Court Opinion

ID: 9692465
Source: CourtListenerOpinion
Date Created: 2023-08-25 15:54:54.711746+00
Date Added: 2024-06-11T18:19:34.665908
License: Public Domain

LAMBERT, J.,
concurring in part and dissenting in Part.
I agree with the majority’s analysis and conclusion that the jury verdict must be reinstated. However, this same analysis compels a result in opposition to the one the majority has reached on the issue of double recovery.
The following excerpt from the majority opinion explains why Commonwealth may not invoke provisions of the Workers’ Compensation Act to receive a windfall:
Workers’ compensation coverage is a voluntary contract between employer and employee, the terms of which are defined by the provisions of the Act. The employer gives up the right to claim certain defenses, in exchange for the employee’s agreement to accept limited benefits in lieu of damages at law. It is the voluntary nature of this statutory contract that renders the Act constitutional.
Despite the foregoing accurate statement of the law, the majority perplexingly proceeds to rely on one of the Act’s provisions to protect a party not covered by the Act, the tortfeasor, Commonwealth. As a result of this faulty application of the Act, the majority reduces the jury’s damages award and gives the negligent nonparty the same advantage that the Act affords, solely, to the injured party’s employer.
There is no question that the relationship between the employer (Intech) and the employee (Krahwinkel) is governed by the Workers’ Compensation Act. As the majority recognizes, it is the voluntary nature of the contract that renders the Workers’ Compensation Act constitutional. The limitation on the employee’s recovery can only be invoked by the employer or another entity whose liability arises by virtue of the contract for workers’ compensation coverage.
Krahwinkel and Intech were the parties to the contract giving rise to the Act’s application; thus, their relationship is governed by the Act’s provisions. Accordingly, if Intech had chosen to remain a party in the litigation, the Workers’ Compensation Act would have governed the right of recovery between Krahwinkel and Intech via the third party tortfeasor, Commonwealth. However, absent any dispute as to rights or remedies between Krahwinkel and Intech, no contract giving rise to the Act’s application is implicated. Once this court determined that Commonwealth’s status was that of an independent tortfea-sor, rather than an employer, the Workers’ Compensation Act became irrelevant to Krahwinkel’s common law claim against Commonwealth.
Essentially, the majority is allowing Commonwealth to enforce a workers’ compensation agreement against Krahwinkel, *162even though it is not a party or beneficiary of that agreement. Under Kentucky law, before a third person who is not a party to a contract can derive benefit from that contract, the third person must show that the contract was made and entered into directly or primarily for the benefit of the third person.1 An employer and employee who choose to enter into a workers’ compensation coverage agreement do so for their own benefit, not for the benefit of a negligent third party. There is no suggestion that Commonwealth was intended to be a third-party beneficiary of the workers’ compensation contract. A person who is neither a party nor a third-party beneficiary of a contract, may not enforce it.2 Accordingly, Commonwealth may not invoke provisions of the Workers’ Compensation Act or benefit from it in the instant case.
The common law, rather than the Workers’ Compensation Act, governs Krahwink-el’s claim against Commonwealth. The common law rule, known as the collateral source rule, states “that it is the tortfea-sor’s responsibility to compensate for. all harm that he causes, not confined to the net loss that the injured party receives.”3 Long followed in Kentucky,4 the collateral source rule allows an injured plaintiff to seek sufficient damages to make him whole without regard to payments made to the injured party by someone other than the tortfeasor.5
Moreover, even if, as the majority contends, KRS 342.700(1) is controlling, the same result obtains from an in-depth analysis of the entirety of the statute. The majority has failed to read the statute as a whole and focuses instead on the first sentence to the exclusion of the remainder. The outcome of the majority decision is to grant a windfall to the wrong party, i.e., the tortfeasor who inflicted the harm instead of the injured worker. As a matter of policy, wrongful conduct should not be rewarded.
The statute at issue, KRS 342.700(1) is an inartful attempt to codify the well-settled common-law principle that a tortfea-sor should not be relieved of a duty to compensate for harm inflicted because the injured party has already received payment from another source. What the statute attempts to do is provide that a covered workers’ compensation employee injured by the negligence of a third party have a workers compensation claim and a common law civil action against the negligent third party. It mandates that the employer or its insurance carrier be given notice of the third party claim and authorized to intervene for the purpose of asserting its subrogation right. That procedure was followed here. However, during the litigation, for reasons that are unknown, the employer decided to forgo its subrogation right, thus giving up its right to obtain reimbursement from the negligent third party. Astonishingly, the majority concludes that this election to forego inures to the benefit of the sole wrongdoer and not to the injured worker. I see it differently.
By a reasonable interpretation of the entirety of the statute, KRS 342.700(1) protects the Workers’ Compensation carri*163er’s subrogation rights, but in the event the carrier does not pursue its subrogation rights, the statute grants no protection to the tortfeasor. I recognize that the statute says the plaintiff cannot recover twice for the same injury, but it does so as a means to protect the subrogation rights of the carrier. The statute was not intended to apply in a similarly restrictive way when the earner does not assert its rights because the purpose for which the statute was enacted — to protect the carrier’s right to reimbursement — is no longer present. In that event the statute allows the injured worker to recover fully from the tortfeasor even though he has received collateral payment. This is so because the tortfeasor is required to pay for the consequences of its wrongful conduct.
The statute itself allows the injured worker to receive payment from the tort-feasor for two reasons. First, the third sentence of KRS 342.700(1) uses permissive language, stating that the carrier “may recover,” but it does not disclose what happens in the event that the carrier fails to pursue its right to recover. Second, the final sentence of the statute requires notice in accordance with KRS 411.188(2). KRS 411.188(2) states that a plaintiff must notify all parties it believes to hold subrogation rights, and such notification “shall state that a failure to assert subrogation rights by intervention ... will result in a loss of those rights with respect to any final award received by the plaintiff as a result of the action.” Thus, as applicable, KRS 342.700 incorporates the provisions of KRS 411.188(2) which answers the question of what shall happen when a party holding subrogation rights fails to assert or pursue those rights. The majority opinion is deeply flawed because it seizes on a single clause in a complex statute that incorporates another statute and fails to give effect to the whole of the statutes except for the clause it prefers. Not only is the conclusion of the majority not required by the statute, it is contrary to proper statutory construction because it fails to give effect to the entire statute.
Finally, KRS 446.080 mandates that courts interpret all statutes liberally to effect the intent of the general assembly.6 We have consistently recognized this: “The general assembly has directed that all statutes be construed in a manner that furthers the objectives for which the statute was enacted.”7 Clearly KRS 342.700(1) is for the benefit of employers or their workers compensation carriers to permit them to recover sums the law requires them to pay as a result of the fault of a third party. Its purpose is to make whole the workers’ compensation carrier by reimbursing it and imposing the actual cost on the actual tortfeasor for the tort-feasor’s share of the workers’ compensation benefit paid. The entire premise of the Workers Compensation Act is to protect employees by ensuring immediate payment for injuries sustained while in the course and scope of employment. Though its purpose is to guarantee payment without considerations of the fault of the employer, it does not circumscribe an injured worker’s legitimate tort claim against a third-party tortfeasor.
Here the majority reaches an unreasonable result by turning the statute on its head and allows the wrongdoer a windfall. No statute should be construed to reach an *164absurd conclusion. Statutes should be given a practical construction to carry out their manifest purposes.8
The proper result in this case would be for the injured party and not the party who inflicted the injury to receive the benefit. Accordingly, I would reinstate the jury verdict entirely.
SCOTT and WINTERSHEIMER, JJ„ join this dissenting opinion.

. Long v. Reiss, 290 Ky. 198, 160 S.W.2d 668 (1942)

. Sexton v. Taylor County, 692 S.W.2d 808 (Ky.App.1985).

. Rest.2d Torts s. 920 (1979).

. Louisville & Nashville RR Co. v. Corothers, 65 S.W. 833, 834 (Ky.1901); Barr. v. Searcy, 280 Ky. 535, 133 S.W.2d 714, 715 (1939).

. See Baptist Healthcare Sys. v. Miller, 177 S.W.3d 676 (Ky 2005); Schwartz v. Hasty, 175 S.W.3d 621 (Ky.2005).

. KRS 446.080(1); Bryant v. Jericol Mining, Inc., 758 S.W.2d 45 (Ky.App.1988).

. Commonwealth v. Pendennis Club, Inc., 153 S.W.3d 784, 787 (Ky.2004); Phil Hollenbach Co. v. Hollenbach, 181 Ky. 262, 204 S.W. 152 (1918) ("The spirit of the law, and not the letter, should control its construction, and the object to be accomplished should be considered.”).

. Reeves v. Fidelity & Columbia Trust Co., 293 Ky. 544, 169 S.W.2d 621 (Ky.1942); see also Bird v. Bd. Of Comm’rs of Kenton County, 95 Ky. 195, 24 S.W. 118 (1893) (Particular words found in a statute, which, if literally followed, lead to an absurdity or defeat the manifest intent of the legislature as gathered from the entire act, may be disregarded in its interpretation).