James Mercer v. Nabors Drilling USA, Lp

STATE OF LOUISIANA

COURT OF APPEAL, THIRD CIRCUIT

10-1092

JAMES MERCER

VERSUS

NABORS DRILLING USA, L.P.

ON REMAND
APPEAL FROM THE
OFFICE OF WORKERS‟ COMPENSATION
DISTRICT 2, DOCKET NO. 09-07201
HONORABLE JAMES BRADDOCK, ADMINISTRATIVE LAW JUDGE
**********

SYLVIA R. COOKS
JUDGE

**********

Court composed of Ulysses Gene Thibodeaux, Chief Judge; Sylvia R. Cooks,
Jimmie C. Peters, Billy H. Ezell and Shannon J. Gremillion, Judges.

REVERSED; JUDGMENT VACATED: REMANDED FOR FURTHER PROCEEDINGS

Broussard, Halcomb & Vizzier
Roy S. Halcomb, Jr.
P.O. Box 1311
Alexandria, LA 71309-1311
Attorney For Plaintiff/Appellant
James Mercer

Galloway, Johnson, Tompkins, Burr & Smith
Kevin A. Marks
Jessie Schott Haynes
701 Poydras Street, Suite 4040
New Orleans, LA 70139
Attorneys For Defendant/Appellee
Nabors Drilling USA, LP

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COOKS, Judge.

FACTS AND PROCEDURAL HISTORY

James Mercer (Mercer) sued a third-party tort feasor for injuries allegedly

sustained in a job-related accident. His employer, Nabors Drilling USA, LP,

(Nabors) intervened in the suit. Mercer reached a settlement with the third-party

tort feasor for an amount which exceeded the sum owed as reimbursement to

Nabors. It is undisputed that Nabors did not provide express written approval of

the settlement. However, Nabors agreed to the amount it was to be paid as

reimbursement for compensation payments and medical payments, and agreed to

deduct from that amount a share of the attorney fees and costs incurred by Mercer.

Mercer reimbursed Nabors the full amount of compensation and medical benefits

which Nabors paid, less its proportionate share of attorney fees and costs as agreed.

By virtue of the full payment to Nabors, Mercer sought to reserve his statutory

right to future benefits owed in accordance with the provisions of La.R.S. 23:1101-

1104.

After full reimbursement to Nabors, Mercer made demand on Nabors to pay

medical benefits for medical costs incurred after the settlement. Nabors refused

and terminated all benefits until such time as an amount equivalent to Mercer‟s

total recovery is used up, dollar for dollar. Mercer filed a claim for benefits with

the Office of Workers‟ Compensation (OWC). Nabors filed a motion for summary

judgment maintaining that the previous decisions of this court on the issue of

continued payment of medical benefits in these circumstances are not controlling

and that the OWC should apply La.R.S. 23:1103(A) as though the word

“compensation” in that statute includes medical benefits. The OWC granted

Nabors‟ motion for summary judgment finding Nabors has a credit for

“compensation, indemnity, loss wage type of compensation as well as for medical

expense compensation.” The OWC dismissed Mercer‟s disputed claim for

compensation seeking payment of new medical expenses. Mercer appeals

maintaining that the prior decisions of this court in Breaux v. Dauterive Hosp.

Corp., 02-1072 (La.App. 3 Cir. 2/5/03), 838 So.2d 109, and City of DeQuincy v.

Henry, 09-636 (La.App. 3 Cir. 12/9/09), 25 So.3d 237, writ granted, 10-70 (La.

4/30/10), 34 So.3d 296, are controlling and that the OWC erred in refusing to

follow the clear holding in those cases. The OWC held that because Nabors did

not give express written approval of the settlement, the matter is distinguishable

from these decisions, and under its reading of La.R.S. 23:1102 and 1103, granted

Nabors‟ motion for summary judgment dismissing Mercer‟s claims for

compensation including future medical benefits.

ANALYSIS

“[W]here one or more legal errors are present” we do not apply the manifest

error standard of review but instead conduct a de novo review of the record.

Breaux, 838 So.2d at 109. The facts of this case are not in dispute. Mercer settled

with a third-party tort feasor without obtaining an express written approval of the

settlement from the intervenor/employer, Nabors. Mercer thereafter reimbursed

Nabors in full for all compensation paid and medical benefits paid prior to the

settlement in accord with Nabors‟ agreement as to the amount to be reimbursed

less a share of the attorney fees and costs it agreed to credit against that sum.

Louisiana Revised Statutes 23:1102 provides in pertinent part (emphasis added):

A.(1) If either the employee or his dependent or
the employer or insurer brings suit against a third person
as provided in R.S. 23:1101, he shall forthwith notify the
other in writing of such fact and of the name of the court
in which the suit is filed, and such other may intervene as
party plaintiff in the suit.

….

B. If a compromise with such third person is made
by the employee or his dependents, the employer or
insurer shall be liable to the employee or his dependents
for any benefits under this Chapter which are in excess of
the full amount paid by such third person, only after the
employer or the insurer receives a dollar for dollar credit
against the full amount paid in compromise, less attorney
fees and costs paid by the employee in prosecution of the
third party claim and only if written approval of such
compromise is obtained from the employer or insurer by
the employee or his dependent, at the time of or prior to
such compromise. Written approval of the compromise
must be obtained from the employer if the employer is
self-insured, either in whole or in part. If the employee or
his dependent fails to notify the employer or insurer of
the suit against the third person or fails to obtain written
approval of the compromise from the employer and
insurer at the time of or prior to such compromise, the
employee or his dependent shall forfeit the right to future
compensation, including medical expenses.
Notwithstanding the failure of the employer to approve
such compromise, the employee’s or dependent’s right to
future compensation in excess of the amount recovered
from the compromise shall be reserved upon payment to
the employer or insurer of the total amount of
compensation benefits, and medical benefits, previously
paid to or on behalf of the employee, exclusive of
attorney fees arising out of the compromise; except in no
event shall the amount paid to the employer or
insurer exceed fifty percent of the total amount
recovered from the compromise. Such reservation shall
only apply after the employer or insurer receives a dollar
for dollar credit against the full amount paid in
compromise, less attorney fees and costs paid by the
employee in prosecution of the third party claim.

In our initial decision on this matter we looked to this court‟s decision in

City of DeQuincy wherein we expressly stated that our decision in Breaux “is a

correct statement of the law: „[T]he workers‟ compensation insurer is not entitled

to a credit for future medical benefits, even when the amount, which the third party

tortfeasor paid in settlement, exceeds that sufficient to reimburse the compensation

carrier.‟ ” City of DeQuincy, 25 So.3d at 240 (citing Breaux, 838 So.2d at 112)

alteration in original.

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In Breaux, this court relied on the Louisiana Supreme Court‟s decisions in

Fontenot v. Hanover Ins. Co., 385 So.2d 238 (La.1980), and Brooks v. Chicola,

514 So.2d 7 (La.1987). We found it instructive in the Fontenot case that the

Louisiana Supreme Court expressed the view that:

The underlying policy of the worker‟s compensation statute
provisions for apportionment of damages between employer
and employee in suits against third persons merely prevents an
employee‟s double recovery for his injuries; it does not require
an employee to reimburse out of his award for pain and
suffering medical expenses which he failed to recover from a
third party tortfeasor.

Breaux, 838 So.2d at 111, quoting Fontenot. Further, our decision in Breaux

relied on the Louisiana Supreme Court‟s decision in Brooks, which held that:

[R]eimbursement to the compensation insurer in this case must
necessarily be limited only to the damage awards for loss of earnings
and medical expenses. An injured worker, as any other tort victim, is
entitled to his full recovery for non-economic losses. There should
be no reduction in his award for the pain and suffering element
simply to give a compensation insurer full reimbursement. As we
stressed in Fontenot, the Louisiana Workers‟ Compensation Law only
requires reimbursement to the extent that damages for lost wages and
medical expenses are recovered from a third party tort feasor. No
preference is granted to the compensation intervenor over the
employee‟s award for pain and suffering. In this way, the true
purpose of the compensation law will be fulfilled. As we have
frequently stated, the law must be given a liberal interpretation to
effect its beneficial purpose of relieving workers of the economic
burden of work-connected injuries by diffusing the cost in the
channels of commerce. The above interpretative analysis of La.R.S.
23:1103 fulfills this methodology and purpose and is reflective of
what we construe to be the legislative intent.

(emphasis added. citations omitted.) It continued:

It necessarily follows that credit for future compensation
likewise must be limited to the award for future loss of earnings. To
allow reimbursement and credit beyond this would reduce the injured
worker‟s recovery for non-economic losses. It would also be contrary
to the liberal interpretation afforded the compensation act and the
humanitarian spirit within which it was enacted.

Although Brooks has been legislatively overruled regarding
another principle, it continues to stand for the premise that the
workers‟ compensation insurer is not entitled to a credit for future

medical benefits, even when the amount, which the third-party tort
feasor paid in settlement, exceeds that sufficient to reimburse the
compensation carrier.

Breaux, 838 So.2d at 112. (alteration in original)

The state Supreme Court has now clarified its previous decisions and has

determined that its holding in Brooks involved only the interpretation of La.R.S.

23:1103 and does not apply to the provisions of La.R.S. 23:1102. City of

DeQuincy v. Henry, No. 2010-C-0070, 62 So.3d 43 (La. 3/15/11).

We have been instructed to review this case on remand in light of the State

Supreme Court‟s recent decision in City of DeQuincy. Nabors argues that the

punitive provisions of La.R.S. 23:1102(B) should be read to mean that, as

punishment for failing to obtain the employer‟s or insurer‟s express written

approval of a compromise settlement, the employee who avails himself of the buy-

back provision in the statute loses the protection accorded him in the Brooks and

Breaux decisions and he must use up all of the monies he recovered from the third

party tort feasor before the employer has to resume paying compensation and

medical payments. We again reject this argument as contrary to Louisiana‟s

workers‟ compensation law. The statute very expressly and clearly provides that

“in no event shall the amount paid to the employer or insurer exceed fifty

percent of the total amount recovered from the compromise.” La. R.S.

23:1102 (B) (emphasis added). Thus Nabors‟ argument seeking an offset equal to

one hundred percent of Mercer‟s recovery clearly contravenes this express

prohibition. Because of the quasi-penal nature of the provision of La.R.S. 23:1102

(B) regarding forfeiture of benefits when the employee compromises without the

employer‟s consent, it must be strictly construed. See Darbonne v. M&M Right of

Way Contractors, 96-1730 (La.App. 3 Cir. 4/30/97), 693 So.2d 299. We direct

Nabor‟s attention to the Supreme Court‟s award in DeQuincy which is consistent
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with the fifty per-cent limitation expressly mentioned in and remaining in the

statute.

Additionally, as recognized by the State Supreme Court in DeQuincy,

Nabors‟ argument also ignores the express statutory provision which clearly states:

Notwithstanding the failure of the employer to approve such
compromise, the employee‟s or dependent‟s right to future
compensation in excess of the amount recovered from the
compromise shall be reserved upon payment to the employer or
insurer of the total amount of compensation benefits, and medical
benefits, previously paid to or on behalf of the employee. . .

La.R.S. 23:1102 (B) (emphasis added). As we said before, “Notwithstanding”

means what it says. Thus, as in DeQuincy, even if Nabors‟ actions would not

amount to “written approval,” Mercer has cured his failure to get an express

written approval of settlement from Nabors by paying the benefits and medicals

previously paid by the employer.

The State Supreme Court held in City of DeQuincy that employers such as

Nabors in these circumstances are entitled to “receive a credit against all future

workers‟ compensation benefits, including future medical expenses” dollar for

dollar out of the funds which “are or may become due to” the employee in his

compromise settlement. We do not understand this holding to include any such

credit against settlement funds paid to the employees‟ spouse or children.

Mercer filed a claim for benefits after his employer refused to pay new

medical bills. The burden is on the employer to assert and establish any defense

available to it to justify its refusal to pay benefits. Nabors asserted that it does not

have to pay any benefits until such time as Mercer has used up his total settlement

recovery dollar for dollar. This defense to Mercer‟s claim for benefits is not

supportable in the law for the reasons discussed above. The OWC erred in

granting summary judgment because there are genuine issues of material fact

unresolved in the record. The record does not show what amount of the settlement

proceeds were paid to compensate Mercer for his individual losses and whether

fifty percent of this amount has been exhausted by the continual benefits and

medicals. We therefore reverse the OWC‟s judgment and remand the case for

further proceedings.

REVERSED; JUDGMENT VACATED, REMANDED FOR FURTHER PROCEEDINGS

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