Case Title: Ex Parte City of Brundidge

Citation: 897 So. 2d 1129

Docket Number: 1030490

State: alabama

Court: Alabama Supreme Court

Date: 2004-06-04T00:00:00Z

Document:
897 So. 2d 1129 (2004)
Ex parte CITY OF BRUNDIDGE.
(In re Coston Collier
v.
City of Brundidge).
1030490.

Supreme Court of Alabama.
June 4, 2004.
Rehearing Denied August 13, 2004.
*1130 Steadman S. Shealy, Jr., and Anthony B. McCallister of Cobb, Shealy, Crum & Derrick, P.A., Dothan, for petitioner.
J. Farrest Taylor of Cochran, Cherry, Givens & Smith, P.C., Dothan, for respondent.
LYONS, Justice.
The City of Brundidge ("the City") and its workers' compensation carrier[1] petitioned the trial court seeking a credit for workers' compensation payments made to Coston Collier, an injured employee of the City, in the same amount Collier had recovered from a third-party tortfeasor. The trial court granted the petition and awarded the City an amount equal to Collier's award from the third-party tortfeasor, less attorney fees. Collier appealed to the Court of Civil Appeals, which reversed the trial court's order. Collier v. City of Brundidge, [Ms. 2020132, December 12, 2003] ___ So.2d ___ (Ala.Civ.App.2003). The City petitioned this Court for a writ of certiorari to review whether the Court of Civil Appeals erred in reversing the trial court's award of credit to the City. We granted certiorari review. For the reasons discussed below, we reverse the judgment of the Court of Civil Appeals.
We adopt the following facts and procedural history as set forth in the Court of Civil Appeals' opinion:
897 So. 2d  at 1119-20 (footnote omitted).
Collier appealed to the Court of Civil Appeals. The Court of Civil Appeals reversed the judgment of the trial court and remanded the case, holding that "the definition of a `covered claim' in § 27-42-5(4) specifically prevents the employer in this case from receiving a credit for workers' compensation benefits that are or will be paid." 897 So. 2d  at 1125.
"[B]ecause the underlying facts are not disputed and this appeal focuses on the application of the law to those facts, there can be no presumption of correctness accorded to the trial court's ruling." Beavers v. County of Walker, 645 So. 2d 1365, 1373 (Ala.1994) (citing First Nat'l Bank of Mobile v. Duckworth, 502 So. 2d 709 (Ala.1987)). A ruling on a question of law carries no presumption of correctness, and appellate review is de novo. See Rogers Found. Repair, Inc. v. Powell, 748 So. 2d 869 (Ala.1999); Ex parte Graham, 702 So. 2d 1215 (Ala.1997).
The City argues that under § 25-5-11, Ala.Code 1975, it is entitled to a credit on *1132 the workers' compensation payments equal to the damages Collier collected from the third party who caused his work-related injury. The City contends that Alabama's statutory scheme shifts the compensation liability from the employer to the third party who is fundamentally responsible for the employee's injury. The City also argues that its right to reimbursement under § 25-5-11 is not abrogated by § 27-42-5(4) in this case because § 27-42-5(4), a part of the Alabama Insurance Guaranty Association Act, § 27-42-1 et seq., Ala.Code 1975 ("the Act"), which restricts payments by the Alabama Insurance Guarantee Association ("AIGA") to insurance companies, is a limitation only on the powers and duties of AIGA, not on the recipient of the funds. Because AIGA has already paid Collier and is not a party to this action, the City contends that Collier cannot use the Act to avoid reimbursing it as he is obligated to do under § 25-5-11. The City also argues that to disallow the City's subrogation right would be to allow Collier to recover twice for the same injury, thereby frustrating the purpose of the Act by placing Collier in a better position by the insurer's insolvency than the he would have been in had the other driver's insurance, Reliance Insurance Company, remained solvent.
Collier argues that the purpose of the Act is to alleviate financial loss to claimants and policyholders otherwise caused by insolvent insurers and that to fulfill this purpose and to ensure that funds are available for claimants and policyholders, the Act expressly prohibits using AIGA's funds to pay subrogation claims to insurance companies. Collier points out that this Court has already held that workers' compensation benefits are excluded from the definition of covered claims in § 27-42-5(4). Collier also argues that by receiving funds from AIGA he is not receiving a double recovery for a single injury because the award he received from AIGA was offset by the amount he received in workers' compensation. Collier also contends that a majority of the jurisdictions that have addressed this issue have held that the workers' compensation carrier is not entitled to subrogate against money paid by AIGA.
Section 25-5-11(a), a part of the Alabama Workers' Compensation Act, § 25-5-1 et seq., Ala.Code 1975, states as follows:
Thus, an employer that pays benefits pursuant to the Workers' Compensation Act is entitled to reimbursement in the event the employee recovers damages from a third-party tortfeasor.
The Legislature, through the Act, has provided a method to protect victims of insolvent insurance companies. The statute calls for the payment of benefits, generally not to exceed $150,000, under specifically enumerated circumstances. In other words, the Act does not purport to leave the victim in the same position as he or she would have been in had the insurer not become insolvent; however, the victim is in *1133 a better position than he or she would have been without the Act.
Among the limits the Legislature established in formulating a remedy that does not attempt to simulate the situation that would have existed had the insurer not become insolvent is the definition of a "covered claim" to be applied in determining AIGA's obligation to pay. This definition, set forth at § 27-42-5(4), states that a "`[c]overed claim' [that is, a claim AIGA can pay] shall not include any amount due any reinsurer, insurer, insurance pool, or underwriting association, as subrogation recoveries or otherwise."
Two unusual features undergird this case. First, the tortfeasor's insurance carrier has become insolvent. Second, AIGA has already paid this claim. The Court of Civil Appeals noted, "Obviously, if AIGA had properly brought the workers' compensation carrier into the third-party claim, as happens in most cases, the carrier would not be entitled to receive reimbursement for the medical expenses and compensation benefits paid on the employee's behalf; AIGA simply would have never made a payment at all." 897 So. 2d  at 1126. Presumably this observation is based upon a determination that AIGA could have successfully resisted payment on the ground that the claim was not a "covered claim" because it constituted an amount due an insurer as a subrogation recovery or otherwise pursuant to § 25-5-11(a) requiring that the proceeds would be payable to the employer to reimburse it for the amount of compensation previously paid. The City's workers' compensation carrier is not a party to this proceeding. Suffice it to say that a determination of whether reimbursement to an employer required by § 25-5-11(a) under circumstances where that employer is insured against workers' compensation claims constitutes a payment to an insurer as a subrogation recovery or otherwise within the meaning of § 27-42-5(4) is an issue not essential to the resolution of this proceeding. The fact, nevertheless, remains that AIGA has already paid this claim. That it may have done so voluntarily does not detract from the undisputed fact that payment has already been made.
The rationale of the Court of Civil Appeals depends on authority relevant to a determination of the status of the claim as a covered claim before any payment is either made by or determined to be due from AIGA. The definition of covered claim in § 27-42-5(4) deals only with the process of determining eligibility for the payment of the claim before it is made. The Court of Civil Appeals applied § 27-42-5(4) to an after-the-fact determination in the context of the effect of the requirement of § 25-5-11(a) that the employer be reimbursed. The Court of Civil Appeals erred in doing so because it applied § 27-42-5(4) in a setting where the statute, which does not admit of a post hoc application, does not apply.
The dissenting opinion of Judge Murdock, joined by Judge Crawley, succinctly states the reasoning that requires this Court to reverse the judgment of the Court of Civil Appeals and reject Collier's contention that the sums paid in settlement are not subject to the obligation to reimburse his employer pursuant to § 25-5-11(a). Judge Murdock wrote:
897 So. 2d  at 1127-29 (footnote and some emphasis omitted; some emphasis original; some emphasis added).
We adopt Judge Murdock's reasoning and reverse the judgment of the Court of Civil Appeals and remand the cause for further proceedings consistent with this opinion.
REVERSED AND REMANDED.
HOUSTON, SEE, BROWN, JOHNSTONE, HARWOOD, WOODALL, and STUART, JJ., concur.
[1]  The City's workers' compensation carrier is not a party to this appeal.