Court Opinion

ID: 9688810
Source: CourtListenerOpinion
Date Created: 2023-08-24 18:06:51.282277+00
Date Added: 2024-06-11T18:18:42.416262
License: Public Domain

R. C. Kaufman, J.
(dissenting). I respectfully dissent.
The majority holds that a nonintervening workers’ compensation carrier has standing , in a third-party tort action brought by an injured employee and his spouse (for loss of consortium) to object to the apportionment of damages between the employee and the spouse determined in a settlement of the tort claims. The majority further holds that when such an objection is made by this nonparty, the trial court is obligated to hold a hearing to *523determine the value of the damages of the spouse in comparison to the employee’s injuries and adjust the settlement allocation appropriately. For the reasons explained more fully below, the majority is wrong.
The majority holding is based on the mistaken assumption that a nonintervening compensation carrier, who merely sends a "lien letter” to protect its rights, has the same rights as one who has formally intervened. As a practical matter this erroneous ruling will result in fewer settlements and more trials. Furthermore, the majority fails to offer any meaningful guidance to trial courts attempting to implement its holding.
In this case, the compensation carrier never formally intervened. Yet the majority is allowing it to object to the settlement reached by the defendant and the plaintiffs. The majority ultimately rejects the substance of the plaintiffs’ objections to this by observing:
Moreover, although the better practice is to formally intervene, whether one has the right to intervene does not affect the statutory right to a lien against any proceeds of the third-party action. A workers’ compensation carrier is not under an obligation to intervene in a third-party tort action in order to protect its statutory lien.
While it is true that a workers’ compensation carrier is not under an obligation to intervene, its decision to merely protect its lien with a lien letter, instead of formally intervening, may have legal consequences. To say that one has a choice does not mean that ramifications do not flow from choosing. The foregoing statement by the majority is used to justify allowing a nonintervening compensation carrier to have standing to object to a settlement. The majority’s statement does not rec*524ognize that the relevant statute, MCL 418.827; MSA 17.237(827), does indeed treat differently those compensation carriers who do intervene and those who do not.
MCL 418.827; MSA 17.237(827) states in part as follows:
(1) Where the injury for which compensation is payable under this act was caused under circumstances- creating a legal liability in some person other than a natural person in the same employ or the employer to pay damages in respect thereof, the acceptance of compensation benefits or the taking of proceedings to enforce compensation payments shall not act as an election of remedies but the injured employee or his dependents or personal representative may also proceed to enforce the liability of the third party for damages in accordance with the provisions of this section. If the injured employee or his dependents or personal representative does not commence the action within 1 year after the occurrence of the personal injury, then the employer or carrier, within the period of time for the commencement of actions prescribed by statute, may enforce the liability of such other person in the name of that person. Not less than 30 days before the commencement of action by any party under this section, the parties shall notify, by certified mail at their last known address, the bureau, the injured employee, or in the event of his death, his known dependents or personal representative or his known next of kin, his employer and the carrier. Any party in interest shall have a right to join in the action.
(2) Prior to the entry of judgment, either the employer or carrier or the employee or his personal representative may settle their claims as their interest shall appear and may execute releases therefor.
(3) Settlement and release by the employee is not a bar to action by the employer or carrier to proceed against the third party for any interest or claim it might have.
*525(5) In an action to enforce the liability of a third party, the plaintiff may recover any amount which the employee or his dependents or personal representative would be entitled to recover in an action in tort. Any recovery against the third party for damages resulting from personal injuries or death only, after deducting expenses of recovery, shall first reimburse the employer or carrier for any amounts paid or payable under this act to date of recovery and the balance shall forthwith be paid to the employee or his dependents or personal representative and shall be treated as an advance payment by the employer on account of any future payments of compensation benefits.
Under this statutory scheme, if a third-party tort action by the employee has been commenced within the one-year period, the compensation carrier has two options in order to protect its reimbursement rights for money it has paid for workers’ compensation benefits: formally intervene in the action, as is its right under the last sentence of section one, or informally assert its lien and await the outcome of the proceedings. As an intervening party, the compensation carrier has the right, as does any other party in the action, to participate in the proceedings. More importantly, by formally intervening, the compensation carrier fully preserves its right to proceed against the third-party defendant for reimbursement. This right obtains under section three, notwithstanding any settlement by the employee. Thus, should the intervening compensation carrier deem a settlement between the employee-plaintiff and the defendant insufficient, it retains its right to proceed against the tortfeasor.
A compensation carrier who does not intervene, however, is not a party to the action. The majority *526fails to cite any authority that arguably gives a nonparty any right to participate in the case. While it is true that a compensation carrier need not intervene to preserve its lien on the proceeds of the third-party tort action going to the employee-plaintiff, there is, absent formal intervention, no law that preserves the compensation carrier’s ability to affect the amount of the proceeds. Absent intervention, the compensation carrier’s lien remains intact; however, the result of nonintervention will be to remove its ability to affect the amount of the proceeds against which the lien may be satisfied (i.e., the amount of money going to the employee-plaintiff).
None of the cases cited by the majority involve the rights of nonintervening compensation carriers to object to settlements. Indeed, in Michigan, the general rule of law with respect to the rights of intervenors is stated in Smith v Norton Twp, 319 Mich 365, 370-371; 29 NW2d 836 (1947), quoting 11 Encyclopedia of Pleading & Practice, pp 509-510:
"An intervener in a suit between other parties must accept such suit as he finds it, and is bound by the record of the case at the time of his intervention. He cannot raise an issue as to whether the proceedings are regular, nor can he plead exceptions having for their object the dismissal of the action. He cannot raise new issues in the suit, nor insist upon a change in the form of the proceedings. An intervener cannot exercise any rights which are limited to the parties to the action.”
Thus, were a compensation carrier to intervene after a settlement had been reached, because of the lateness of its intervention, under Smith, it could not be heard to object to the settlement. Yet under the majority’s rule, a nonintervening compensation carrier is given greater rights to object. *527Certainly this turns the normal state of affairs on its head.
While no Michigan case heretofore has addressed the issue, persuasive authority in other jurisdictions rejects the rule implicit in the majority’s holding. In Rascop v Nationwide Carriers, 281 NW2d 170, 173 (Minn, 1979), the court held that a compensation carrier lost any right to object to a settlement of a claim for loss of consortium because, inter alia, although it received notice of and even objected to the proposed settlement and distribution, it failed to intervene. The court held: "Therefore, they have no standing to question the settlement and allocation of the proceeds.” Id. Rascop, of course, merely recognizes the unremarkable proposition that, in order to be heard to object to a proceeding, one must be a party to the proceeding.
While I recognize that the Court of Appeals has consistently been solicitous to the concerns of compensation carriers that, in third-party tort actions, employees and their spouses may attempt to defeat the compensation carrier’s right under MCL 418.827(5); MSA 17.237(827)(5) to share in the proceeds of the suit by unfairly allocating a disproportionate amount of the recovery to the spouse’s claim for loss of consortium, see Treadeau v Wausau Area Contractors, Inc, 112 Mich App 130, 137; 316 NW2d 231 (1982); Lone v Esco Elevators, Inc, 78 Mich App 97, 108, n 7; 259 NW2d 869 (1977), this solicitousness is not deserved in the case of a nonintervening compensation carrier.
A compensation carrier who wishes to fully protect its interest has a statutory remedy by intervening. Where a compensation carrier intervenes, by statute, any settlement by the employee-plaintiff has no binding effect on the right of the compensation carrier to proceed against the tort*528feasor for full recovery of its lien. MCL 418.827(3); MSA 17.237(827)(3) could not be clearer:
(3) Settlement and release by the employee is not a bar to action by the employer or carrier to proceed against the third party for any interest or claim it might have.
Thus a settlement that is perceived by the compensation carrier as unfair to its interest will not affect its ability to pursue its claim against the tortfeasor; The intervening compensation carrier cannot upset the settlement between the employee-plaintiff and the defendant, but can proceed with its claim to trial, even if the employee-plaintiff has settled. The compensation carrier retains its lien on the settlement amount being paid the employee-plaintiff, and can proceed to trial for the remainder of its lien. Given this statutory scheme, courts should not gratuitously give a compensation carrier more protection or remedies by rewarding the nondiligent compensation carrier.1 As a practical matter, a defendant is unlikely to settle with the employee-plaintiff without also getting a release from the compensation carrier. Nonetheless, the right of the employee-plaintiff and the defendant to settle without agreement from the compensation carrier remains.
The majority’s approach allows a compensation carrier to lie back until after settlement, and if the settlement is not to its liking, seek to disrupt *529it. Settlements in personal injury actions are typically products of intense negotiations, and parties justifiably consider and expect the matter closed once settlement is reached. If the compensation carrier intervenes, it will be present at the settlement conference and can fully participate. All parties will be present to engage in the dynamic give and take process of trying to settle a personal injury case. Allowing a nonparty to upset the arrangements of the parties, and their expectations, will only serve to increase the chance that no settlement will be reached.
In cases where the amount of the settlement reached is not great or is less than the amount of the compensation carrier’s lien, there may be no real inducement for an employee to settle the claim against the tortfeasor. At this point, the chance that the case will go to trial materially increases. Thus, the result reached by the majority flies in the face of the well-settled policy of the law to encourage settlements. The practical effect of the majority’s approach will be to condemn to trial some cases that might have been settled.
The other legal and practical consideration ignored by the majority is how the trial court is to implement the mandate to . determine fair apportionment. Indeed, this is a failure of prior decisions such as Lone and Treadeau. No clue is given the trial court regarding what procedures or standards should be used,2 or what constitutes a fair apportionment of damages. Is the trial court, after having ascertained the actual value of the employee’s and the spouse’s damages, to review the settlement’s apportionment under a strict mathematical *530approach or some lesser exacting standard? Can the trial court take into consideration the practical problems posed when the settlement amount is far less thán the compensation lien? Is the trial court to use the likelihood of plaintiff establishing liability at trial as somehow relevant, and if so, in what way? Without sufficient guidance in answering these questions and many others, it is foreseeable that further litigation at both the trial and the appellate levels will occur. Even if I were to agree with the majority’s legal conclusion, I would object to remanding this case under a directive that is so devoid of content that it produces rather than resolves uncertainty in this field.
I would affirm.

 There is at least a suggestion in Detroit v Spivey, 68 Mich App 295, 299-300; 242 NW2d 561 (1976), and the language of MCL 418.827(3); MSA 17.237(827)(3), that, notwithstanding a suit by the employee, after one year, the compensation carrier may commence a suit on its own behalf. If this is indeed true, there is even less justification for granting standing to a nonintervening compensation carrier to contest the allocation of the settlement. Its interests in satisfying its lien would be fully protected because it would be able to directly sue the tortfeasor, assuming of course it commences its action in a timely fashion.

 For example, assuming that the plaintiffs have preserved their right to a jury trial, we would be confronted with the question that was belatedly raised by a nonparty to the action: Are they entitled to a jury determination of the factual issue regarding the amount of damages suffered by the employee and the spouse?