Court Opinion

ID: 9714958
Source: CourtListenerOpinion
Date Created: 2023-08-26 05:50:07.751554+00
Date Added: 2024-06-11T18:23:29.951352
License: Public Domain

GILBERT, Justice
(concurring in part and dissenting in part).
I concur with the majority opinion in regard to prejudgment interest, but I respectfully dissent from the remainder of the opinion. The practical effect of the majority opinion will prolong these proceedings and require an endless series of up to 1,639 separate subrogation claims. Each claim will be fraught with separate statute of limitation disputes and faded memories of witnesses trying to recall what happened years before. This will cause considerable strain on our judicial system and increase all parties’ costs of litigation. Since Conwed produced credible and unrefuted expert scientific testimony, as the plaintiffs did in Sentinel Management Co. v. Aetna Casualty & Surety Co., 615 N.W.2d 819 (Minn.2000), it should be allowed to proceed now with its claims. Conwed’s expert merely extrapolated from the number of known asbestos-related diseases currently manifested in Conwed employees to project the number of future manifestations. As in Sentinel, where the plaintiffs’ expert extrapolated from positive asbestos samples from 5 rental units in an apartment building to conclude that *416all 450 units were contaminated with asbestos, the expert’s extrapolation regarding the likelihood of Conwed’s employees developing a compensable illness in the future should go to the weight, rather than to the admissibility of his testimony. See Sentinel, 615 N.W.2d at 824.
The timing for these claims is especially important in this case because it appears that Union Carbide Chemicals and Plastics Company (Union Carbide) is trying to have it both ways procedurally. On the one hand, Union Carbide has pleaded the statute of limitations as an affirmative defense against Conwed’s claim in the underlying action in U.S. District Court. In that proceeding, Union Carbide is arguing that Conwed has waited too long and its claim should be time barred. Then, in this case, to the contrary, Union Carbide is arguing that Conwed’s subrogation claims are premature or have been brought too soon because no payments under the Workers’ Compensation Act have actually been made and some claims have not yet been filed. However, in this case, although a Frye-Mack type hearing has not yet been held, see generally Sentinel, 615 N.W.2d at 824 (describing such a test), there is credible evidence indicating that Conwed has been exposed to a potentially significant asbestos contamination related workers’ compensation liability. There is obviously a major factual dispute as to the injury and amount, but these issues would be resolved by the fact finder. Minnesota Statutes § 176.061 (2000) relates to third-party liability, and subdivision 5 provides a cumulative remedy for damages to either the employee or the employer to directly maintain that action.
Minnesota Statutes § 176.061, subd. 5(a) specifically provides that the employer is subrogated to the rights of the employee or has a right to indemnification when benefits have been paid or a proceeding has been instituted. We have held that under these circumstances, the employer is subrogated to the rights of its employee to the extent of compensation paid, the employer is entitled to no greater rights than the employee, and that an employer’s carrier has no right of indemnity independent of its right of subrogation. Kaiser v. Northern States Power Co., 353 N.W.2d 899, 903 (Minn.1984). We have further held that such subrogation claims are limited to recovery of common law damages for past and future wage loss, loss of earning capacity and medical expenses. Tyroll v. Private Label Chems., Inc., 505 N.W.2d 54, 60 (Minn.1993). However, we have never addressed the rights of an employer to maintain a separate action in the name of the employee or employer against a third-party tortfeasor for the recovery of damages where the employee has been exposed to asbestos, which causes latent diseases, but the employee has not yet commenced a claim and payments have not yet been paid. Here we have allegations of potential future workers’ compensation claims based on a known but latent and delayed liability. In this case, the employer may have already incurred damages as a self-insured employer and suffered lost profits based on future anticipated workers’ compensation liability.1 Thus, if it *417elects to proceed under Minn.Stat. § 176.061, subd. 5(b), an employer has a claim against the other party for recovery of premiums incurred even though some of the employees have not received benefits or instituted claims. In this case, Conwed desires to prove damages through expert, scientific testimony addressing probabilities of having to pay out future workers’ compensation benefits to injured employees.2
Minnesota Statutes § 176.061, subd. 5 provides an employer the right to recover damages “notwithstanding the payment of benefits by the employer * * * or their . liability to pay benefits.” Minn.Stat. § 176.061, subd. 5. The employer’s rights do not stop with subrogation and indemnity theories of recovery, and the underlying complaint in the U.S. District Court makes claims beyond subrogation.3 Specifically, the statute also allows the employer or the attorney general in the event the employee does not proceed with its claim against the other party to “maintain a separate action or continue an action already instituted” in the name of the employee and the name of the employee’s dependents or in the name of the employer or in the name of the attorney general on behalf of the special compensation fund “against the other party for the recovery of damages.” Id., subd. 5(a). If the employer commences such an action, the employee may move to intervene as a direct party in that action. Id. All proceeds after fees and costs are to be distributed to the employees in accordance with subdivision 6. Id. The majority opinion avoids discussing this second statutory scenario, which empowers the employer to institute a proceeding on behalf of the employee, in a separate action, with distribution of any proceeds to be governed by MinmStat. § 176.061, subd. 6. In a footnote, the majority reasons that it is not necessary to discuss this issue because of a statement Conwed made that it is not pressing innovative direct claims like the plaintiffs in Group Health Plan, Inc. v. Philip Morris, Inc., 621 N.W.2d 2 (Minn.2001), or State by Humphrey v. Philip Morris, Inc., 551 N.W.2d 490 (Minn.1996). However, in Group Health and Humphrey, the HMOs were seeking standing to recover costs for increased healthcare services they provided to their members as a result of tobacco-related illnesses from smoking cigarettes, relying on numerous substantive statutes. Group Health, 621 N.W.2d at 4; Humphrey, 551 N.W.2d at 496. Contrary to the new theories of recovery pled in the G'tvup Health and Humphrey cases, the employer in this case has been granted standing by the legislature to institute a separate action in either the employer’s or employee’s name against the other party to recover damages. Minn. Stat. § 176.061, subd. 5(a).4
*418Conwed has the burden of proof to put forth evidence that it has been damaged. Its claim for future losses is not unlike other tort actions based on expert testimony, which routinely assess future damages for wage loss, loss of earning capacity, pain and suffering, future disability, and estimated medical expenses. Credible evidence has been put forth in support of such workers’ compensation based claims and will have to withstand cross-examination and rebuttal evidence.
Conwed’s evidence consists not only of expert scientific testimony, but ample evidence that other employees working in the same plant, at the same time, have developed significant compensable diseases under the Workers’ Compensation Act. Already, 215 Conwed employees have filed separate workers’ compensation claims based on diseases they contracted from the asbestos contamination in the plant where they all worked. Conwed has paid out approximately 4 million dollars in benefits to 161 of those filing these claims. Con-wed estimates that the projected damage exposure for the remaining 1,639 employees ranges between 44.3 and 71.3 million dollars.
This asbestos contamination occurred when Union Carbide allegedly sold approximately 7,300 tons of Calidvia asbestos to Conwed between 1965 and July of 1974. The asbestos was incorporated by Conwed into certain ceiling tile products manufactured by Conwed. An epidemiologic study of Conwed workers completed in 1987 found that those workers demonstrated a high frequency of pulmonary abnormalities associated with asbestos exposure.5
Dr. Philip Harber, a preeminent occupational medicine and asbestos epidemiologist from UCLA School of Medicine, conducted a research project into the future health experience and workers’ compensation costs associated with the Conwed workers as a result of their exposure to Union Carbide’s Calidria asbestos. Dr. Harber prepared a scientific projection of the future asbestos-related symptoms that will occur among the Conwed employees as a result of exposure to Union Carbide’s asbestos. These projections were based on the experience that had already occurred and was prepared only for those workers who had been employed for a substantial period of time while Union Carbide asbestos was supplied to Conwed. Dr. Harber then prepared annual projections, based on epidemiologic models and data, for the asbestos-related disease experience among Conwed workers from 1989 to the year 2030. As discussed earlier, this extrapolation from already existing asbestos-related disease experience to predict future experience provides adequate support for Conwed to proceed with its claims.
*419The third party, the alleged tortfeasor, can defend this as a tort claim, not a workers’ compensation claim. Consequently, as we previously have held, it is correct to say that the ultimate damages recoverable in an employer’s subrogation suit are the benefits paid and payable, it is also correct to say that those damages are to be recovered out of the common law tort damages in which the third-party tortfea-sor is first found responsible. See Tyroll, 505 N.W.2d at 60. The inevitability and amount are subject to vigorous debate but the cause of action for “any benefits which the employer ⅜ * * is obligated to make in the future,” Minn.Stat. § 176.061, subd. 6(d), remains for the employer directly or by the employer in the employee’s name, and is not only based on “the employer’s obligation to pay workers’ compensation benefits” as held by the majority in this case.
Subdivision 6 further reinforces the right to a separate cause of action against the other party that an employer has. It provides a distribution formula for reimbursement of costs of collection including payment of attorney fees; for one-third of the remainder to be paid to the injured employee without being subject to any right of subrogation; for reimbursement of the employer, out of the balance remaining, in an amount equal to all benefits paid under this chapter or on behalf of the employee or the employee’s dependents by the employer; and for the remaining balances to be paid to the employee or employee’s dependents. Id, subd. 6. After the costs of collection, the employees receive all the proceeds, with the employer gaining a credit for any workers’ compensation benefits it is obligated to pay, but has not paid, and for any benefits that the employer or the special compensation fund is obligated to make in the future. Id Importantly, subdivision 6(b) provided payment of one-third of the remainder to an injured employee “without being subject to any right of subrogation.” Id, subd. 6(b). This language is another significant legislative indicator of an employer’s right of action irrespective of subrogation.
Similarly, subdivision 7 grants an employer “a separate additional cause of action against the third party” relating to medical treatment for the direct benefit of the employer “to the extent that the employer or the special compensation fund has paid or mil be required to pay compensation or pay for medical treatment of the injured employee * * Id, subd 7. (emphasis added). This element (“will be required to pay”) is a factual matter traditionally left to the sound discretion of a fact finder, not an appellate court. Minn. Stat. § 176.061, subd. 5(a) allows the employer to prove the employee’s compensa-ble injury. Conwed has presented substantial expert testimony, which is better assessed by a fact finder in terms of its weight, rather than an appellate court in terms of its admissibility.
The Hodder case cited by the majority in relation to subdivision 7 is nondisposi-tive, and the reference to the subdivision 6 distribution formula supports Conwed’s claim rather than eliminates it. The majority cites Hodder v. Goodyear Tire & Rubber Co., 426 N.W.2d 826 (Minn.1988), to the extent that an employer’s recovery is still subject to the subdivision 6 distribution formula. However, immediately following that proposition, we held in Hodder that “[i]n those instances where the employee does not or cannot maintain a third-party action, subdivision 7 continues to give the employer, as in Springer, the right to recover its benefits paid and payable.” Hodder, 426 N.W.2d at 838 (citing Travelers Ins. Co. v. Springer, 289 N.W.2d 131 (Minn.1979)).
*420The statutory damage framework encompasses both future benefits exposure plus changes in workers’ compensation insurance premiums. Minn.Stat. § 176.061, subd. 5(b). The statute specifically permits the employer to bring employees’ workers’ compensation claims in the name of the employer. Id., subd. 5(a). The employer is allowed to proceed on its own, or, in essence, to stand in the place of each individual employee, and to offer testimony through its experts as to injury and benefits. Additionally, the amounts an employer may be entitled to are part of the factual equation. A jury might have to contend with determining issues such as physical manifestation and the dollar amount of exposure to future benefits, life expectancy, premium changes, or equivalent damage for a self-insured employer, etc. but, again, these are factual questions. The majority simply assumes that because an employee has neither been paid benefits nor commenced an action, the injury or illness has not manifested itself.
As in any litigation involving proof of causation and the prediction of future damages, there are always difficulties of proof, and both parties face some risk. Conwed’s risk may be that a judgment now would be less than its ultimate exposure, and then it would have no further subrogation right in indemnification claims. A fact finder may not believe the experts based on the fact that a large number of employees have not yet filed claims or manifested symptoms of asbestos-related diseases. Credibility of experts will no doubt affect the ultimate outcome. Union Carbide could put forth strong arguments that may tend to diminish or eliminate Conwed’s claims in the eyes of a jury. Union Carbide’s risk is that they are assessed a damage amount that exceeds what Conwed will actually pay out. Maybe Conwed decided to proceed now, being mindful of these risks but desiring to seek a resolution of its claim while memories are still fresh. Union Carbide obviously desires to defer not only a decision, but the requirement of making a payment now, and would rather divide the claims into a series of separate subro-gation and indemnity claims. Neither option is perfect, but a jury and trial court are better equipped to weigh and consider these countervailing facts, arguments, and probabilities.
We have previously decided how an employer’s future workers’ compensation contribution can be determined. It is to be reduced to its present value as of the date of the contribution judgment in the tort action and the contribution claim is to be paid in a single, lump sum payment. Wilken v. International Harvester Co., 363 N.W.2d 763, 767 (Minn.1985). In so deciding, we emphasized the advantages of a final one-time resolution of the contribution claim at the time of the judgment and noted that these kinds of contribution claims should not linger on for the lifetime of the employee. Id. We also responded to the inherent difficulty of proof by stating that “[t]he contribution award, like the tort verdict, necessarily involves approximations based on reasonable assumptions. True, the employee next year may die or recover, but these uncertainties do not prevent the measurement of a lump sum verdict against the third-party tortfeasor.” Id. at 767-68. As we suggested in Wilken, special interrogatories could be submitted to the jury for a separate finding on liability, causation, and damages. Id. at 768. Then the court could apply an appropriate discount factor, by affidavit, to determine a present value of this claim. Id.
Accordingly, the certified questions should be answered in the affirmative. We should recommend that the U.S. District Court hold a Frye-Mack hearing on this state law question and determine *421whether the scientific evidence offered is generally accepted in the relevant scientific community; and whether the particular scientific evidence in this case has shown to have foundational reliability. Goeb v. Tharaldson, 615 N.W.2d 800, 815 (2000). The U.S. District Court’s vast experience in dealing with mass tort claims analyzed in the context of Sentinel and Goeb should be able to resolve Conwed’s claims in an expeditious and fair manner for all the parties, in one proceeding, rather than potentially spreading hundreds of separate subrogation claims into the courts through the years.

. Although the financial statements or discovery responses were not before us at oral argument, counsel for Conwed, in response to a question as to whether Conwed had taken a charge to earnings based on potential future workers’ compensation benefits exposure Conwed might have, answered that he could not answer that question exactly but that it is something that is reported annually and that it had been requested by Union Carbide in discovery. There is obviously a factual question in regard to the amount, but this is a discoverable and quantifiable element of damages that should be left to the fact finder, especially based on the limited procedural *417and factual record that is before this court on certification.

. Conwed is not seeking damages for pain and suffering, general disability, embarrassment, disfigurement and mental anguish.

. There are two additional counts alleging damages that have been or in the future will be caused to be paid for workers' compensation benefits," which include costs and expenses in excess of $50,000 for negligence, negligent representation, failure to warn and strict liability.

.Furthermore, as mentioned and by way of example, the damage claims allowed in Minn. Stat. § 176.061 go beyond merely workers' compensation benefits paid to an employee or ones based only on commenced legal proceedings. Subdivision 5(b) for instance provides:
If an employer, being then insured, sustains damages due to a change in workers’ compensation insurance premiums, whether by a failure to achieve a decrease or by a retroactive or prospective increase, as a result of the injury or death of an employee which was caused under circumstances *418which created a legal liability for damages on the part of a party other than the employer, the employer, notwithstanding other remedies provided, may maintain an action against the other party for recovery of the premiums. This cause of action may be brought either by joining in an action described in clause (a) or by a separate action. Damages recovered under this clause are for the benefit of the employer and the provisions of subdivision 6 are not applicable to the damages.
In this case, Conwed may have sustained some damages as an approved self-insurer under Minnesota Workers’ Compensation law. These damages are over and above workers' compensation benefits and are equivalent to a change in workers’ compensation premiums an insured employer would incur under similar circumstances.

. See Thomas G. Robins, MD, MPH & Margaret A. Green, MD, MPH, Respiratory Morbidity in Workers Exposed to Asbestos in the Primary Manufacture of Building Materials, 14 Am. J. Indus. Med., 433 (1988).