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BORTOLOTTI v. UNIVERSAL TERRAZZO & TILE CO.

Cite as 304 Neb. 219

Terry Bortolotti, appellee and cross-appellant, v. 

Universal Terrazzo and Tile Company and

Acuity Insurance Company, appellants

and cross-appellees, and Columbia

Insurance Group, appellee.

___ N.W.2d ___

Filed October 11, 2019. No. S-17-1024.

1. Workers’ Compensation: Evidence: Appeal and Error. The findings 

of fact made by the Nebraska Workers’ Compensation Court will not be 

set aside on appeal unless clearly wrong. However, where there is not 

sufficient competent evidence to support an award, an appellate court 

must modify, reverse, or set aside the award.

2. Workers’ Compensation: Wages: Appeal and Error. The determination of average weekly wage is a mixed question of fact and law. To 

the extent the determination involves a question of fact, the Workers’ 

Compensation Court’s factual findings will not be set aside unless 

clearly wrong; to the extent a question of law is involved, an appellate 

court is obligated to make its own determination.

3. Pleadings. An amended pleading supersedes the original pleading, 

whereupon the original pleading ceases to perform any office as a 

pleading.

4. Pleadings: Proof. The pleadings alone are not proof but mere allegations of what the parties expect the evidence to show.

5. Statutes. Statutory language is to be given its plain and ordinary 

meaning.

6. Workers’ Compensation. The Nebraska Workers’ Compensation Act 

should be construed liberally to carry out its spirit and beneficent 

purposes.

7. Workers’ Compensation: Corporations: Words and Phrases. Net 

profits or net income of a subchapter S corporation do not necessarily 

qualify as “wages” under Neb. Rev. Stat. § 48-126 (Reissue 2010).

Nebraska Supreme Court Online Library

www.nebraska.gov/apps-courts-epub/

11/01/2019 01:05 AM CDT
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8. Workers’ Compensation: Corporations: Employer and Employee: 

Wages: Words and Phrases. “Wages” under Neb. Rev. Stat. § 48-126 

(Reissue 2010) do not include payments received solely because of the 

recipient’s status as an S corporation shareholder. Rather, “wages” under 

§ 48-126 are compensation for the recipient’s activities as a corporate employee.

9. ____: ____: ____: ____: ____. The determination of “wages” under 

Neb. Rev. Stat. § 48-126 (Reissue 2010) for an employee-shareholder of 

a subchapter S corporation is a fact-specific inquiry.

10. Workers’ Compensation: Evidence: Appeal and Error. When testing the sufficiency of the evidence to support findings of fact made 

by the Workers’ Compensation Court trial judge, the evidence must be 

considered in the light most favorable to the successful party, every 

controverted fact must be resolved in favor of the successful party, and 

the successful party will have the benefit of every inference reasonably 

deducible from the evidence.

11. Workers’ Compensation: Appeal and Error. On appellate review, the 

factual findings made by the trial judge of the Workers’ Compensation 

Court have the effect of a jury verdict and will not be disturbed unless 

clearly wrong.

Petition for further review from the Court of Appeals, 

Moore, Chief Judge, and Bishop and Arterburn, Judges, on 

appeal thereto from the Workers’ Compensation Court, Julie A. 

Martin, Judge. Judgment of Court of Appeals affirmed in part, 

and in part reversed and remanded with direction.

John W. Iliff and Adam J. Wachal, of Gross & Welch, P.C., 

L.L.O., for appellants.

John F. Thomas and Jay D. Koehn, of McGrath, North, 

Mullin & Kratz, P.C., L.L.O., for appellee Terry Bortolotti.

Heavican, C.J., Miller-Lerman, Cassel, Stacy, Funke, 

Papik, and Freudenberg, JJ.

Cassel, J.

I. INTRODUCTION

On appeal from the Nebraska Workers’ Compensation Court’s 

award to Terry Bortolotti, the Nebraska Court of Appeals 
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reduced his weekly income benefit from the maximum to the 

minimum and eliminated the award of out-of-pocket medical 

expenses.1 On further review, we uphold the reduced weekly 

benefit but reinstate the medical expense award.

The income benefit depends on the correct determination 

of Bortolotti’s average weekly wage, which the compensation 

court erroneously based on a superseded pleading. In a matter of first impression, we address the definition of “wages” 

where the worker is both an employee and a shareholder of a 

subchapter S corporation.

Regarding Bortolotti’s medical expenses, the Court of 

Appeals failed to give his testimony the inferences mandated 

by the deferential standard of review.

II. BACKGROUND

1. Trial Proceedings

Bortolotti worked in a family business, Universal Terrazzo 

and Tile Company (Universal), for over 30 years as an installer 

of terrazzo tile and fabricator and installer of granite. In 2011, 

Bortolotti became the sole stockholder and the president of 

Universal—a subchapter S corporation. Universal had at least 

15 employees. As president, Bortolotti spent 60 percent of 

his time performing office and managerial work as opposed 

to physical labor. While he was president, Universal changed 

workers’ compensation insurance providers from Columbia 

Insurance Group to Acuity Insurance Company.

The injury at issue in this appeal occurred in June 2013. 

Bortolotti’s operative petition for workers’ compensation benefits alleged weekly earnings of $3,625 at the time of the injury. 

Universal and Acuity Insurance Company denied the allegation. Henceforth, we collectively refer to Universal and Acuity 

Insurance Company as “Universal.” We set forth additional 

facts in our analysis.

1 Bortolotti v. Universal Terrazzo and Tile Co., No. A-17-1024, 2019 WL 

446630 (Neb. App. Feb. 5, 2019) (selected for posting to court website).
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The compensation court determined that Bortolotti sustained 

a compensable injury. It specifically found Bortolotti to be 

a credible witness. The compensation court had difficulty 

determining Bortolotti’s average weekly wage due to a lack 

of exhibits. Based on an allegation in a superseded pleading, the court held that Bortolotti’s average weekly wage was 

$1,399.45, entitling him to the maximum compensation rate of 

$728 per week.

With regard to past medical expenses, the compensation 

court stated that it was unable to use an exhibit offered by 

Bortolotti, because it did not comply with a court rule. But the 

court awarded Bortolotti $9,849.38—the amount that he testified he personally paid for his medical expenses and which was 

itemized in greater detail on the exhibit he offered.

Universal appealed, and Bortolotti cross-appealed. Universal 

challenged, among other things, the calculation of Bortolotti’s 

average weekly wage and the award of out-of-pocket medical expenses.

2. Court of Appeals’ Decision

The Court of Appeals affirmed the compensation court’s 

award as modified. It noted that documents establishing 

Bortolotti’s 2013 income were records in his control and that he 

did not produce any such documentation. The Court of Appeals 

concluded that the compensation court erred in determining 

Bortolotti’s average weekly wage from the allegations in his 

petition, noting that Universal denied the allegations. Because 

Universal adduced evidence that Bortolotti’s 2013 wages were 

$3,950, the Court of Appeals determined that Bortolotti should 

have been awarded the minimum income benefit of $49 per 

week under Neb. Rev. Stat. § 48-121.01 (Reissue 2010).

The Court of Appeals eliminated the award for Bortolotti’s 

out-of-pocket medical expenses. It agreed with Universal that 

because the compensation court did not rely on the exhibit 

offered by Bortolotti, it had no basis to award the $9,849.38 

in expenses.
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Bortolotti filed a petition for further review, which we 

granted.

III. ASSIGNMENTS OF ERROR

Bortolotti assigns two errors. He alleges that the Court of 

Appeals erred by substituting its own judgment for that of the 

compensation court in (1) failing to give him the benefit of all 

factual inferences when it reduced his average weekly wage 

and (2) finding that he failed to prove entitlement to recover 

his out-of-pocket medical expenses.

IV. STANDARD OF REVIEW

[1] The findings of fact made by the compensation court 

will not be set aside on appeal unless clearly wrong.2 However, 

where there is not sufficient competent evidence to support an 

award, an appellate court must modify, reverse, or set aside the 

award.3 These standards are central to our review, but we set 

forth other standards where applicable.

V. ANALYSIS

1. Average Weekly Wage

(a) Standard of Review

Our case law regarding whether determination of average 

weekly wage is a question of law or fact or both is muddled. 

Initially, we recognized it as a mixed question of fact and 

law.4 In that case, we stated that “[t]he formula for computing the average weekly wage depends upon whether plaintiff 

was engaged in an occupation involving seasonal employment or nonseasonal employment.”5

 When we next considered 

determination of average weekly wage, we stated that it was 

2 See Hare v. Watts Trucking Service, 220 Neb. 403, 370 N.W.2d 143 

(1985). See, also, Neb. Rev. Stat. § 48-185 (Reissue 2010).

3 Hare v. Watts Trucking Service, supra note 2.

4 Elrod v. Prairie Valley, 214 Neb. 697, 335 N.W.2d 317 (1983).

5 Id. at 698, 335 N.W.2d at 318.
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“essentially” a question of fact.6 Unsurprisingly, the next time 

the issue arose, we treated it as a factual question, stating that 

the trial court’s factual finding as to average weekly wage was 

not clearly wrong.7 Nine months later, the Court of Appeals 

addressed the question of what is included within the word 

“wages” as a factual one.8

Our decision in Hull v. Aetna Ins. Co.9 appears to have created confusion. We stated:

We note that the determination of the definition of the 

average weekly wage of a self-employed claimant is a 

question of law. An appellate court is obligated in workers’ compensation cases to make its own determinations 

as to questions of law. [Citations omitted.] Thus, we are 

obligated to clarify the meaning of the term “business 

expenses” in our previous holding.10

This is a correct statement as to the definition of such wage. 

Importantly, we did not say the determination of average 

weekly wage is a question of law. The Court of Appeals next 

confronted the issue and, without citing Hull, opined that the 

trial court’s determination of average weekly wage was a question of fact.11

Since then, published Nebraska appellate cases have uniformly stated that the determination of how the average weekly 

wage of a workers’ compensation claimant should be calculated is a question of law. It began with Harmon v. Irby Constr. 

6 Clifford v. Harchelroad Chevrolet, 229 Neb. 78, 80, 425 N.W.2d 331, 332 

(1988).

7 See McGowan v. Lockwood Corp., 245 Neb. 138, 511 N.W.2d 118 (1994).

8 Logan v. Rocky Mountain Rental, 3 Neb. App. 173, 524 N.W.2d 816 

(1994).

9 Hull v. Aetna Ins. Co., 249 Neb. 125, 541 N.W.2d 631 (1996).

10 Id. at 131, 541 N.W.2d at 634-35.

11 See McGinnis v. Metro Package Courier, 5 Neb. App. 538, 561 N.W.2d 

587 (1997).
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Co.,

12 where we proclaimed: “The determination of how the 

average weekly wage of a workers’ compensation claimant 

should be calculated is a question of law. Hull v. Aetna Ins. 

Co., 249 Neb. 125, 541 N.W.2d 631 (1996).” But, as set forth 

above, that does not accurately recite what we said in Hull. It 

snowballed from there. We cited Harmon in Ramsey v. State.13

The Court of Appeals then cited Ramsey in two cases,14 and 

we cited Ramsey in Mueller v. Lincoln Public Schools.

15 In our 

most recent case to address determination of average weekly 

wage,16 we cited Mueller.

[2] Having traced the jurisprudential underpinnings regarding the standard of review, we believe our original iteration 

to be correct: The determination of average weekly wage is a 

mixed question of fact and law. To the extent the determination 

involves a question of fact, the compensation court’s factual 

findings will not be set aside unless clearly wrong; to the 

extent a question of law is involved, we are obligated to make 

our own determination.17

(b) Additional Facts

An amended petition alleged an average weekly wage of 

$1,399.45 in June 2013. But a second amended petition and 

the third amended petition—the operative petition—alleged 

weekly earnings of $3,625 at the time of the June 2013 injury. 

In Universal’s respective answers to each of these pleadings, it 

denied the allegation of average weekly wage.

12 Harmon v. Irby Constr. Co., 258 Neb. 420, 429, 604 N.W.2d 813, 820 

(1999).

13 Ramsey v. State, 259 Neb. 176, 609 N.W.2d 18 (2000).

14 See, Griffin v. Drivers Mgmt., Inc., 14 Neb. App. 722, 714 N.W.2d 749 

(2006); Arbtin v. Puritan Mfg. Co., 13 Neb. App. 540, 696 N.W.2d 905 

(2005).

15 Mueller v. Lincoln Public Schools, 282 Neb. 25, 803 N.W.2d 408 (2011).

16 Becerra v. United Parcel Service, 284 Neb. 414, 822 N.W.2d 327 (2012).

17 See Elrod v. Prairie Valley, supra note 4.
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BORTOLOTTI v. UNIVERSAL TERRAZZO & TILE CO.

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During trial, counsel for each party referenced figures contained on a tax return for Bortolotti, but documents containing such figures are not in our record. Our record contains 

only a 2013 “Schedule E,” titled “Income From Passthrough 

Statement,” which showed self-employment wages of $3,950 

and qualified production activities income of $186,783. 

Additional information can be gleaned from the following colloquy between Bortolotti and his counsel:

Q [by counsel for Bortolotti]. Okay. All right. Let’s talk 

about your average weekly wage.

Now, in looking at your tax return, I see that you were 

the —

Did Universal . . . file a 2013 tax return?

A [by Bortolotti]. Yes.

Q. And it shows that the — that under your —

That was a joint tax return with you and your wife; 

correct?

A. Yes.

Q. And under Item 17, it shows rental real estate, 

royalties, partnerships, S Corporations, trusts, attached 

Schedule E. And that number is 198,873.

Is that the income that the corporation would have 

received from the work for 2013?

A. Yes.

Later, during cross-examination, the following questions and 

answers ensued:

Q [by counsel for Universal]. Now, there was some 

questions about your tax return.

On your tax return, there’s also a line for wages; 

correct?

A [by Bortolotti]. Yes.

Q. And you and your wife were wage earners at 

Universal . . . ?

A. Yes.

Q. And you put on your Form 1040 that you submitted 

to the Internal Revenue Service that you and your wife 

had wages of $12,000 in 2013.
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Do you recall that?

A. Yes.

Bortolotti believed the $12,000 in wages to be his wife’s 

wages. According to Bortolotti, he did not receive a salary and 

he considered his wage to be whatever tax returns showed the 

corporation’s net amount to be. Bortolotti also testified that he 

took a weekly draw of $3,625 from the corporation’s income 

of $198,873.

Universal submitted a document containing its calculation 

of Bortolotti’s average weekly wage. The document showed 

six payments in 2013 totaling $1,350: five made in January 

and February in the amount of $250 each and one payment of 

$100 in June. Universal thus calculated Bortolotti’s average 

weekly wage as “$1,350.00 ÷ 26 weeks = $51.92.” Another 

exhibit, summarizing a payroll journal, showed 32 payments 

to Bortolotti during 2013 which totaled $3,950. Bortolotti 

testified that these exhibits were not accurate records of his 

weekly income.

The compensation court recognized that Bortolotti had 

the burden to establish his average weekly wage. The court 

then explained the difficulty it encountered in determining 

Bortolotti’s average weekly wage:

The Court spent a considerable amount of time on 

this issue, more time than it should have. The lack of 

exhibits left the Court with a formidable and difficult 

task. Clearly, [Bortolotti] should have provided better evidence. Without tax returns, the Court was unable to verify 

if business expenses had been properly deducted from the 

company’s gross earnings he relied upon. . . . A simple 

mathematical calculation did not substantiate the weekly 

draw testified to ($198,873/52 weeks=$3,824.48), leaving 

the Court to question his testimony on this issue. On the 

other hand, the Court does not find [Universal’s] calculation to represent his correct earnings either. The only 

consistent figure, to some extent, that the Court found 

came from the pleadings. His first two Petitions alleged 
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a weekly wage of $1,300.00 and the Third Amended 

Petition alleged the more specific number of $1,399.45. 

Accepting the allegations in the pleadings as true and not 

being sufficiently persuaded the amount is incorrect, the 

Court holds that [Bortolotti’s] average weekly wage on 

June 13, 20l3, was $1,399.45.

(c) Discussion

An award of the compensation court may be modified if the 

findings of fact by the compensation court do not support the 

order or award.18 We agree with the Court of Appeals that the 

compensation court erred in determining Bortolotti’s average 

weekly wage was $1,399.45.

[3,4] No evidence supported this amount. Although one of 

Bortolotti’s earlier petitions alleged this amount, Universal’s 

answer denied that allegation. Thus, there was no admission 

derived from that pleading, and certainly no judicial admission.19 An amended pleading supersedes the original pleading, 

whereupon the original pleading ceases to perform any office 

as a pleading.20 Essentially, the allegation of $1,399.45 ceased 

to exist upon the filing of subsequent amended petitions. So 

when the compensation court found that “the Third Amended 

Petition alleged the more specific number of $1,399.45,” it 

clearly erred for two reasons. First, the number came from 

the ineffective, superseded pleading. But there was a more 

fundamental flaw. The pleadings alone are not proof but mere 

allegations of what the parties expect the evidence to show.21

Because the finding was based solely upon a pleading, which 

was not evidence, the finding had literally no evidence to support it. This finding was clearly wrong. Thus, the Court of 

18 See Martinez v. CMR Constr. & Roofing of Texas, 302 Neb. 618, 924 

N.W.2d 326 (2019).

19 See Cook v. Beermann, 202 Neb. 447, 276 N.W.2d 84 (1979).

20 deNourie & Yost Homes v. Frost, 295 Neb. 912, 893 N.W.2d 669 (2017).

21 In re Estate of Radford, 297 Neb. 748, 901 N.W.2d 261 (2017).
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Appeals was required to reverse or modify that portion of the 

award. We now review its determination.

In determining average weekly wage, neither the compensation court nor the Court of Appeals discussed any significance 

of Universal’s status as a subchapter S corporation. The compensation court, citing Hull v. Aetna Ins. Co.,

22 stated merely 

that “[a] self-employed claimant’s average weekly wage under 

Neb. Rev. Stat. § 48-121(2) shall be based upon the claimant’s 

gross income less business expenses, i.e., net income.” During 

oral arguments, counsel for the parties agreed that Hull does 

not apply here. The Court of Appeals recognized that Bortolotti 

was the sole shareholder and an employee of Universal, but 

its analysis did not mention the corporation’s status as an 

S corporation.

Universal’s status as an S corporation with Bortolotti as its 

sole shareholder is a complicating feature. “Subchapter S is a 

tax status designed to tax corporate income on a pass-through 

basis to shareholders of a small business corporation.”23 A 

subchapter S corporation is not taxed on its earnings; rather, 

the income, expenses, and other tax items “‘“pass through”’” 

and are taxable to or deductible by shareholders.24 In a child 

support case, after recognizing that income for the purpose 

of child support is not synonymous with taxable income, we 

stated that the owner of a wholly owned S corporation is selfemployed within the meaning of the child support guidelines.25

But for tax purposes, self-employed individuals and S corporation shareholders are treated differently.

Whether the profits of an S corporation should be included 

as wages in determining average weekly wage is an issue of 

first impression in Nebraska. A treatise on workers’ compensation law does not provide clear guidance:

22 Hull v. Aetna Ins. Co., 247 Neb. 713, 529 N.W.2d 783 (1995).

23 Gase v. Gase, 266 Neb. 975, 983, 671 N.W.2d 223, 230 (2003).

24 Id.

25 See Gase v. Gase, supra note 23.
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Generally, profits from a business, whether commercial or farm, are not considered as wages for purposes 

of establishing average wage. But close questions have 

arisen in connection with corporate officers, who may 

also be stockholders, whose remuneration is not fixed but 

depends to some extent on the fortunes of the business. 

One court has held that the employee’s share of profits 

was not the correct measure, but that the test should be 

the wage of another employee performing similar duties.26

A different resource states:

If a corporate officer or stockholder is a wage-earning 

corporate employee, and the wages reflect services rendered, presumably the wages paid would normally constitute the basis for computing workers’ compensation 

benefits. It has been said that where an officer of a 

corporation is injured while performing the duties of an 

ordinary employee, compensation for the injury must be 

based on wages received by him in the capacity of such 

employee. . . .

. . . A stockholder’s share in the corporate profits cannot 

be deemed wages for workers’ compensation purposes.27

Legal commentators agree that profits from the injured worker’s own business enterprise are not considered in determining 

the average wage unless they are almost entirely the direct 

result of the worker’s personal management and endeavor.28

Decisions from other jurisdictions provide some insight. In 

a case where an injured employee and three others each held a 

25-percent interest in a closely held corporation and the injured 

employee received no wages from the company, the Tennessee 

26 8 Arthur Larson et al., Larson’s Workers’ Compensation Law § 93.01[2][e] 

at 93-26 to 93-27 (2017).

27 2 John P. Ludington et al., Modern Workers Compensation § 201:15 at 

25-26 (Matthew J. Canavan & Donna T. Rogers eds., 1993).

28 See, 82 Am. Jur. 2d Workers’ Compensation § 411 (2013); 100 C.J.S. 

Workers’ Compensation § 592 (2013).
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Supreme Court reasoned that the employee’s earnings should 

be based on the compensation paid by the same company to 

another employee performing the same or similar duties.29 A 

Virginia appellate court held that profits from a sole proprietorship or a wholly owned S corporation were not earnings 

that could be used to calculate the average weekly wage.30 In 

a New York case where the claimant was the owner, president, 

and sole shareholder of an S corporation and also performed 

work as a mechanic, the court affirmed a determination that the 

claimant’s average weekly wage was $500 per week based on 

payroll entries indicating those weekly payments.31

In a Pennsylvania workers’ compensation case,32 the commonwealth court considered what the term “wage” meant in 

the context of an injured worker’s dual role as employee and as 

president and sole owner of an S corporate employer. Viewing 

the controversy as an issue of fact, the court stated that substantial evidence supported the findings below: that the net 

of the worker’s $96,000 salary and the corporation’s $66,472 

net loss represented the worker’s earnings from the business. 

The court observed that “[i]n several cases, the compensation 

authorities and appellate courts have treated the determination of an employee’s average weekly wage as a factual issue, 

subject to review for support by substantial evidence.”33 And 

its discussion of two earlier cases showed that the result was 

driven by the substantial evidence standard. In one case,34 the 

claimant was the sole proprietor of a home repair business and 

it was determined that gross income rather than net profit was 

a more accurate reflection of the claimant’s earnings. In the 

29 P & L Const. Co., Inc. v. Lankford, 559 S.W.2d 793 (Tenn. 1978).

30 Smith v. Robert W. Smith, 32 Va. App. 242, 527 S.E.2d 463 (2000).

31 Joyce v. European Auto Service, 226 A.D.2d 952, 641 N.Y.S.2d 175 

(1996).

32 Mullen v. W.C.A.B. (Mullen’s Truck), 945 A.2d 813 (Pa. Commw. 2008).

33 Id. at 818.

34 Moore v. W.C.A.B., 539 Pa. 333, 652 A.2d 802 (1995).
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other case,35 the claimant was both an employee and an owner 

of a small corporation and compensation authorities declined 

to rely on corporate income in determining average weekly 

wage. The court explicitly recognized that “[a] decision as to 

whether a claimant’s gross income or net income most accurately reflects earnings is a question of fact for the [workers’ 

compensation judge].”36

An Illinois case relied in part on a state statute defining average weekly wage to mean actual earnings.37 In that 

case, an employee sustained an injury while working as a 

refuse scavenger for a village. While working for the village, 

the employee was also the president and sole shareholder 

of a landscaping business, which was an S corporation. The 

employee received no wages from the corporation but did 

receive income in the form of net profits. The arbitrator did 

not include such net profits, stating that salary, wages, or earnings had never been liberally construed to include net profits. 

It found that the employee’s earnings during the period of the 

injury were $22,679.80 and that his average weekly wage was 

$436.15. Both parties appealed to an industrial commission, 

which affirmed the judgment as modified. On further appeal, 

the employee argued that the commission erred in failing to 

include the income generated by his landscaping business in 

calculating his average weekly wage. The appellate court held: 

“[A] claimant’s business income should not be included in the 

calculation of average weekly wage. We would be legislating 

from the bench if we were to hold that ‘actual earnings’ should 

be construed to include net profit.”38

[5,6] Of course, fundamentally, this is a question of statutory interpretation. Two principles govern. First, statutory 

35 Bi-Thor Elec., Inc. v. W.C.A.B., 702 A.2d 1145 (Pa. Commw. 1997).

36 Mullen v. W.C.A.B. (Mullen’s Truck), supra note 32, 945 A.2d at 819.

37 Paoletti v. Industrial Com’n, 279 Ill. App. 3d 988, 665 N.E.2d 507, 216 Ill. 

Dec. 447 (1996).

38 Id. at 996, 665 N.E.2d at 512, 216 Ill. Dec. at 452.
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language is to be given its plain and ordinary meaning.39

Second, the Nebraska Workers’ Compensation Act should 

be construed liberally to carry out its spirit and beneficent 

purposes.40

Thus, we turn to our statutory definition of “wages.” Neb. 

Rev. Stat. § 48-126 (Reissue 2010) provides in relevant part:

Wherever in the Nebraska Workers’ Compensation Act 

the term wages is used, it shall be construed to mean the 

money rate at which the service rendered is recompensed 

under the contract of hiring in force at the time of the 

accident. . . . In continuous employments, if immediately 

prior to the accident the rate of wages was fixed by the 

day or hour or by the output of the employee, his or her 

weekly wages shall be taken to be his or her average 

weekly income for the period of time ordinarily constituting his or her week’s work, and using as the basis 

of calculation his or her earnings during as much of the 

preceding six months as he or she worked for the same 

employer, except as provided in sections 48-121 and 

48-122. The calculation shall also be made with reference 

to the average earnings for a working day of ordinary 

length and exclusive of earnings from overtime, except 

that if the insurance company’s policy of insurance provides for the collection of a premium based upon such 

overtime, then such overtime shall become a part of the 

basis of determining compensation benefits.

Like the conclusion reached by the Illinois court, we cannot 

read “wages” in § 48-126 to include net profit for an employee 

of an S corporation.

Bortolotti asks us to find, as the compensation court did, 

that he was entitled to the statutory maximum weekly income 

benefit 41 of $728. He directs us to the Schedule E showing 

39 Christine W. v. Trevor W., 303 Neb. 245, 928 N.W.2d 398 (2019).

40 Krause v. Five Star Quality Care, 301 Neb. 612, 919 N.W.2d 514 (2018).

41 See § 48-121.01(1)(b) and Neb. Rev. Stat. § 48-121.02 (Reissue 2010).
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“Qualified production activities income” of $186,783 and to 

his testimony that he took a weekly draw from the corporation of $3,625 and that his tax return showed a net income 

for Universal of $198,873. We note that the compensation 

court did not accept this evidence. The court stated that it 

was unable to verify if business expenses had been properly 

deducted from the company’s gross earnings due to the absence 

of tax returns in the record. It also specifically “question[ed]” 

Bortolotti’s testimony regarding his weekly draw.

The compensation court also rejected evidence that 

Bortolotti’s earnings for 2013 were $3,950. It stated that it did 

“not find [Universal’s] calculation to represent [Bortolotti’s] 

correct earnings” and that it did “not believe that [Bortolotti] 

only earned $3,950.00 in 2013.” This disbelief is understandable. After all, he was the president and sole shareholder of a 

company that appeared to be profitable.

[7-9] Net profits or net income of a subchapter S corporation do not necessarily qualify as “wages” under § 48-126. 

This statute requires us to focus on the “money rate at which 

the service rendered is recompensed.”42 Where both the corporation and the shareholder-employee expressly treat payments 

as wages for all purposes, including for purposes of income 

and employment taxes, the evidence may be clear. But, as we 

have explained, “wages” under § 48-126 do not include payments received solely because of the recipient’s status as an 

S corporation shareholder. Rather, “wages” under § 48-126 

are compensation for the recipient’s activities as a corporate 

employee. The determination of “wages” under § 48-126 for 

an employee-shareholder of a subchapter S corporation is a 

fact-specific inquiry.

Two of our prior decisions provide only limited guidance. 

In Bituminous Casualty Corp. v. Deyle,

43 the claimant was 

the president, general manager, and majority stockholder of a 

42 § 48-126.

43 Bituminous Casualty Corp. v. Deyle, 225 Neb. 82, 402 N.W.2d 859 (1987).
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construction company. The claimant received no cash wages 

or bonus from the company, but he kept profits from buying 

properties constructed by the company at cost and reselling 

or leasing them. The claimant did not report those profits as 

income, and the company did not report the benefits as salary paid to the claimant. We determined that no “wages” were 

paid and that thus, the claimant was not entitled to receive any 

compensation other than the payment of his medical bills. On 

the other hand, in Hull v. Aetna Ins. Co.,

44 we stated that a selfemployed claimant’s average weekly wage should be based on 

net income. We subsequently affirmed a review panel’s determination that the self-employed individual’s average weekly 

wage was $123.44, based on net business income of $6,419.45

This precedent does not permit us to articulate any brightline rule regarding an employee-shareholder of a subchapter 

S corporation.

Competent evidence in the record supports the Court of 

Appeals’ determination of average weekly wage. The Court 

of Appeals determined Bortolotti’s average weekly wage to 

be $49—the minimum weekly income benefit provided by 

statute46—based on Universal’s evidence that Bortolotti earned 

$3,950 in wages in 2013. That amount is supported by the 

record—the Schedule E from Bortolotti’s 2013 tax return 

showed wages of $3,950, which was the same amount of total 

payments to Bortolotti shown on Universal’s payroll journal 

for 2013. As the parties recognized, Bortolotti had the burden 

to establish his average weekly wage from this S corporation. 

Thus, he was required to provide evidence differentiating his 

wages as a corporate employee from his profits as a corporate shareholder. He failed to do so, and Universal presented 

competent evidence respecting this distinction. We affirm 

44 Hull v. Aetna Ins. Co., supra note 22.

45 See Hull v. Aetna Ins. Co., supra note 9.

46 § 48-121.01(2).
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the Court of Appeals’ determination that Bortolotti’s average 

weekly wage benefit was $49.

2. Out-of-Pocket Medical Expenses

(a) Standard of Review

[10] When testing the sufficiency of the evidence to support 

findings of fact made by the Workers’ Compensation Court 

trial judge, the evidence must be considered in the light most 

favorable to the successful party, every controverted fact must 

be resolved in favor of the successful party, and the successful party will have the benefit of every inference reasonably 

deducible from the evidence.47

[11] On appellate review, the factual findings made by 

the trial judge of the Workers’ Compensation Court have 

the effect of a jury verdict and will not be disturbed unless 

clearly wrong.48

(b) Additional Facts

Exhibit 41, offered by Bortolotti, was a one-page exhibit 

which listed the date, provider, cost, and payer of various medical bills. The court received the exhibit into evidence without objection. During trial, the following colloquy occurred 

between Bortolotti and his counsel:

Q. All right. Now, have you then put together in 

Exhibit 41 the monies that have been made paid to [a 

doctor’s] office by Columbia Insurance, the bills that have 

been paid by United Health and then the bills that have 

been paid by you for your left shoulder injury?

A. Yes.

Q. And so you’ve paid, according to this, $9,849.38?

A. Yes.

Universal did not inquire about these out-of-pocket expenses 

on cross-examination.

47 See Krause v. Five Star Quality Care, supra note 40.

48 Id.
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The compensation court stated that “Although offered 

[Bortolotti’s] own itemization of claimed expenses and summaries of payments made by third parties . . . , the Court finds 

it is unable to use these for entering an award in favor of 

[Bortolotti] as to the payment of medical expenses.” The court 

cited Workers’ Comp. Ct. R. of Proc. 10 (2018), which called 

for itemized bills. The court’s award stated: “[Bortolotti] 

testified that he personally paid $9,849.38 for his medical 

expenses, which was itemized in greater detail in Exhibit 

41. He should be reimbursed by [Universal] for his out-ofpocket expenses.”

The Court of Appeals reasoned that because the compensation court rejected exhibit 41 and Bortolotti “based his answer 

‘according to’ exhibit 41,” the compensation court had no basis 

to make the award of out-of-pocket medical expenses.49

(c) Discussion

The premise of the Court of Appeals’ conclusion is that the 

second question posed to Bortolotti was based solely on exhibit 

41. We disagree.

On this issue, the appellate court failed to apply the deferential standard of review, which required it to view the testimony most favorably to Bortolotti and to give him the benefit 

of every inference reasonably deducible from the evidence. 

The colloquy between Bortolotti and his counsel showed that 

Bortolotti “put together” exhibit 41, which raised an inference that he had personal knowledge of the amounts shown 

thereon. In other words, the second question and answer must 

be viewed deferentially in the context of the preceding question and answer.

The compensation court relied on Bortolotti’s testimony 

in finding that he paid $9,849.38 in out-of-pocket medical 

expenses. Viewing that testimony most favorably to Bortolotti 

and giving him the benefit of every reasonable inference, the 

49 Bortolotti v. Universal Terrazzo and Tile Co., supra note 1 at *8.
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compensation court’s factual finding was not clearly wrong. 

Accordingly, the Court of Appeals erred in disturbing the compensation court’s award of out-of-pocket expenses.

VI. CONCLUSION

The compensation court’s average weekly wage determination, based on an allegation in an inoperative pleading, was 

clearly wrong. Because the Court of Appeals’ determination of 

average weekly wage was supported by competent evidence in 

the record, we affirm that determination.

The compensation court was not clearly wrong in finding that Bortolotti paid $9,849.38 in out-of-pocket medical 

expenses. We reverse the decision of the Court of Appeals in 

part and remand the matter with direction to affirm the compensation court’s award of out-of-pocket medical expenses.

 Affirmed in part, and in part reversed

and remanded with direction.