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.

**********
APPEAL FROM THE
OFFICE OF WORKERS’ COMPENSATION
HONORABLE JAMES BRADDOCK, PRESIDING
**********

SYLVIA R. COOKS
JUDGE

**********

Court composed of Sylvia R. Cooks, 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

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 et seq.

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 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)1 as though the word “compensation” in that

statute includes medical benefits. The OWC granted Nabors’ motion and dismissed

Mercer’s complaint. Mercer appeals maintaining that the prior decisions of this court

in Breaux v. Dauterive Hosp. Corp., 02-1072 (La.App. 3 Cir. 2/5/2003), 838 So.2d

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109, and Dequincy v. Henry, 09-636 (La.App. 3 Cir. 12/9/2009), 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

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 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.

[(2)]

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

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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 a recent decision by this court, we expressly stated that our decision in

Breaux “is a correct statement of the law”:

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.

Dequincy, 25 So.3d at 240. (Citing Breaux, 838 So. 2d at 112).

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 find it instructive in the Fontenot case that the Louisiana

Supreme Court expressed the view that:

The underlying policy of the workers’ compensation statute provisions
for apportionment of damages between employer and employee in suits
against third persons merely prevents an employee’s double recovery for

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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 tort feasor.

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

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)

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

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

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

Breaux decisions and leaves him liable to 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 reject this argument as contrary to the holdings in Fontenot,

Brooks, and Breaux and as contrary to Louisiana’s workers’ compensation law. First,

we note, the statute 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 entitlement

to one hundred percent of Mercer’s recovery, and the OWC’s holding allowing such

reimbursement, clearly contravene this express prohibition. More importantly,

Nabors’ argument, and the OWC’s holding, ignore 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). “Notwithstanding” means what it says.

Because of the quasi-penal nature of the provision of La.R.S. 23:1002 (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. Additionally,

the Louisiana Civil Code instructs us to interpret the meaning of statutes with

reference to each other. La. Civ.Code art. 13. Thus we must apply the provisions of

La.R.S. 23:1103 and 1102 to gain a full understanding of the statutory scheme of our

workers’ compensation laws so that, in accordance with the Louisiana Supreme

Court’s instruction in Brooks, we give full effect to the “beneficent purpose” of the

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workers’ compensation statutes which seek to relieve injured workers from the

economic burden of a work-related injury by “diffusing the cost in the channels of

commerce.” Brooks, 514 So.2d at14. La R.S. 23:1103 provides:

A. (1) In the event the employer or the employee or his dependent
becomes party plaintiff in a suit against a third person, as provided in
R.S. 23:1102, and damages are recovered, such damages shall be so
apportioned in the judgment that the claim of the employer for the
compensation actually paid shall take precedence over that of the injured
employee or his dependent; and if the damages are not sufficient or are
sufficient only to reimburse the employer for the compensation which
he has actually paid, such damages shall be assessed solely in his favor;
but if the damages are more than sufficient to so reimburse the
employer, the excess shall be assessed in favor of the injured employee
or his dependent, and upon payment thereof to the employee or his
dependent, the liability of the employer for compensation shall cease for
such part of the compensation due, computed at six percent per annum,
and shall be satisfied by such payment. The employer’s credit against
its future compensation obligation shall be reduced by the amount of
attorney fees and court costs paid by the employee in the third party suit.

(2) No compromise with such third person by either the employer
or the injured employee or his dependent shall be binding upon or affect
the rights of the others unless assented to by him.

We have already recited and discussed the application of the provisions of La.R.S.

23:1103 (B) above in this matter.

It is important to note in this case that although Nabors did not give its express

written consent to the compromise settlement made on behalf of Mercer, his wife and

children as claimants in the third-party suit, Nabors did participate in the resolution

of the third-party matter by agreeing to an amount it was to be repaid for its

compensation and medical payments made to Mercer and agreeing to an amount to

be deducted for attorney fees and costs. We note, under the workers’ compensation

statutory scheme, Nabors did not have to agree to a reduction in the form of a

proportionate share of the attorney fees and costs where it did not agree to a

compromise. And yet, Nabors agreed to such resolution of its claims, and now asserts

that we should interpret the workers’ compensation statutes so as to penalize Mercer

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for not obtaining Nabors’ written approval of the compromise settlement, through

which they got paid what they asked to be paid, and we should ignore the express

provisions of the statutory scheme intended to protect Mercer from this very threat.

We find that such a ruling would be unfair to Mercer and not in keeping with the

beneficent purposes of the workers’ compensation statutes, and would run afoul of

the Louisiana Supreme Court’s decisions in Fontenot and Brooks as well as our

previous decisions in Breaux and Dauterive. Nabors received what it asked to be

paid, and even agreed to be paid less than it would have been entitled to receive under

the workers’ compensation statutes. Mercer fulfilled the requirement of the buy-back

provisions of the statute, in accordance with Nabors’ demand, which are meant to

protect him as an injured worker and to limit the amount he must pay out of his third-

party tort recovery before his employer must resume compensation payments, to an

amount not to exceed, in any event, “fifty percent of the total amount recovered from

the compromise.” La.R.S. 23:1102(B). Under our prior decision in Breaux, and

consistent with the Louisiana Supreme Court’s holdings in Fontenot and Brooks,

Nabors 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 amounts paid prior to the settlement by Nabors. Breaux, 838 So.2d

at 112. The summary judgment of the OWC is reversed and vacated. The case is

remanded to the OWC for further proceedings consistent with this opinion.

REVERSED, JUDGMENT VACATED; REMANDED FOR FURTHER

PROCEEDINGS.

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