Court Opinion

ID: 9787737
Source: CourtListenerOpinion
Date Created: 2023-08-31 00:23:36.030778+00
Date Added: 2024-06-11T07:37:00.098348
License: Public Domain

OROZCO, Judge,
dissenting.
¶ 21 Claimant was employed as a registered nurse by Banner Health System. Banner is self-insured for purposes of its short-term disability and workers’ compensation insurance coverage. If an employee is injured on the job and, as in this case, Banner denies the employee’s worker’s compensation claim, the employee may apply for and, if eligible, obtain short-term disability benefits. If the denial of the worker’s compensation claim is later determined to be error, as occurred here, the worker’s compensation fund reimburses the short-term disability fund.
¶ 22 The majority holds that because Banner “simply shift[ed] funds between its own divisions,” that claimant is not entitled to recover her attorneys’ fees. Supra ¶ 19. I would hold that regardless of whether an employer is self-insured or not, whenever a short-term disability insurance carrier has a right to collect worker’s compensation benefits recovered in an Industrial Commission action by an injured worker, the claimant’s reasonable attorneys’ fees should be deducted from the benefits paid to the short-term disability carrier. For that reason, I respectfully dissent.
¶ 23 I agree with most of the majority’s analysis of Hobson v. Mid-Century Ins. Co., 199 Ariz. 525, 19 P.3d 1241 (App.2001). However, we part company where they find that the common fund doctrine does not apply, even though A.R.S. § 23-1068(B) does not contain a prohibition on reducing the lien amount. Supra ¶ 16. The majority goes on to say that, “[in] this case, the claimant was entitled to receive either short-term disability benefits or workers’ compensation benefits, but not both.” Id. The majority misses Claimant’s point.
¶ 24 Claimant is not arguing that she is entitled to receive both short-term disability *432benefits and workers’ compensation benefits. Her argument is that if Banner’s short-term disability division is entitled to reimbursement due to her successful litigation in her workers’ compensation claim, then the short-term disability division should “pay its proportionate share of attorneys’ fees and costs incurred by the [claimant].”
¶ 25 Arizona Revised Statutes § 23-1023 applies in cases in which an employee who is entitled to worker’s compensation benefits recovers against a third party for his injury, and the workers’ compensation insurance carrier has a lien against the recoverable amount. In Hobson, this court recognized that the Supreme Court held that the language from A.R.S. § 23-1023(D) (Supp.2008) “shall not be subject to a collection fee” prohibited reducing a workers’ compensation lien to pay attorneys’ fees. Hobson, 199 Ariz. at 529, ¶ 10, 19 P.3d at 1245 (citing Liberty Mut. Ins. Co. v. Western Cas. & Sur. Co., 111 Ariz. 259, 260, 527 P.2d 1091, 1092 (1974)).7 However, in this case, claimant is not requesting reduction of a worker’s compensation lien to pay her attorneys’ fees under A.R.S. § 23-1023(D). Instead, she is requesting a reduction of the short-term disability carrier’s lien in order that her fees be paid pursuant to A.R.S. § 23-1068(B). Unlike § 23-1023(D), § 23-1068(B) is silent on whether such a reduction is allowed. I believe the common fund doctrine should apply and Claimant should be awarded her attorneys’ fees.
¶ 26 “The common fund doctrine is a general rule of equity that ‘a person or persons who employ attorneys for the preservation of a common fund may be entitled to have their attorney’s fees paid out of that fund.’ ” LaBombard v. Samaritan Health System, 195 Ariz. 543, 548, 991 P.2d 246, 251 (quoting In re Estate of Brown, 137 Ariz. 309, 312, 670 P.2d 414, 417 (App.1983)). “It is ‘a recognized exception to the rule that attorney’s fees in Arizona are allowed pursuant only to statute or contract.’ ” Id. at 548-49, 991 P.2d at 251-52. The reason for the common fund doctrine is to ensure
fairness to the successful litigant, who might otherwise receive no benefit because his recovery might be consumed by the expenses; correlative prevention of an unfair advantage to the others who are entitled to share in the fund and who should bear then* share of the burden of its recovery; [and] encouragement of the attorney for the successful litigant, who will be more willing to undertake and diligently prosecute proper litigation for the protection or recovery of the fund if he is assured that he will be promptly and directly compensated should his efforts be successful.
Id. at 549, 991 P.2d at 252 (citation omitted). However, the common fund doctrine is a rule of equity, so if a statute clearly provides that an entity is not required to pay a proportionate share of attorneys’ fees, this court will not apply the doctrine to circumvent the statute. Id. In this case, as previously stated, there is no statute prohibiting reduction of the lien; therefore, the common fund doctrine should apply.8
¶ 27 There are also good public policy reasons for holding that the common fund doctrine applies in situations such as this. Worker’s compensation benefits, once approved, are available indefinitely with respect to a work-related injury under the worker’s compensation system, but short-term disability coverage is not. The impact of the majority’s opinion in this case likely will be that *433attorneys will be unwilling to take worker’s compensation cases on a contingency basis whenever a claimant files for and receives short-term disability benefits in the interim.9 Moreover, the majority’s opinion creates a disincentive for claimants to pursue worker’s compensation claims if they receive short-term disability benefits. Therefore, workers receiving short-term disability payments will be unwilling and unable to pursue their worker’s compensation claims. Consequently, when their employment with the employer who carries short-term disability ends, if they have not pursued their worker’s compensation claim, their right to compensation related to their work-related injury will also end. As Claimant points out, this will create “a manipulated injustice to the applicant.”
¶ 28 Our legislature no doubt had similar public policy concerns in mind when it adopted A.R.S. § 23-1069. When a claimant in a worker’s compensation case or the claimant’s attorney files an application for attorney’s fees with the Industrial Commission prior to final disposition of the case, the commission shall fix and award “a reasonable attorney’s fee” to be paid from the compensation award. A.R.S. § 23-1069(A). The attorneys’ fee may be for as much as 25 percent of the award, the amount Claimant contracted to pay her attorney in this case. A.R.S. § 23-1069(B). The Industrial Commission does not have the authority to fix an attorney fee award absent an application filed prior to final disposition. Sanchez v. Indus. Comm’n of Ariz. through Pine, 137 Ariz. 518, 520, 672 P.2d 183, 185 (1983). The language of A.R.S. §' 23-1069 is a strong indication the legislature intended that attorneys in worker’s compensation eases be reasonably compensated, and that their reasonable fees be deducted from the compensation award. This is consistent with public policy favoring a system in which injured workers whose worker’s compensation claims are unjustly denied can afford to hire skilled attorneys to represent them.
¶ 29 For the above mentioned reasons, I respectfully dissent.

. In Hobson, although the statute prohibited reducing the lien to pay attorneys’ fees, the amount of the lien was determined by first deducting claimant’s attorneys’ fees from the total settlement amount. Hobson, 199 Ariz. at 527-28, ¶¶ 2-4, 19 P.3d at 1243-44. In other words, the claimants’ attorneys were paid "off the top.” Id. at 531, ¶ 16, 19 P.3d at 1247.

. The majority holds the doctrine does not apply and the “equitable claim of Lee’s attorney fails” because Banner, as an organization, "recovered no additional monies” and ”[n]o cash changed hands.” The implication is that there was no unjust enrichment of the short-term disability fund as a result of the Industrial Commission action because the money that came into the disability fund came from another Banner division. However, the short-term disability fund received an infusion of funds it would not otherwise have received. Where that money came from should be immaterial to this analysis.

. The majority states that if the disability coverage and worker’s compensation coverage were provided by distinct entities, the analysis, and presumably the result, "might be different.” However, it seems unlikely an attorney would depend on that distinction and risk taking on a case he might win and not get paid.