Opinion ID: 2060520
Heading Depth: 2
Heading Rank: 3

Heading: Is Specific Compensation Subject to the Suspension Mechanism?

Text: Having determined that § 28-35-58's reference to compensation includes any postsettlement specific compensation awarded to the employee, we next address whether a specific compensation award is subject to that section's suspension and reimbursement provisions. Here we are reminded that no construction, particularly of a remedial statute, should be adopted which would defeat its evident purpose. Coletta, 106 R.I. at 770, 263 A.2d at 684. The duty of the Judiciary is to attribute to a statute the meaning most consistent with its evident purpose in order to effectuate the Legislature's intent. See Gilbane Co., 576 A.2d at 1196; see also McCarthy v. Environmental Transportation Services, Inc., WCC (Appellate Division) 91-11115 at 6 (citing Gilbane Co.). Although the precise language employed by the Legislature is somewhat peculiar to our statute, the overall operation of § 28-35-58 is comparable to similar workers' compensation statutes in other jurisdictions. These statutes share a common policy: to permit injured workers to recover tort damages from third parties while preserving their employers' potential workers' compensation liability as security against a deficient tort recovery and, at the same time, guarding against any double recovery or windfall to the injured employees. Thus, under most state workers' compensation statutes, an employer's liability is not completely extinguished even after a third-party tortfeasor has paid a judgment or a settlement in connection with the employee's injuries. See generally Arthur Larson, 6 Workers' Compensation Law § 74.16(a)-(e) (1997) (and cases cited therein). However, to avoid an excessive or a double recovery by the employee, the employer is allowed to obtain reimbursement of its compensation payments from damages recovered by the employee from responsible third parties. The employer's workers' compensation obligations are typically set off against the proceeds of any tort settlement or judgment so that the employer is reimbursed for any compensation previously paid or payable in the future to the employee. Once this is done, the injured employee is allowed to retain any excess tort damages (net of reimbursed or credited workers' compensation benefits) recovered from the settling third-party tortfeasor. The central objective is to provide the mechanics that will achieve the result described    the third party paying what he would normally pay if no compensation question were involved; the employer and carrier [insurer] `coming out even' by being reimbursed for their compensation expenditure; and the employee getting any excess of the damage recovery over compensation. Id. at § 74.16(a). Future workers' compensation liability, arising from an employer's continuing obligation to make weekly payments, is generally credited as it comes due against any remaining third-party settlement or judgment proceeds. The steps by which this intended result is to be achieved, however, are not always spelled out in the various workers' compensation statutes. A complication that, in the nature of things, cannot be avoided is the fact that at the time of distribution of the third party recovery the extent of the [employer's] liability for future compensation benefits often is unknown. Indeed, this would happen in almost every serious case in which the compensation payments are periodic and the third party recovery is reasonably prompt.       If the statute does not take pains to deal explicitly with the problem of future benefits, but merely credits the [employer] for compensation paid, or compensation for which the [employer] is liable, the correct holding is still that the excess of third party recovery over past compensation actually paid stands as a credit against future liability of the carrier. (Emphasis added.) 6 Larson, at § 74.31(e). This future-benefits problem is especially apropos to our statute, which requires a workrelated injury to have reached maximum medical improvement (also referred to as an end result) before a claim for § 28-33-19 specific-compensation benefits may be presented. See § 28-33-19(c); see also Jones, 117 R.I. at 48, 362 A.2d at 141. We are of the opinion that in amending § 28-35-58, the General Assembly intended to achieve the result described in Larson's above-quoted workers' compensation treatise. Two important and salutary policies are served thereby. First, although the WCA creates no-fault liability on the employer's part to benefit and protect the employee, it also reflects a policy judgment that, whenever possible, any culpable tortfeasor(s) should bear the ultimate financial burden for the employee's injuries. Thus, when a recovery can be obtained against a responsible third party (who usually cannot be held liable or amenable to a substantial settlement without some degree of culpability), the third party is made to bear the cost of those injuries while the employer whose liability arises solely through the WCA's no-fault liability provisions is reimbursed or credited pro tanto for its past and continuing WCA obligations. It is critical to recognize that under the WCA the employer serves as a vanguard for the employee's welfare, standing ready to advance benefits to the employee without delay and without determination of fault until the employee obtains a recovery from any settling third-party tortfeasor or tort-judgment debtor. See Wright, 535 A.2d at 320; Cacchillo v. H. Leach Machinery Co., 111 R.I. 593, 595-96, 305 A.2d 541, 542-43 (1973). If the employee does obtain a third-party recovery, the employer's WCA obligations are then credited or reimbursed only to the extent that any recovery from the third party equals or exceeds the employer's WCA obligations. But the employee is never required to reimburse the employer or its insurer out of his or her own pocket. The second policy reflected in the statute is that the employee may pursue a recovery from alleged third-party tortfeasors either before or after collecting WCA benefits and may retain any excess proceeds recovered from such third parties. Thus the WCA implicitly recognizes that workers' compensation benefits are sometimes inadequate to compensate an employee for his or her injuries fully. See Wright, 535 A.2d at 320. Indeed, the very concept of workers' compensation embodies a compromise between the relative certainty of no-fault employer liability for an employee's work-related injuries and the fixed, but limited, schedule of benefits recoverable for such injuries. Thus under the WCA a lost eye or injured arm is worth only a scheduled maximum amount, an incapacitated employee recovers only a portion of his or her reduced earning capacity, and no pain-and-suffering or punitive damages may be awarded to the injured employee. But on the other side of the equation, the employee is guaranteed these benefits without exposure to the vagaries of fault-based tort litigation. These dual policies undergird and percolate through the majority of our sister states' workers' compensation statutes. [6] Section 28-35-58, as amended, promotes both policies by preserving an employer's potential liability for future weekly benefits as insurance against the possibility that the employee's tort recoveries will prove to be insufficient to indemnify him or her for the duration of his or her incapacity. In so providing, the 1985 amendment impliedly rejects the irrebuttable presumption expressed in Travis that a third-party tort recovery will always be deemed to compensate an employee fully for all his or her work-related losses. At the same time § 28-35-58 also requires the proceeds of such recoveries to be used to reimburse the payer of any WCA benefits to prevent double recovery by the employee. We further note in passing that if the employee had obtained a specific-compensation award from the employer before securing a third-party recovery, such an award would have to be repaid to the employer or its insurer out of any subsequent third-party-settlement or judgment proceeds. Although this court has never had occasion to rule on this issue directly, such a result appears to follow inescapably from § 28-35-58's reimbursement provisions. [7] In sum we conclude that the panel's treatment of specific-compensation awards granted after the employee has obtained a third-party tort recovery comports with the language of the WCA while also heeding its underlying policies. At the same time the panel's approach has the virtue of not discriminating among specific-compensation awards based upon whether the employee receives them before or after any third-party tort recovery. Accordingly an injured employee who receives a specific-compensation award after his or her recovery of a thirdparty settlement or judgment is to be immediately credited with a setoff against the excess-settlement proceeds recovered from the third party in the form of a reduction of the suspension period. As applied to the facts in this case, this credit reduces the $2.5 million of excess settlement proceeds used to calculate the § 28-35-58 suspension period by approximately $53,000the same result that would obtain in the case of a pre-settlement specific-compensation award. We also note that the immediate vesting of the specific-compensation award in the form of this setoff satisfies in our opinion § 28-33-19's requirement that awards be credited in a one-time lump-sum amount and also heeds § 28-33-24's mandate that specific compensation    payments shall be vested and are not to be divested by any subsequent happening or contingency. Because of the large settlement amount in this case, it is almost certain that Rison will not outlive the 175-year suspension period. Nonetheless, the amended WCA allows him (and his estate) to retain any remaining excess settlement proceeds, no matter how sizable that sum may prove to be. And although this result is a significant advantage to the employee (recall that in Travis the employee was not allowed to recover any WCA benefits after a tort recovery), none of the central policies informing the WCA are offended. Air Filter, in its role as the nofault-liability vanguard, is made whole for any workers' compensation expenditures it may have been required to advance to Rison. And for his part, Rison is guaranteed financial support during the period of his work incapacityhowever long that may prove to bebut he is not allowed to retain any excess-settlement proceeds unless and until Air Filter and/or its insurer have first been made whole. [8] D. Scope of Appellate Jurisdiction Finally, we discern no merit in Rison's remaining contention that the panel decided issues beyond the scope of Air Filter's appeal. The panel stated in its final decree, The sole issue before the court is an interpretation of the provisions of R.I.G.L. § 28-35-58, and it described the question before it in this manner: Essentially this ruling revolves around what is the meaning of compensation. We agree with those characterizations. The panel was called upon to interpret § 28-35-58 and to determine how that provision's suspension mechanism applies to the facts of this case. The panel did so, and we perceive no error in its ruling. E. Order Pursuant to our prerogative under § 28-35-36, we frame the following order and remand this matter to the WCC: 1. The employee, James Rison III, shall be entitled to an award of specific compensation in the amount of $52,582 for the loss of use of his upper extremities and the disfigurement resulting from his work-related injuries, as provided by § 28-33-19. 2. In lieu of payment, however, the aforementioned specific-compensation award shall be credited against the excess settlement damages according to the provisions of § 28-35-58, thereby reducing the otherwise applicable suspension period by a number of weeks to be determined in accordance with this opinion. 3. Air Filter's liability for future weekly indemnity benefits under § 28-33-17 and its potential liability for all other benefits or compensation to which Rison may be entitled under chapters 29 to 38 of the WCA (except those for which Rison has already received credit or payment) shall continue, subject to all other WCA provisions relating to cessation of benefits upon death or to modification of benefits due to a reduction of his incapacity, provided that Air Filter's liability for future compensation payments shall be suspended for a period to be determined in accordance with this opinion.