Case ID: so2d_657/html/0234-01.html
Source: Caselaw Access Project
Author: {"author": "JiDECUIR, Judge. 1 iTHIBODEAUX, Judge,", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Sharon FAGON, Plaintiff-Appellant, v. LAFAYETTE BUREAU OF CREDIT CONTROL, INC., Defendant-Appellee.
    No. 94-1422.
    Court of Appeal of Louisiana, Third Circuit.
    May 10, 1995.
    Alex D. Chapman Jr., Ville Platte, for Sharon Fagon.
    John G. Poteet Jr., Lafayette, for Lafayette Bureau of Credit Control, Inc.
    Before THIBODEAUX, DECUIR and AMY, JJ.
   JiDECUIR, Judge.

This matter arises from a suit alleging a seizure of worker’s compensation proceeds by Lafayette Bureau of Credit Control, Inc. Plaintiff, Sharon Fagon, contends the trial court erred as a matter of law in awarding judgment to defendant, Lafayette Bureau of Credit Control, Inc., in violation of La.R.S. 23:1205, which provides an exemption from creditor’s claims out of compensation proceeds.

Sharon Fagon was allegedly injured while employed by Shoney’s, Inc., and began to receive worker’s compensation benefits. Ms. Fagon was hospitalized at Cypress Hospital on three occasions. After issuance of a medical report indicating that plaintiffs mental illness was not related to her employment accident, Shoney’s refused to pay Cypress Hospital’s bill totaling $20,239.45 for Ms. Fa-gon’s third hospitalization. Cypress Hospital assigned its rights to collect on this unpaid hospital bill to defendant, Lafayette Bureau of Credit Control, Inc., who sued plaintiff for the unpaid bill. Plaintiff answered and filed a third party demand against Shoney’s. Thereafter, plaintiff entered into a worker’s compensation settlement with Shoney’s. As part of this lump sum agreement, plaintiff agreed to assume all responsibility for outstanding medical expenses and to hold Sho-ney’s harmless from said obligations. The settlement agreement provided in pertinent part:

|2I further specifically agree to indemnify, save, and hold harmless SHONEYS, INC.
... for and from any claims for medical expenses that remain unpaid ... I specifically agree to indemnify, save and hold harmless SHONEY’S, INC. ... for the medical bills of Cypress Hospital which I understand they have contested and hereby release SHONEY’S, INC. ... from any and all claims asserted by me in the Civil Action entitled LAFAYETTE BUREAU OF CREDIT CONTROL, INC. VERSUS SHARON FAGON, pending in the 27th Judicial District Court for St. Landry Parish ...

The trial judge found the plaintiff to be in bad faith in that she intended all along to file bankruptcy on the outstanding amount due to Cypress and have the lump sum settlement with Shoney’s declared exempt from seizure by defendant pursuant to La.R.S. 23:1205. This fact is undisputed.

Defendant’s attorney, upon learning of the settlement agreement, requested of Shoney’s attorney that his name be included as additional payee on the settlement proceeds check. Plaintiff then filed suit alleging a seizure of the proceeds by Lafayette Bureau of Credit Control, Inc. The trial judge was correct in its ruling that defendant’s actions in refusing to remove its name as additional payee on the settlement proceeds does not constitute a seizure. Shoney’s was under no legal obligation to include defendant’s attorney as an additional payee. Plaintiffs remedy is against the issuer of the cheek, not defendant in this appeal.

To hold otherwise in the case sub judice would result in an absurd and inequitable disposition of this matter. The legislature in enacting La.R.S. 23:1205 did not intend to encourage collusion and bad faith settlement of compensation claims to the detriment of creditors.

Costs of appeal are assessed to plaintiff-appellant.

AFFIRMED.

THIBODEAUX, J., dissents and assigns reasons.

1 iTHIBODEAUX, Judge,

dissenting.

After Fagon filed bankruptcy, she claimed her workers’ compensation lump sum settlement of $25,000.00 was exempt from any type of disbursement. The bankruptcy trustee did not oppose the exemption, but the Lafayette Bureau of Credit Control filed a motion in opposition to the exemption. The motion was denied by the bankruptcy judge. Thus, the settlement proceeds were exempt from any type of levy or seizure. Shoney’s attorney testified that upon written permission from the Bureau’s attorney, she would reissue Fagon’s lump sum settlement check and exclude the Bureau attorney’s name therefrom. The Bureau’s attorney has refused to give such permission and has continued to attempt to collect his client’s debt.

Rift support of her claim for damages due to the Bureau’s failure to remove its attorney’s name from her settlement check, thereby denying her access to the $25,000.00, Fa-gon relies on La.R.S. 23:1205 and argues that under the statute, the Bureau as a creditor cannot seize the settlement proceeds from a claim for workers’ compensation benefits.

La.R.S. 23:1205 provides in pertinent part:
Claim for payments; privilege of employee; non-assignability; exemption from seizure.
Claims or payments due ... and shall not be assignable, and shall be exempt from all claims of creditors and from levy or execution or attachment or garnishment, except under a judgment for alimony in favor of a wife, or an ascendant, or descendant.

This statute is an explicit pronouncement of the legislative will to protect state workers’ compensation benefits. The statutory provision provides for only one exception to the anti-attachment of those benefits and that is for alimony payments. See Thibodeaux v. Thibodeaux, 454 So.2d 813, 816 n. 7 (La. 1984).

Although the Bureau has postured its argument in terms of equity and bad faith on the part of Fagon in making the decision to file for bankruptcy with no intention of paying her outstanding medical bill, and therefore rationalized the placement of its attorney’s name on the settlement check, it is effectively an attempt by the Bureau to enforce a claim as Fagon’s creditor. The essence of the Bureau’s claim is that Fagon incurred hospital expenses which, when she agreed to the settlement with her employer, she never intended to pay but instead filed bankruptcy. As the Bureau is merely a creditor of Fagon for the unpaid medical bills, the Bureau has no right to “seize” the worker’s compensation benefits under the guise of protecting its rights to payment by attaching its attorney’s name to Fagon’s settlement check as a payee. See Foster v. Manville Forest Products, Inc., 554 So.2d 736 |3(La.App. 2 Cir.1989), writ denied, 558 So.2d 605 (1990). Furthermore, there is no statutory support for the Bureau attorney’s actions.

Fagon is entitled to have counsel for the Bureau’s name removed from the settlement check, thus allowing Fagon to receive the proceeds.

For the foregoing reasons, I respectfully dissent.