000 in Workers’ Compensation benefits from the defendant employer.
The plaintiff employee and the third party later settled the action for $100,000, as related in the opinion. The net proceeds of the settlement, after the deduction of attorneys fees and litigation costs, totaled about $66,000. The plaintiff employee reimbursed the defendant employer out of the proceeds of the settlement, deducting for himself one-third of the amount to be reimbursed.
The defendant employer’s two-thirds share of the net proceeds totaled about $44,000; the plaintiff employee’s one-third share amounted to about $22,000. The parties went before a Workers’ Compensation commissioner to determine the status of the moratorium.
The employer claimed that although the law permitted the employee to keep his one-third share of the net proceeds, it did not eliminate the moratorium, created by Connecticut case law, requiring the plaintiff to exhaust the proceeds from the third-party action before receiving additional workers’ compensation benefits from the employer.
The employee responded that the law commanded that the employee’s one-third share "shall inure solely to the benefit of the employee." He took this to mean that the legislature did not intend for those proceeds to benefit any party other than the plaintiff employee, and, thus, those proceeds were not subject to the moratorium.
However, the Workman’s Compensation commissioner agreed with the defendant employer and allowed the moratorium.
As a result, the plaintiff sought a review by the Compensation Review Board, which upheld the commissioner’s decision. The board said that P.A. 11-205 did not explicitly direct that the moratorium should not apply to the one-third reduction. Therefore, the moratorium should continue to apply, despite the words in P.A. 11-205 that "the reduction should solely benefit the employee.”
Finally, Callaghan appealed to the Connecticut Supreme Court.
“Contrary to the decisions of the commissioner and the board, we conclude that the moratorium does not apply to the one-third reduction in favor of the plaintiff. ...P.A. 11-205 clearly and unambiguously intended for the one-third reduction to be for the employee’s sole benefit. Although we agree that the added text and the legislative history concerning its enactment do not specifically address the moratorium, applying the moratorium to the reduction would erode the benefit conferred on the employee by P.A. 11-205,” D'Auria wrote.
“The moratorium would require the employee to use the proceeds from the one-third reduction to pay any future expenses that otherwise would be covered by workers’ compensation benefits from the employer and, thus, contradict the clear directive that ‘the reduction shall inure solely to the benefit of the employee,’" D'Auria wrote.
“Because application of the moratorium would conflict with and undermine the clear intent of the text, we conclude that the moratorium should not apply to the one-third reduction. We therefore reverse the decision of the board and direct it to deny the defendant employer’s request for a moratorium on the plaintiff employee’s workers’ compensation benefits,” the judge wrote.
Justices Richard N. Palmer, Richard A. Robinson, Christine S. Vertefeuille, Maria Araujo Kahn and Andrew J. McDonald concurred.