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M. McCarter v. Alaska National Insurance Co. (11/4/94), 883 P 2d 986
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NOTICE: This opinion is subject to formal correction
before publication in the Pacific Reporter. Readers
are requested to bring errors to the attention of the
Clerk of the Appellate Courts, 303 K Street, Anchorage,
Alaska 99501.
THE SUPREME COURT OF THE STATE OF ALASKA
) Supreme Court No. S-5746
MICK MCCARTER, )
) Superior Court No.
Appellant, ) 1JU-92-1780 CI
v. )
) O P I N I O N
ALASKA NATIONAL INSURANCE )
COMPANY, ) [No. 4140 - November 4, 1994]
)
Appellee. )
______________________________)
Appeal from the Superior Court of the
State of Alaska, First Judicial District,
Juneau,
Larry R. Weeks, Judge.
Appearances: Steven L. Hempel, Mark
Clayton Choate Law Offices, Juneau, for
Appellant. Randall J. Weddle and Matthew D.
Regan, Faulkner, Banfield, Doogan & Holmes,
Anchorage, for Appellee. Christine Schleuss,
Anchorage, for Amicus Curiae Alaska Academy
of Trial Lawyers.
Before: Moore, Chief Justice,
Rabinowitz, Matthews, Compton, Justices, and
Bryner, Justice, pro tem.*
RABINOWITZ, Justice.
I. FACTS AND PROCEEDINGS
Mick McCarter was employed as a "flagger"at a highway
construction site for Wilderness Women, Inc. Edward Hanousek,
III struck and injured McCarter while driving a vehicle past the
site. Wilderness Women, Inc.'s insurance carrier, Alaska
National, Inc. (ANI), paid McCarter workers' compensation
benefits amounting to $11,936.
McCarter sued Hanousek for negligence. Because
Hanousek himself had few assets, McCarter settled with Hanousek's
insurer for $50,000 (the policy limit) plus Civil Rule 82
attorney's fees of $7,500. McCarter argued before the superior
court, and argues here, that this settlement did not fully
compensate him for his injuries.
Alaska workers' compensation law requires a person who
both receives workers' compensation benefits and recovers damages
from a third party to reimburse the employer or the employer's
insurance carrier for the costs of all benefits actually
furnished and all amounts paid as compensation, as well as to
reimburse the state for any second injury fund payments:
If the employee or the employee's
representative recovers damages from the
third person, the employee or representative
shall promptly pay to the employer the total
amounts paid by the employer under
(e)(1)(A),(B), and (C) of this section,
insofar as the recovery is sufficient after
deducting all litigation costs and expenses.
Any excess recovery by the employee or
representative shall be credited against any
amount payable by the employer thereafter.
AS 23.30.015(g).
ANI asserted that this provision entitled it to the
full amount of compensation paid and benefits furnished to
McCarter, less a pro rata share of McCarter's litigation costs
and expenses. After McCarter failed to reimburse ANI, ANI filed
a complaint for declaratory judgment and other relief.
Thereafter, ANI moved for summary judgment. McCarter
subsequently asked the superior court to certify him as a public
interest litigant. His motion was denied. The superior court
allowed the Alaska Academy of Trial Lawyers (AATL) to participate
as amicus curiae. The superior court then entered a memorandum
and order granting ANI's motion for summary judgment. McCarter
once again requested to be certified as a public interest
litigant. The court again denied him public interest litigant
status and awarded ANI attorney's fees in the amount of $1,500.
Final judgment was entered against McCarter for the compensation
he received in the amount of $11,936 plus attorney's fees of
$1,500.
McCarter appeals from that judgment, claiming that (1)
the superior court erred in its failure to recognize an exception
to AS 23.30.015(g) where the employee does not receive a "double
recovery,"1 and (2) the superior court should have granted him
public interest litigant status.
II. DISCUSSION
A. Interpretation of AS 23.30.015(g)
McCarter's first argument is that the legislature never
intended AS 23.30.015(g) to apply to cases like his.2 McCarter
notes that the statutory scheme was intended to establish an
employer's exclusive liability, not an employee's exclusive
remedy, citing Miller v. Northside Danzi Constr. Co., 629 P.2d
1389 (Alaska 1981). His statement is accurate, but it is not
inconsistent with summary judgment for ANI. Subsections
23.30.015(a) and (g), as fairly read and applied by the superior
court, allow pursuit of multiple remedies.3 These provisions do
not require McCarter to waive any third-party claims in order to
receive compensation and benefits from the insurance company.
McCarter was able to sue Hanousek without jeopardizing the
payments ANI had already made to him.
Nor did the workers' compensation award represent the
maximum amount he could recover. By pursuing Hanousek, McCarter
was able to increase his total recovery from less than $12,000 to
$50,000. Thus, subsection (g) does not, as McCarter asserts,
conflict with subsection (a), which provides that employees need
not choose between remedies.
The purpose of subsection (g), according to McCarter,
is to prevent "double recoveries," meaning a recovery in excess
of the worker's total losses. It can also be argued that the
statute prevents a "double recovery"where "double recovery"
means cumulative recoveries from two different entities.
McCarter simply fails to demonstrate that the legislature
intended to prevent "double recoveries,"as he uses the term.
Nothing in the text of AS 23.30.015 supports McCarter's double
recovery theory.
AATL makes an additional textual argument. It observes
that subsection (f) requires employers to make payments even when
the employees bring third-party actions, and posits that this
provision is pointless if the employee must reimburse the
employer. This is mistaken for two reasons. First, resolution
of litigation can be protracted and subsection (f) ensures prompt
payment. Second, the third-party litigation may be unsuccessful,
and the risks for the employee would be much greater if employer
payments of compensation and benefits would be forfeited by the
institution of a third-party suit by the employee.4
A final argument that AATL makes is that this court
should look, as it did in Cooper v. Argonaut Insurance Cos., 556
P.2d 525, 527 n.10 (Alaska 1976), to the "analogous situation"of
equitable subrogation. Courts generally do not allow equitable
subrogation until the insured has been fully compensated for its
loss. See Garrity v. Rural Mut. Ins. Co., 253 N.W.2d 512, 514
(Wis. 1977).
We observe that Cooper did not state that the law of
equitable subrogation should be the touchstone for all questions
that arise in workers' compensation law. Rather, we cited
equitable subrogation law to support our view that a carrier
would be unjustly enriched if it could share in the benefits of a
third-party suit without sharing in the litigation costs.
Cooper, 556 P.2d at 527 & n.10.
Moreover, Cooper considered equity and policy arguments
in order to construe statutory language that was reasonably
susceptible to more than one meaning. See Cooper, 556 P.2d at
526. Generally, when the statutory language is unambiguous, as
it is here, we will not modify or extend the statute. Yahara v.
Construction & Rigging, Inc., 851 P.2d 69, 72 (Alaska 1993);
Zoerb v. Chugach Elec. Ass'n, Inc., 798 P.2d 1258, 1260 (Alaska
1990); see, e.g., Arctic Structures, Inc. v. Wedmore, 605 P.2d
426, 440 (Alaska 1979) (refusing to reduce an employer's
reimbursement to reflect the employer's negligence). Thus, we
conclude that the superior court's decision requiring
reimbursement is consistent with the command of AS 23.30.015(g).5
B. Constitutional Issues
McCarter alternatively contends that if the superior
court construed AS 23.30.015(g) correctly, the statute is
unconstitutional. He maintains that his right to pursue a third-
party suit is meaningless if he cannot keep any of the proceeds,
and thus he would be denied access to the courts. Yet unless the
third-party recovery is less than the worker's compensation
payments, which is not the case here, the injured worker can keep
proceeds from the third-party action after reimbursing the
employer or its carrier for all compensation and benefits
received less the employer's pro rata portion of the litigation
costs incurred in the third-party litigation. Though there may
be cases in which the recovery is less than the payments,
McCarter cites no authority for the proposition that it is of
constitutional significance for one's liabilities to consume the
proceeds of a particular third-party recovery.6
McCarter also asserts that AS 23.30.015(g) violates
substantive due process.7 Although he maintains that subsection
(g) is irrational in this case, he acknowledges the legitimacy of
its underlying purpose: it ensures that workers are compensated
at acceptable rates for their work-related injuries, while
minimizing employers' liability in cases where the workers have
remedies against third-parties. Thus, he cannot meet his heavy
burden of "demonstrating that no rational basis for the
challenged law exists." See Concerned Citizens of S. Kenai
Peninsula v. Kenai Peninsula Borough, 527 P.2d 447, 452 (Alaska
1974).
McCarter's procedural due process argument is that,
through the statutory scheme, "the injured worker is deprived of
a previously available right - to pursue the third party and
retain an equitable portion of the proceeds recovered from the
third party." Yet he does not allege that the procedures in this
case were inadequate. Instead, he attacks the legislative policy
underlying the Act but does not allege that the workers'
compensation act was enforced arbitrarily. Thus, he has failed
to state a valid procedural due process claim.
McCarter's equal protection argument is equally
misguided. He contends that strict scrutiny applies but that
subsection (g) would fail any level of scrutiny. Strict
scrutiny, however, is not appropriate.8 As explained above, he
has not been denied access to the courts, and there is no
"Constitutional right to retain the proceeds of a third party
settlement where the amount of the settlement plus the
compensation benefits do not grant full legal redress to the
injured worker."9 The statute implicates no fundamental right.10
More important, as noted above, there is a rational basis for AS
23.30.015 in general and subsection (g) in particular.
C. Public Interest Litigant Status
McCarter argues that the superior court should have
accorded him public interest litigant status. He acknowledges
the requirement that a public interest litigant lack a sufficient
economic incentive to bring the suit in the absence of the issues
of general importance. See Oceanview Homeowners Ass'n v.
Quadrant Constr. & Eng'g, 680 P.2d 793, 799 (Alaska 1984).
McCarter is seeking to retain approximately $13,500; his
assertion that he is a public interest litigant is unpersuasive.
AFFIRMED.
_______________________________
* Sitting by assignment made pursuant to article IV,
section 16 of the Alaska Constitution.
1 Statutory interpretation and constitutional challenges
are questions of law reviewed de novo. See Langdon v. Champion,
752 P.2d 999, 1001 (Alaska 1988). An award of attorney's fees is
committed to the sound discretion of the trial court and will not
be disturbed unless manifestly unreasonable. CTA Architects of
Alaska, Inc. v. Active Erectors & Installers, Inc., 781 P.2d
1364, 1365 (Alaska 1989).
2 For purposes of this appeal, we assume that McCarter's
loss exceeded $50,000.
3 AS 23.30.015(a) provides:
If on account of disability or
death 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.
4 In Forest v. Safeway Stores, Inc., 830 P.2d 778, 781
(Alaska 1992), we said:
The clear purpose of [AS 23.30.015(a)]
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.
5 It is also consistent with the federal Longshore and
Harbor Workers' Compensation Act, 33 U.S.C. 901 et seq., on
which the Alaska's Workers' Compensation Act is modeled. Section
933(g)(4) states:
Any payments by a trust fund described
in section 917 of this title shall be a lien
upon the proceeds of any settlement obtained
from or judgment recorded against a third
person . . . .
Section 917 of that Act states:
Where a trust fund which complies
with section 186(c) of Title 29 established
pursuant to a collective-bargaining agreement
in effect between an employer and an employee
covered under this chapter has paid
disability benefits to an employee which the
employee is legally obligated to repay by
reason of his entitlement to compensation
under this chapter or under a settlement, the
Secretary shall authorize a lien on such
compensation in favor of the trust fund for
the amount of such payments.
See I.T.O. Corp. v. Sellman, 954 F.2d 239, 241-42 (4th Cir.),
reh'g, 967 F.2d 971 (4th Cir. 1992), cert. denied, ___ U.S. ___,
113 S. Ct. 1579 (1993); see also Force v. Director, Officer of
Workers' Compensation Programs, 938 F.2d 981, 983 (9th Cir.
1991); Brandt v. Stidham Tire Co., 785 F.2d 329, 331 (D.C. Cir.
1986).
Our decision is in line with what other states have
done as well: they have consistently refused to modify statutory
distribution terms similar to subsection (g) in the name of
equity. See, e.g., Young v. Industrial Comm'n, 707 P.2d 986, 987
(Ariz. App. 1985); Laureano v. New Jersey Transit Bus Operations,
Inc., 531 A.2d 1361 (N.J. Super. 1987), cert. denied, 540 A.2d
174 (N.J. 1988); Maxey v. Department of Labor & Indus., 789 P.2d
75 (Wash. 1990). See generally 2A Arthur Larson, Larson's
Workmen's Compensation Law 74.31(b) (1993) (discussing this
issue and citing cases from 33 states and several federal
courts).
6 Cf. Wright v. Action Vending Co., 544 P.2d 82, 86-87
(Alaska 1975) (upholding the constitutionality of the Act's
exclusive liability provision against a claim that it deprived
the spouse of an injured worker of a right to sue for loss of
consortium); see also Taylor v. Southeast-Harrison W. Corp., 694
P.2d 1160 (Alaska 1985) (upholding the constitutionality of the
Act's differential treatment of deceased employees with dependent
survivors).
7 In Municipality of Anchorage v. Leigh, 823 P.2d 1241
(Alaska 1992), this court discussed the analysis for determining
the constitutionality of a workers' compensation statute.
Substantive due process is denied
when a legislative enactment has no
reasonable relationship to a legitimate
governmental purpose. It is not a court's
role to decide whether a particular statute
or ordinance is a wise one; the choice
between competing notions of public policy is
to be made by elected representatives of the
people. The constitutional guarantee of
substantive due process assures only that a
legislative body's decision is not arbitrary
but instead based upon some rational policy.
A court's inquiry into
arbitrariness begins with the presumption
that the action of the legislature is proper.
The party claiming a denial of substantive
due process has the burden of demonstrating
that no rational basis for the challenged
legislation exists. This burden is a heavy
one, for if any conceivable legitimate public
policy for the enactment is apparent on its
face or is offered by those defending the
enactment, the opponents of the measure must
disprove the factual basis for such a
justification.
Id. at 1244 (quoting Concerned Citizens of S. Kenai Peninsula v.
Kenai Peninsula Borough, 527 P.2d 447, 452 (Alaska 1974)).
8 Workers' compensation benefits reflect economic
interests, and therefore, are entitled only to minimum protection
under this court's equal protection analysis. Sonneman v.
Knight, 790 P.2d 702, 704-05 (Alaska 1990) (rejecting argument
that unemployment compensation benefits are an inherent
fundamental right); see also State v. Anthony, 810 P.2d 155, 158
(Alaska 1991), reh'g granted, 816 P.2d 1377 (Alaska 1991)
(holding that a permanent fund dividend is an economic interest
subject to minimum protection).
9 McCarter cites a Montana case, Francetich v. State
Compensation Mutual Insurance Fund, 827 P.2d 1279 (Mont. 1992),
that invalidated a statutory provision similar to Alaska's. The
Montana Constitution, however, contains a provision specifically
guaranteeing injured workers the proceeds of third-party actions.
Francetich, 827 P.2d at 1282. Francetich is therefore
distinguishable.
10 McCarter points to another fundamental right: equal
protection of the laws. The argument that equal protection
analysis in this case must involve strict scrutiny because the
fundamental right to equal protection is implicated constitutes a
totally circular, unpersuasive argument.
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