Opinion ID: 2172767
Heading Depth: 1
Heading Rank: 2

Heading: Construction of Iowa Code Section 85.22(1).

Text: In two related arguments, Milwaukee Mutual argues that a court may require the indemnitee to share part of the attorney fees and costs under section 85.22(1), but it is not required to do so. It suggests that the 1959 amendment to that section (which had previously not allowed payment of any fees by the indemnitee) was enacted to prevent the indemnitee's unjust enrichment. Here, there was no benefit to the indemnitee, it argues, because it was required to pay the resulting judgment. Milwaukee Mutual also argues that a proper application of section 85.22(1) would require that, upon recovery in a third-party case, fees and costs should first be deducted from the judgment, then the workers' compensation indemnitee should be paid in full (without reduction for fees), and any balance paid to the employee. Using that approach here, the effect would be to assess the entire fee to Farris; the full lien amount of $102,000 would be paid to Milwaukee Mutual without reduction for attorney fees. Farris argues that Milwaukee Mutual should pay its share of the attorney fees. The district court agreed, and so do we. If the controlling purpose of section 85.22(1) is said to be to prevent unjust enrichment to an indemnitee, Milwaukee Mutual's position would be correct; it was not enriched by this third-party suit. On the other hand, if the purpose of the section is to provide a fair distribution of fees under the exercise of a court's judgment, it would have to be construed in favor of Farris. We believe the latter is the correct view. Milwaukee Mutual candidly concedes that, if there were two separate insurance carriers involved, the workers' compensation insurer should pay its share of the fees. We do not believe it is fair, or in conformity with the intent of section 85.22(1), to penalize an employee in a third-party suit because it happened that one insurance company had both ends of the insurance coverage. We affirm. AFFIRMED.