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Izaguirre v. R & L Carriers Shared Services, LLC

Supreme Court of Idaho, Boise

August 30, 2013

Rubio IZAGUIRRE, Claimant-Appellant,
v.
R & L CARRIERS SHARED SERVICES, LLC, Employer Zurich American Insurance Co., Surety, Defendants-Respondents.

Page 930

Richard S. Owen, Nampa, argued for appellant.

Elam & Burke, Boise, for respondents. Jon Bauman argued.

J. JONES, Justice.

This Industrial Commission appeal deals with the extent of subrogation rights of an employer or its surety. The claimant, Rubio Izaguirre, settled with a third-party tortfeasor following a work-related automobile accident. His employer and surety asserted a right of subrogation against the entirety of that settlement, minus only a deduction for attorney fees and costs. Izaguirre argued that subrogation rights should extend only to damages that workers' compensation typically insures and not to pain and suffering. The Commission found in favor of the employer and surety, holding that " [t]he entire proceeds of the settlement" were subject to subrogation. Izaguirre timely appealed and we affirm.

I.

FACTUAL AND PROCEDURAL HISTORY

Izaguirre was a truck driver for R & L Carriers Shared Services, LLC (Employer). On February 28, 2008, while on the job, Izaguirre was involved in a motor vehicle collision. His resulting knee injuries caused him to miss work, led to a surgery, and persisted until he was eventually terminated by his employer.

In June of 2008, Izaguirre and his wife retained an attorney to bring an action against the driver who caused the accident. This action sought recovery for Izaguirre's damages and included a claim by Izaguirre's wife for loss of consortium. The Izaguirres settled their claims for $200,000 and entered into a Release of All Claims and Indemnity Agreement (Release Agreement) with the third party and his insurance carrier. Izaguirre's attorney subsequently drafted a letter that " [broke] down the total settlement, attributing $100,000 to Mrs. Izaguirre's claim for loss of consortium and $100,000 to Claimant's personal injury claim." At this time, Zurich American Insurance (Surety) " had a subrogated interest of $43,518.65." The Surety and the Izaguirres " agreed to the payment of a 25% attorney fee on the recovery of the subrogated amount," so the Izaguirres' attorney " reimbursed $32,623.99 to Surety, and retained $10,879.66 payable as attorney fees."

Izaguirre filed a Workers' Compensation Complaint on July 9, 2010, seeking " [a]dditional medical benefits, TTD benefits, PPI benefits and attorney fees for unreasonable denial and/or delay in benefits due." The Surety and Employer (the Respondents) filed their Answer on July 23, 2010. Izaguirre

Page 931

filed a request for calendaring on December 17, 2010, asking that the matter be set for hearing on the merits after January 1, 2011. On March 21, 2011, the Respondents filed a motion to bifurcate the proceedings and stay consideration of the merits until after the subrogation issues were decided. In that motion, the Respondents argued:

The potential limitation on R & L Carriers' right of subrogation raised by Claimant's contention requires that the Commission interpret Idaho law to determine issues including: (1) the threshold question of whether the [Release Agreement] permits or effects a limitation on R & L Carriers' right of subrogation guaranteed by Idaho Code § 72-223; (2) whether the characterization of the recovery as among Claimant, his wife, and the third parties is binding on R & L Carriers; and (3) whether workers' compensation benefits are community property and, if so, whether a recovery for loss of consortium is also community property.

Izaguirre opposed the motion, arguing that the Commission had no jurisdiction to consider whether the Surety's subrogation rights extended to any of the settlement funds attributed to Mrs. Izaguirre's claim for loss of consortium. The Commission found it appropriate to bifurcate the proceeding to address the threshold legal issues pertaining to subrogation rights and set a hearing before the full Commission for that purpose. The Commission's order provided that the issues on the merits of Izaguirre's compensation claim " shall be reserved and held in abeyance for a future hearing." The Commission issued a subsequent Order Amending Hearing Issues on June 23, 2011, specifying the issues to be determined at the hearing.

Following the bifurcated hearing, the Commission entered its Findings of Fact, Conclusions of Law, and Order (Decision) on January 31, 2012. In it, the Commission made four main findings: (1) that it had jurisdiction to evaluate the claims in the Release Agreement and " determine which claims will be subject to [Respondents'] right of subrogation under Idaho Code § 72-223" ; (2) that the " entire proceeds of the settlement of [Izaguirre's] claim" are subject to subrogation, whereas Mrs. Izaguirre's loss of consortium claim was not; (3) that the consortium claim was valued at $9,000; and (4) that the Release Agreement would be enforced as agreed upon by the parties, but that " on the balance of the settlement proceeds subject to Surety's right of subrogation ($147,481.35), Surety is obligated to pay the sum of $51,845.25 as its proportionate share of attorney fees and costs incurred by Claimant in pursuit of the third party recovery." The Commission further held that " this decision is final and conclusive as to all issues adjudicated." Izaguirre timely appealed, claiming the Commission erred in ruling that the " entire proceeds of the settlement" were subject to subrogation.[1]

II.

ISSUES ON APPEAL

I. Was the Decision a final and appealable order?
II. Do the terms of the Release Agreement provide an independent basis for requiring Izaguirre to ...

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