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Johnson v. Southern Industrial Constructors Inc.

February 06, 1998

CHARLES LYNWOOD JOHNSON
v.
SOUTHERN INDUSTRIAL CONSTRUCTORS, INC.



On discretionary review pursuant to N.C.G.S. § 7A-31 of a unanimous decision of the Court of Appeals, 126 N.C. App. 103, 484 S.E.2d 574 (1997), vacating and remanding an order entered on 3 March 1995 by Sumner, J., in Superior Court, Nash County. Heard in the Supreme Court 19 November 1997.

The opinion of the court was delivered by: Lake, Justice.

This is a workers' compensation case presenting the question of whether a superior court may assert its jurisdiction over the jurisdiction of the Industrial Commission, pursuant to the provisions of N.C.G.S. § 97-10.2(j), by adding assumed future workers' compensation benefits to those currently paid by the employer, to establish that an employee's recovery from a third-party tort-feasor was insufficient to compensate the employer's subrogation lien, and thus allow the trial court to determine the amount and distribution of such lien. The Court of Appeals held that the trial court was correct in including assumed future benefits in determining the insufficiency of the third-party judgment to compensate the subrogation lien, and thus the trial court by this methodology had jurisdiction and the authority to set the amount of the employer's subrogation lien under this statutory provision. We hold that the trial court may not by this means assert its jurisdiction over the jurisdiction of the Industrial Commission, and accordingly, we reverse the Court of Appeals.

On 17 October 1988, the plaintiff, an employee of Siemens Energy & Automation, Inc. (Siemens), suffered a herniated disk in his back when struck by a falling jib crane in the course of his employment. Siemens denied negligence on its part, but admitted the compensability of plaintiff's injury under the North Carolina Workers' Compensation Act, and through its insurance carrier, Zurich-American Insurance Company (Zurich), began providing compensation for plaintiff's medical expenses and temporary total disability benefits, pursuant to Commission approval, in the amount of $256.00 per week.

On 7 August 1991, plaintiff filed suit against third-party tort- feasor, Southern Industrial Constructors, Inc., the defendant, alleging his injuries were proximately caused by the negligence of one of defendant's employees. Plaintiff prevailed at trial, and pursuant to jury verdict, judgment was entered against defendant in the amount of $219,052.20, plus interest and court costs in the amounts of $55,405.12 and $3,538.28, respectively.

On 22 December 1994, plaintiff filed a motion requesting that the trial court determine the amount of the subrogation lien filed by Siemens and Zurich pursuant to N.C.G.S. § 97-10.2(j). On 4 January 1995, Siemens and Zurich requested distribution of the third-party recovery by order of the Industrial Commission pursuant to N.C.G.S. § 97-10.2(f)(1). On 3 March 1995, pursuant to plaintiff's motion, the trial court, following a hearing, entered an order including, in part, the following findings of fact:

4. Zurich-American has asserted its statutory lien during the course of the third-party negligence action; the lien includes both medical expenses and indemnity payments. The lien totaled $121,853.83 on January 27, 1995 and increases by the sum of $256.00 each week.

8. The plaintiff has experienced continuous physical pain and mental suffering since the accident.

10. Since the trial of this case was concluded, the plaintiff has been evaluated by [a psychologist] who has determined the plaintiff is "totally disabled from employment at any exertional level in the national economy and that such employment in the future is not foreseen . . . ."

11. [Plaintiff's] physical and mental condition prevent him from returning to gainful employment. It is anticipated he will continue to receive workers' compensation indemnity benefits for the rest of his life.

12. was 47 years of age at the time of trial and his life expectancy is 27.38 years. Workers['] compensation benefits to be paid in the future at the rate of $256.00 per week total $364,482.56. [A forensic economist] has determined the present value of the future payments is $178,908.63 using a 6% discount rate.

13. The total present value of the workers' compensation lien is $300,506.46 which includes the total amount of all payments made for medical expenses and indemnity through January 20, 1995 and the present value of all future indemnity payments.

14. The award of $219,052.20 is exceeded by the total lien of $300,506.46 and is insufficient to compensate the subrogation claim of Zurich-American.

Upon these findings, the trial court concluded that it had authority, pursuant to the provisions of N.C.G.S. § 97-10.2(j), to determine the amount of the workers' compensation lien of Siemens and its insurance carrier, Zurich; that it was fair and equitable to reduce the workers' compensation lien to the total sum of $25,000.00 to be paid to Zurich, with the remaining sum of $252,995.60 from the judgment against the defendant (the third-party tort-feasor) to be made available for payment of court costs, attorney fees and damages to the plaintiff; and the court so ordered. Siemens and Zurich, as unnamed parties in this action, filed notice of appeal to the Court of Appeals, which upheld the jurisdictional determination and premise of the trial court, but vacated and remanded "for further hearing and specific findings of fact." Johnson v. Southern Indus. Constructors, 126 N.C. App. 103, 116, 484 S.E.2d 574, 581 (1997). The petition of these parties for discretionary review was allowed by this Court on 23 July 1997.

The plaintiff contends that the provisions of N.C.G.S. ยง 97-10.2(j) give the trial court the jurisdiction and authority to set the amount of the subrogation lien in this case. Section 97-10.2(j) provides in pertinent part: Notwithstanding any other subsection in this section, in the event that a judgment is obtained which is insufficient to compensate the subrogation claim of the Workers' Compensation Insurance Carrier, or in the event that a settlement has been agreed upon by the employee and the third party, either party may apply to . . . the presiding Judge before whom the cause of action is pending, to determine the subrogation amount. After notice to ...


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