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D. Forest v. Safeway & Scott Wentzel Services (4/17/92), 830 P 2d 778
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NOTICE: This opinion is subject to formal correction
before publication in the Pacific Reporter. Readers are
requested to bring typographical or other formal errors to
the attention of the Clerk of the Appellate Courts, 303 K
Street, Anchorage, Alaska 99501, in order that corrections
may be made prior to permanent publication.
THE SUPREME COURT OF THE STATE OF ALASKA
DONALD FOREST, )
)
Appellant, ) Supreme Court No. S-4079
)
v. ) Superior Court No.
) 4FA-89-1090 Civil
SAFEWAY STORES, INC., and )
SCOTT WENTZEL SERVICES, ) O P I N I O N
)
Appellees. ) [No. 3832 - April 17, 1992]
________________________________)
Appeal from the Superior Court of the State
of Alaska, Fourth Judicial District,
Fairbanks, Richard D. Savell, Judge.
Appearances: Richard W. Wright, Edward R.
Niewohner, for Appellant. Robert J.
McLaughlin, Faulkner, Banfield, Doogan &
Holmes, Seattle, for Appellees.
Before: Rabinowitz, Chief Justice, Burke,
Matthews, Compton and Moore, Justices.
BURKE, Justice.
MATTHEWS, Justice, with whom RABINOWITZ,
Chief Justice, joins, dissenting.
An employee injured in an industrial accident, for
which he was being paid workers' compensation benefits, brought
suit against a physician, alleging that his industrial injury was
later aggravated by malpractice on the part of the physician.
The employee subsequently entered into a stipulation to dismiss
his malpractice claim with prejudice. His employer, who had been
paying compensation, filed a petition with the Workers'
Compensation Board (Board) to dismiss the employee's compensation
claim. The Board granted the petition, concluding that the
employee had compromised his third-party claim against the
physician without the employer's written consent, thus forfeiting
all rights to further compensation. On appeal to the superior
court, the Board's decision was affirmed. We reverse and remand
to the Board for further proceedings consistent with this
opinion.
I
The essential facts are not in dispute. Donald Forest
injured his back in 1983, while working for Safeway Stores, Inc.
Safeway accepted Forest's workers' compensation claim and began
to pay compensation benefits, although the full extent of
Safeway's statutory liability remained in dispute.1 In 1984,
Forest underwent back surgery. The surgery was performed by Dr.
John Joosse. According to Forest, the surgery not only failed to
resolve his back problem, it made the problem worse.
Accordingly, Forest filed a medical malpractice action against
Dr. Joosse.
Safeway continued to pay Forest workers' compensation
benefits while the malpractice suit was pending. Safeway also
continued to negotiate with Forest over the full extent of
compensation due. These negotiations culminated in an offer of
settlement; Safeway prepared a Compromise and Release, which it
presented to Forest in late 1987. In the proposed compromise,
Safeway offered a lump sum payment of $77,000, and two waivers:
(1) a waiver of a small costs judgment against Forest for $489;
and (2) a waiver of "any lien under AS 23.30.015 for the third
party claim [Forest] has filed against Dr. John Joosse." Forest,
however, never signed the proposed compromise.
As indicated by the language of the proposed
compromise, Safeway was aware of Forest's malpractice claims
against Dr. Joosse. Indeed, at some point after Forest filed
suit against Dr. Joosse, Safeway "notified [Forest] of its intent
to share in the proceeds of the malpractice action pursuant to AS
23.30.015."
In the malpractice action, Dr. Joosse moved for summary
judgment on both of the negligence counts alleged in the
complaint. After hearing oral argument, the superior court,
Judge Mary E. Greene, granted partial summary judgment. On one
count, she ruled in favor of Dr. Joosse. On the second count,
she ruled in Forest's favor. As to this count, however, Judge
Greene stated:
I feel obliged to make a further
statement. Just because one is able to
defeat summary judgment by raising an issue
of fact that ends up being a credibility case
doesn't mean that you've got a great case.
It's very apparent to me that this is not a
very strong plaintiff's case.
In April 1988, Forest filed a notice of appeal of the
superior court's summary judgment decision. Eight months later,
however, Forest dropped his appeal and joined in a stipulation to
dismiss with prejudice his malpractice action. The stipulation
provided that each party would bear its own costs and attorney's
fees. In accordance with the stipulation, Judge Greene ordered
the malpractice action dismissed, with prejudice, and judgment
was entered.
When Safeway learned that the malpractice action had
been dismissed, it petitioned the Board to dismiss Forest's
compensation claim. Safeway claimed that, by dismissing his
malpractice action without its consent, Forest forfeited his
right to receive further compensation under AS 23.30.015(h).
The Board granted Safeway's petition, finding as
follows:
[Forest] settled his third party claim,
apparently to avoid possible cost and
attorney fee liability and Rule 11 sanctions.
The parties did not stipulate to dismiss,
however, until more than nine months after
Judge Green[e]'s [summary judgment] ruling.
This was plenty of time for [Forest] to
notify [Safeway] of the settlement
considerations and to allow [Safeway] to
pursue the third party claim if it wished.
The employer was never given the choice.
The Board then denied Forest's claim for additional workers'
compensation benefits. Safeway ceased to pay Forest any benefits
at all from the date of the dismissal order.
Forest appealed the dismissal of his claim to the
superior court. The court ruled that AS 23.30.015(h) required
forfeiture of all future benefits,2 and affirmed the Board's
decision. This appeal followed.
II
AS 23.30.015 governs payment and reimbursement of
workers' compensation when a third party may be liable to pay
damages for an employee's injury.3 Several provisions of that
section are relevant to an analysis of this case.
First, Forest was under no obligation to pursue a claim
for damages against Dr. Joosse. AS 23.30.015(a). He was free to
collect workers' compensation benefits, and leave it at that.4
Second, Safeway's obligation to pay workers' compensation
benefits continued, while Forest's suit against Dr. Joosse was
pending. Id. at (f). Third, any damages recovered by Forest
from Dr. Joosse, minus litigation costs and expenses, would have
gone to reimburse Safeway for benefits paid; any excess would
have diminished the amount for which Safeway remained liable.
Id. at (g). Fourth:
If compromise with a third person is
made by the person entitled to compensation .
. . of an amount less than the compensation
to which the person . . . would be entitled,
the employer is liable for compensation
stated in (f) of this section only if the
compromise is made with the employer's
written approval.
AS 23.30.015(h).5
The central question here is whether, under AS
23.30.015(h), Forest forfeited his right to all compensation from
Safeway. Although Forest has presented several different
arguments to support reversal6, we consider only the proper
interpretation of AS 23.30.015(h).
"The goal of statutory construction is to give effect
to the legislature's intent, with due regard for the meaning the
statutory language conveys to others." Tesoro Alaska Petroleum
Co. v. Kenai Pipe Line Co., 746 P.2d 896, 905 (Alaska 1987).
Whenever possible, each part or section of a statute should be
construed with every other part or section, so as to produce a
harmonious whole. Anchorage v. Scavenius, 539 P.2d 1169, 1174
(Alaska 1975). It is also important to note that we have
consistently held that the Workers' Compensation Act should be
liberally construed in favor of the employee in accordance with
its humanitarian purposes.7 Bignell v. Wise Mechanical
Contractors, 651 P.2d 1163, 1165 n.5 (Alaska 1982).
AS 23.30.015(a) sets the tone for the sub-sections that
follow and indicates that the legislature was concerned with an
employee's election of remedies in cases involving multiple cause
disabilities:
If on account of disability . . . for
which compensation is payable under this
chapter the person entitled to the
compensation believes that a third person
other than the employer or a fellow employee
is liable for damages, the person need not
elect whether to receive compensation or to
recover damages from the third person.
AS 23.30.015(a). In this case, Forest suffered a work-related
back injury which may have been aggravated by Dr. Joosse's later
surgery. This is not a situation where multiple causes, some
work-related and others not, have combined to create a
compensable, yet nondivisible, injury.8
The clear purpose of this section is to allow employees
to seek damages from third-party tortfeasors without jeopardizing
their compensation while, at the same time, allowing employers to
share in damage awards up to the limit of their exposure under
the workers' compensation law. As we noted in Ribar v. H & S
Earthmovers, 618 P.2d 582, 584 n.4 (Alaska 1980), employers are
entitled to reimbursement under AS 23.30.015 for compensation
paid for injuries caused by a physician's negligence committed
while treating a compensable injury.9 Therefore Safeway had a
legitimate, albeit dependent, interest in Forest's third-party
claim against Dr. Joosse.
However, under AS 23.30.015(a), Safeway's interest in
the third party claim only extended to Dr. Joosse's negligent
aggravation, if any, of the original work-related injury. The
Board erred in interpreting AS 23.30.015(h) in isolation. This
notice and forfeiture provision ensures that an employer's
dependent interest in the employee's third-party claim is not
compromised without the employer's written consent.
It does not follow from the language of the section,
taken in its entirety, that an employee who sues a third party
for aggravation of a existing work-related injury forfeits his or
her right to all compensation, both for the initial injury and
for the aggravation, simply because the employer was excluded
from settlement negotiations. Such an interpretation would
result in a windfall for the employer. It would also constitute
a particularly harsh penalty for an injured worker who would end
up paying for what is undoubtedly an attorney's blunder.10
Accordingly we hold that the Board erred in dismissing
Forest's entire compensation claim. Under our interpretation of
the section, the Board should have determined Forest's
entitlement to compensation attributable to the initial injury
apart from any aggravation caused by Dr. Joosse's malpractice and
then dismissed that part of Forest's compensation claim
attributable to the physician's negligence. Our interpretation
does not take the teeth from AS 23.30.015(h), nor does it do
violence to the language.11
Upon remand to the Board, Forest will carry the burden
of proving that the malpractice claim lacked merit. In other
words, Forest bears the burden of segregating his initial injury
from any possible aggravation caused by Dr. Joosse's negligence.
This follows from the fact that Forest failed to comply with the
nonburdensome notice and approval requirements of AS
23.30.015(h). In so doing, Forest foreclosed Safeway's ability
to secure reimbursement for that portion of the back injury that
may have been caused by Dr. Joosse's negligence.12
The decision of the superior court affirming the
Board's decision to dismiss Forest's claim for compensation
benefits is REVERSED and REMANDED to the Board for further
proceedings consistent with this opinion.
MATTHEWS, Justice, joined by RABINOWITZ, Chief Justice,
dissenting in part.
I agree that the forfeiture provision of AS
23.30.015(h) should only apply to the extent that the third-party
medical malpractice claim and the workers' compensation claim
overlap. However, I do not believe that the claimant should be
allowed to escape application of the forfeiture clause to an over
lapping claim on the grounds that the third-party defendant was
not negligent. Under AS 23.30.015(h) a claimant who has compro
mised with a third-party defendant without the written approval
of the employer cannot escape forfeiture of the claim against the
employer on the grounds that the third-party defendant was not
negligent. It seems inconsistent, therefore, to permit Forest to
avoid a forfeiture of that portion of his claim against the
employer which overlaps his third-party claim on the grounds that
Dr. Joosse, the third-party defendant, was not negligent.
Under the majority opinion there are two issues on
remand: (1) what is the value of that portion of Forest's total
claim against Safeway which was aggravated by Dr. Joosse's
treatment; and (2) was Dr. Joosse's treatment negligent? Forest
can win the case on remand in two ways under the majority
opinion. He may establish that Dr. Joosse's treatment did not
aggravate his injuries, or he may establish that Dr. Joosse's
treatment was not negligent, although it may have aggravated his
injuries. In the typical third-party claim where a claimant's
injuries are concurrently caused by a third-party defendant and
the claim is compromised without the written approval of the
employer, it is never a defense to forfeiture that the third-
party defendant was not negligent. Thus, I think the majority
has gone too far by allowing Forest to escape liability on the
ground that Dr. Joosse's treatment was not negligent. I would
limit the inquiry on remand solely to the first issue noted
above, the extent to which Dr. Joosse's treatment aggravated
Forest's condition.
_______________________________
1. Forest and Safeway disputed the full extent and nature
of Forest's injuries and the role vocational rehabilitation
should play in Forest's compensation scheme.
2. Judge Savell noted the harshness of this result and
opined that a medical malpractice exception to AS 23.30.015(h)
would "further the broad social policies underlying the Workers'
Compensation Act."
3. Because the facts of this case are largely undisputed,
the question before us is whether the Board correctly applied the
law to these facts. M-K Rivers v. Schleifman, 599 P.2d 132, 134
(Alaska 1979). We give "fresh consideration"to the adequacy of
such conclusions of law in a Board decision. Id.
Additionally, we note that this case involves a close
interpretation of AS 23.30.015, a legal question squarely within
the province of this court. We review such questions of
statutory interpretation that do not involve the Board's special
expertise under the substitution of judgment standard of review.
Kodiak Oilfield Haulers v. Adams, 777 P.2d 1145, 1148 (Alaska
1989).
4. If a worker does not file suit against a potentially
liable third party within one year of the initial workers'
compensation award, then the worker's acceptance of workers'
compensation benefits acts as an assignment to the employer of
any claim against the third party. AS 23.30.015(b). Here,
Forest did file suit; hence, no assignment rights went to
Safeway. Safeway's interests in the suit became dependent upon
Forest's prosecution of it.
5. AS 23.30.015(j) is also tangentially relevant here.
This subsection provides that a worker who commences an action
against a third party must notify the Board and all interested
parties within 30 days. Forest apparently notified Safeway,
because Safeway in turn notified Forest that it intended to share
in any damages Forest recovered against Dr. Joosse.
6. Among other things, Forest argues that the stipulation
to dismiss his malpractice claims was not sufficiently
remunerative to constitute a "compromise"within the meaning of
AS 23.30.015(h). He also maintains that Judge Greene's comments
on the merits of his malpractice claim constitute a judicial
determination that the claim was frivolous. Therefore, he
continues, Safeway suffered no prejudice when he agreed to
dismiss the claim and should not be permitted to plead AS
23.30.015(h) to escape liability for further compensation. See
e.g. Chapman v. Hoage, 296 U.S. 526 (1935). We do not consider
any of his arguments to be particularly persuasive nor are they
necessary to a proper disposition of this appeal.
7. We are aware of the legislature's 1988 amendment to the
Workers' Compensation Act in which a preferential reading of the
Act in favor of workers is prohibited. The amendment provides:
(b) The legislature declares that the
workers' compensation laws must not be
construed by the courts in favor of any
party.
Ch. 79, 1, SLA 1988. However, since the amendment "applies
only to injuries sustained on or after July 1, 1988,"ch. 79 48
SLA 1988, this change in our rules of construction will not be
applied in this case.
8. Professor Larson explains the distinction nicely:
A practical difficulty that attends
the application of ordinary third-party rules
to malpractice cases arises from a
fundamental difference between these
aggravation cases and third-party cases in
which the wrongdoer caused the original
injury. The difference lies in the fact that
the malpractice action involves liability for
only a part of the injury while every other
third-party action involves liability of the
third party for the entire injury.
2A A. Larson, The Law of Workmen's Compensation 72.65(a), at 14-
228.64 (1990).
9. Later aggravations of a work-related injury are
compensable under AS 23.30.010 if the earlier injury was a
substantial factor contributing to the nonindustrial injury. Cook
v. Alaska Workmen's Compensation Board, 476 P.2d 29, 35 (Alaska
1970).
10. Statutes which cause forfeiture are not favored and
will be narrowly construed. State ex rel. Smith v. Tyonek
Timber, Inc., 680 P.2d 1148, 1157 (Alaska 1984).
11. We also note that our interpretation of this subsection
does not amount to the judicial adoption of a "medical
malpractice exception"to the notice and approval provisions of
AS 23.30.015(h). See, e.g., Roach v. Hastings Plastics Corp.,
442 N.E.2d 1186 (N.Y. 1982). Rather we are construing its
language in accordance with the language of AS 23.30.015(a) so as
to produce a harmonious whole. Wien Air Alaska v. Arant, 592
P.2d 352, 356 (Alaska 1979)("The meaning of a statutory provision
is determined by the language of the particular provision
construed in light of the purpose of the whole instrument.");
Anchorage v. Scavenius, 539 P.2d at 1174.
12. In essence, by stipulating to dismiss his malpractice
claim with prejudice, Forest asserts that the claim lacks
substance. He is obviously in a better position to prove this
than is Safeway. The party asserting a fact generally bears the
burden of proving that fact, especially when the party controls
the evidence which bears upon that fact. Sloan v. Jefferson, 758
P.2d 81, 83 (Alaska 1988).
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