Opinion ID: 853605
Heading Depth: 1
Heading Rank: 2

Heading: Indiana's Worker's Compensation System

Text: Indiana's present worker's compensation system was essentially established [by] the Workmen's Compensation Act of 1929. Evans v. Yankeetown Dock Corp., 491 N.E.2d 969, 971 (Ind.1986). Prior to worker's compensation, workers were faced with harsh common law. Frampton v. Central Indiana Gas Co., 260 Ind. 249, 297 N.E.2d 425, 427 (1973). The employee's only remedy was an action in tort against the employer[,] ... which w[as] rarely successful due to employer-friendly common law defenses. Id. A. Purpose of Worker's Compensation. With the enactment of the worker's compensation system, workers who were previously precluded from recovery under common law theories are [now] guaranteed compensation. Walker v. State, 694 N.E.2d 258, 268 (Ind.1998). Employers must provide limited compensation to workers whose injuries arise out of and in the course of [their] employment, regardless of fault. Note, Charles Richard O'Keefe, Jr., The Guides to the Evaluation of Permanent Impairment and Worker's Compensation in Indiana, 27 Ind. L.Rev. 674, 649 (1994). In return for the employer's payment of benefits, the employer is given immunity from civil litigation with his employee. Stephen E. Arthur, 11 Ind. Practice § 119.01 at 241 (Supp.1999) (citations omitted). The scheme is ... social legislation designed to aid workers and their dependents and `shift the economic burden for employment related injuries from the employee to the employer and consumers of its products [and services].' O'Keefe, supra, 27 Ind. L.Rev. at 649-50; see also Collins v. Day, 604 N.E.2d 647, 648 (Ind.Ct.App.1992), aff'd on other grounds, 644 N.E.2d 72 (Ind. 1994). B. Third-party Actions. In addition to shifting the cost of injuries from worker to employer to achieve social policy goals, the Worker's Compensation Act also provides a way to seek compensation from third-parties who caused injuries. The concept underlying third party actions is the moral idea that the ultimate loss from wrongdoing should fall upon the wrongdoer. Arthur Larson & Lex K. Larson, 6 Larson's Workers' Compensation Law § 71.10 at 14-1 (1999). Historically, some states required workers to elect at the outset whether to seek compensation benefits or pursue a third-party action. If an employee thought his injury arose in the course of his employment, and applied for compensation, but was incorrect, he was precluded from suing the third-party. Now, however, an employee can accept compensation benefits while pursuing a third-party action; at the completion of that action, the employee may, in effect, keep whichever is worth more. In worker's compensation third-party actions, as in other tort settings, the comparative fault of the injured employee-plaintiff is factored into the final judgment or settlement. And, while the employee is generally required to repay the worker's compensation carrier for benefits and expenses paid while the employee pursued the third-party action, the amount of that reimbursement is likewise reduced by the amount of the employee's comparative fault. Ind.Code Ann. § 22-3-2-13 (West 1991); Ind.Code Ann. § 34-51-2-19 (West 1999). C. The Interplay Between Compensation and Third-party Actions. The worker's compensation system does not necessarily provide the kind of complete recovery an injured employee might receive in a third-party action. On the other hand, it provides compensation even when the tort system would give no recovery at all (as in cases whether no one has acted negligently). It is also reasonably prompt. While it could take years to reduce a third-party claim to judgment, the Worker's Compensation Act requires that the employer provide medical treatment before the adjudication of permanent impairment. Ind.Code Ann. § 22-3-3-4 (West Supp.1999). In some instances, as in this case, a worker's compensation insurance carrier begins to pay benefits to the injured employee before he even files a claim. (Appellant's Br. at 4 (citing Dep. of David E. Peiffer at 29-3[1]).) Worker's compensation legislation has evolved from efforts to ameliorate the inequitable and often devastating effects of industrial accidents on the labor force.... Work[er]'s compensation is intended to provide an expeditious remedy which will guarantee the injured employee some recovery for an industrial accident. Arthur, supra, 11 Ind. Practice § 119.01 at 246 (emphasis added) (citations omitted). Of course, compensation under the worker's comp scheme is calculated on a different basis than the damages awarded in a third-party action. Compensation benefits are not awarded as damages for pain, suffering or other monetary loss. Id. at 247 (citations omitted). The benefits are intended to replace the future wages that the employee would earn if he were able to continue to work. [5] Leisure v. Leisure, 605 N.E.2d 755, 758-59 (Ind. 1993). The amount of this compensation is not determined by jury, but rather by statute, [6] and may well be less than what the injured could receive from the guilty tortfeasor. [7] This compensation may, however, be the most complete recovery a plaintiff can obtain if, for example, there is no third-party tortfeasor to sue, or the plaintiff's injury resulted primarily from his own fault. The worker's compensation provision governing claims against third persons, Ind.Code § 22-3-2-13, provides a plaintiff the opportunity to choose between worker's compensation and third-party judgments in some situations, so that he might maximize the recovery. If the final judgment in a suit brought by an injured employee is less than the amount of the worker's compensation benefits and medical expenses, the employee can choose to accept the judgment and reimburse the worker's compensation payor, or to assign all rights to the judgment to the worker's compensation payor, and continue to accept the benefits as prescribed by the Board. Ind.Code Ann. § 22-3-2-13 (West 1991). [8] If through settlement or litigation an employee obtains an amount that is more than the worker's compensation benefits, then the employee must reimburse the worker's compensation payor and keep the remainder of the judgment or settlement, thereby relinquishing all right to the compensation benefits. Id. [9] Because an injured employee must choose between the third-party judgment and the worker's compensation benefits and medical expenses, or in some instances, because the legislature makes that choice for the employee, there is no reason an attorney should recover a percentage of the whole of both awards. Of course, a carrier must pay a fee to the injured employee's lawyer for collecting on its lien by conducting the third-party litigation. Whether it must pay fees on anything else is the subject of this litigation.