Opinion ID: 1112397
Heading Depth: 1
Heading Rank: 2

Heading: Apportionment of Recovery Costs

Text: The next issue raised by Cosse is whether the court of appeal erred in giving retroactive effect to the 1989 amendment to La.R.S. 23:1103, thereby limiting Celotex's liability for Cosse's recovery costs to one-third of Celotex's recovery for pre-judgment payments or pre-judgment damages, rather than following, as the trial judge did, the formula set forth in Moody v. Arabie, 498 So.2d 1081 (La.1986), for calculating the percentage of recovery costs for which an intervening employer should be liable. Prior to 1989, the worker's compensation law was silent as to the allocation of recovery costs, including attorney fees. In 1986, this court in Moody set out a formula to establish the employer's proportionate interest in the recovery, which would determine the percentage of its liability for the recovery costs. Under that formula, the employer's share of the recovery was determined by dividing the employer's reimbursement by the recovery from the third person. The trial judge applied that formula in the present case, determining that Celotex was liable for 52% of the recovery costs. [10] In 1989, La.R.S. 23:1103 was amended (effective January 1, 1990) to add paragraph C, which provides in pertinent part: C. If either the employer or employee intervenes in the third party suit filed by the other, the intervenor shall only be responsible for reasonable legal fees and costs incurred by the attorney retained by the plaintiff. Such reasonable legal fees shall not exceed one third of the intervenor's recovery for pre-judgment payments or pre-judgment damages. In finding the 1989 amendment applicable to this case, the court of appeal relied on footnote one in Taylor v. Production Services, Inc., 600 So.2d 63, 65 (La.1992), in which we stated [t]he 1989 amendment is not applicable to this case in which judgment was rendered prior to the effective date of the statute. The court of appeal interpreted this language to mean the relevant event for purposes of vesting of rights was the date of judgment, rather than the date of the accident. We find this reasoning to be in error. A review of the facts of Taylor show that both the accident (November 13, 1985) and the rendition of the judgment (September 3, 1987) occurred prior to the effective date of the 1989 amendment. Thus, while our use of judgment was perhaps an unfortunate choice of words, the result of the case was that the 1989 amendment would not be applied to a 1985 accident. This conclusion is further reinforced by reference to a case rendered shortly after Taylor, St. Paul Fire & Marine Ins. Co. v. Smith, 609 So.2d 809 (La.1992). In St. Paul, we held that subsection B of La.R.S. 23:1103 did not apply retroactively. [11] The facts of St. Paul show that the accident occurred on May 19, 1988, whereas the judgment was rendered on January 16, 1990, after the 1989 amendment's effective date of January 1, 1990. Our opinion clearly looked to the date of plaintiff's injury rather than the date of judgment, stating [i]n this case, the relevant event (plaintiff's injury) occurred before the January 1, 1990, effective date of the 1989 amendment. Application of the 1989 amendment in this case would adversely affect Cosse, since it would reduce Celotex's proportion of liability for Cosse's recovery costs from 52% to a maximum of one-third of Celotex's recovery for pre-judgment payments or pre-judgment damages. Therefore, we find the court of appeal erred in giving retroactive effect to the 1989 amendment to La.R.S. 23:1101(C). Nonetheless, Celotex argues that application of the Moody formula results in an inequity to the intervening employer. [12] Celotex contends that the Moody formula (calculating the employer's share of recovery based on the employee's total recovery from the third party tortfeasor) conflicts with our opinions in Fontenot v. Hanover Ins. Co., 385 So.2d 238 (La.1980), and Brooks v. Chicola, 514 So.2d 7 (La.1987), which limit the intervening employer's recovery to that portion of the judgment for medical expenses and lost wages and prevent reimbursement from the portion of damages awarded for pain and suffering. In essence, Celotex argues that it is unfair to make it pay a proportion of recovery costs for the entire judgment, when it may only receive reimbursement from the portion of judgment awarding medical expenses and lost wages. While Celotex's argument may point out a theoretical inequity in the law, we are unable to find any actual prejudice to Celotex. The jury awarded Cosse $220,000 for past and future lost wages, $37,072 for past and future medical expenses and $187,500 in general damages. The trial judge calculated the value of Celotex's interest in Cosse's recovery as $229,166, [13] consisting of $101,552 for past worker's compensation benefits and medical payments, and $127,614 as credit for future compensation payments. Since the value of Celotex's interest in Cosse's recovery is less than the jury's award to Cosse for lost wages and medical expenses, application of Fontenot and Brooks does not serve to diminish Celotex's recovery. Moreover, the apportionment by the trial judge of 52% of the liability to Celotex for Cosse's recovery costs appears fair, as Celotex's interest in the recovery represents roughly half of Cosse's award. [14] Finally, we note that any problems in this regard will not occur in post-1990 cases, since Moody, Fontenot and Brooks have been supplanted by the amendments to La.R.S. 23:1103(B) & (C). Accordingly, we find the trial judge correctly relied on the Moody formula in calculating recovery costs. However, we find the actual numbers arrived at by the trial judge are incorrect, since he erroneously reduced Celotex's reimbursement by Cosse's 5% fault. Additionally, the figures used by the trial judge may no longer be current, since interest has been running while the case was on appeal and in this court. For these reasons, we believe the case must be remanded to the trial court for a new calculation of the percentage of recovery costs for which Celotex is liable.