LEWIS F. KRAHWINKEL, JR., V. COMMONWEALTH ALUMINUM CORPORATION.
Annotate this Case
Download PDF
AS MODIFIED : FEBRUARY 23, 2006
RENDERED : AUGUST 25, 2005
TO BE PUBLISHED
,$ixyrrntr ~ourf of `pfi
2003-SC-0708-DG
AND
2004-SC-0219-DG
LEWIS F. KRAHWINKEL, JR.
V.
E-a- a
~
APPELLANT/CROSS-APPELLEE
ON REVIEW AND CROSS-REVIEW FROM COURT OF APPEALS
2002-CA-124 AND 2002-CA-193
HANCOCK CIRCUIT COURT NO. 97-CI-4
COMMONWEALTH ALUMINUM
CORPORATION
APPELLEE/CROSS-APPELLANT
OPINION OF THE COURT BY JUSTICE COOPER
REVERSING AND REMANDING
Appellee, Commonwealth Aluminum Corporation ("Commonwealth"), contracted
with Intech-Industrial Technology, Inc. ("Intech") for the purchase and installation of a
new fluid capture system in its industrial plant. The contract required Intech to install a
large tank in the basement of the plant into which groundwater containing PCBs would
be pumped for containment and disposal . On January 24, 1996, the tank was unloaded
from an Intech truck and moved by a permanently installed overhead crane across the
motor room of Commonwealth's plant to a room containing a large hole in the floor
through which the tank was lowered to the basement. The grate that normally covered
the hole was removed for this purpose . Appellant, Lewis F. Krahwinkel, Jr., an
~.tr
P
employee of Intech, was assigned the task of guiding the tank through the motor room
using a lead line. He testified that a large amount of oil and grease, as much as an inch
thick, was on the portion of the motor room floor on which he was required to walk in
order to guide the tank, and that the oil and grease adhered to his boots . After the tank
was lowered into the hole, Appellant remained on the ground floor passing tools to other
Intech employees in the basement . While so engaged, he slipped and fell through the
hole approximately sixteen feet to the basement floor, seriously injuring his right knee
and ankle. He later opined that the oil and grease that adhered to his boots while he
was guiding the tank through the motor room caused his feet to slip out from under him .
Gene Holtzman, Commonwealth's safety administrator, admitted at trial that there was
oil and grease on the floor in the area around the hole.
Appellant filed a workers' compensation claim against Intech . He also brought
this civil action in the Hancock Circuit Court against Commonwealth, alleging that his fall
was caused by negligent acts or omissions of Commonwealth . Intech intervened in the
civil action to assert its statutory subrogation claim, KRS 342.700(1), but voluntarily
dismissed its intervening complaint prior to trial .
According to an Agreement as to Compensation dated February 5, 2001,
Appellant successfully prosecuted his workers' compensation claim against Intech to an
"opinion and award dated February 27, 1998 ." He received $18,240 .57 in temporary
total disability benefits (TTD)l (57 weeks2 X $320 .01 per week) and additional weekly
benefits for a 50% permanent partial disability (PPD) . 3 Pursuant to KRS 342 .020,
Intech's insurer, Underwriters Safety & Claims, also paid medical bills of $15,292.15
KRS 342 .730(1)(a) .
2 January 25 - March
21, 1996 (8 weeks) ; January 3 - August 31, 1997 (34 2/7ths
weeks) ; July 20 - October 31, 2000 (14 5/7ths weeks) .
3 KRS 342.730(1)(b) .
incurred by Appellant up to the date of the agreement . The remainder of Appellant's
workers' compensation claim was settled for a lump sum of $39,956.68, itemized as
follows:
$30,456.68
4,500.00
4,000 .00
1,000 .00
$39,956.68
- lump sum payment of 50% PPD award
- buyout of future medical expenses
- waiver of right to reopen
- waiver of vocational rehabilitation
At the trial of Appellant's civil action against Commonwealth, Appellant
introduced evidence that there were no protective guardrails ("fall prevention") around
the hole and no place to tie off a safety harness ("fall restraint") normally worn while
working in the vicinity of an open floor hole. Appellant asserted that Commonwealth's
violation of occupational safety and health regulations requiring these protections
constituted negligence per se and that the jury should be instructed only to determine
the degree of Appellant's fault, if any, and render an apportioned verdict pursuant to
KRS 411 .182 . Instead, the trial court instructed the jury that Commonwealth had a duty
to exercise ordinary care to maintain its business premises in a reasonably safe
condition . The jury returned a verdict finding both parties at fault and fixing Appellant's
damages at $44,971 .02, itemized as follows :
$10,000 .00
7,300.00
17,671 .02
10,000 .00
$44,971 .02
- permanent impairment of power to earn money
- past and future pain and suffering
- medical expenses incurred
- lost wages
Because the jury also apportioned fault at 75% against Commonwealth and 25%
against Appellant, the trial court reduced the judgment to a lump sum of $33,728.27
($44,971 .02 X 0.75). Applying the apportionment to each separate item of damages
yields the following itemization :
$ 7,500 .00 5,475.00 13,253 .27 7,500.00 $33,728 .27
permanent impairment
pain and suffering
medical expenses
lost wages
On appeal to the Court of Appeals, Commonwealth asserted that (1) the trial
court should have sustained its motion for a directed verdict because (a) the presence
of the hole was open and obvious, and (b) pursuant to its contract with Intech, the latter
assumed responsibility for the safety of its own employees ; or, in the alternative, (2) the
trial court should have vacated those portions of the judgment that duplicated amounts
paid to Appellant or his medical providers pursuant to his workers' compensation claim
so as to prevent double recovery. The Court of Appeals held that (1) Appellant's
testimony that his fall was caused by the oil and grease that adhered to his boots while
he was guiding the tank through the motor room created a jury issue with respect to
Commonwealth's negligence and causation, rendering it unnecessary to address
whether Intech had contractually assumed responsibility to provide guardrails or safety
harnesses for its employees ;4 but (2) an owner is not liable for injuries to third parties
arising out of work performed by an independent contractor unless the work constitutes
a nuisance or is inherently dangerous, and that the work performed by Intech fell into
neither of those categories ; and (3) even if the work was inherently dangerous, the
liability of an owner to employees of an independent contractor is limited to payment of
workers' compensation benefits . See KRS 342 .700(2). Since Appellant had already
recovered workers' compensation benefits from Intech, he had no claim against
4 Commonwealth did not file a third-party complaint against Intech for contribution .
Compare AIK Selective Self Ins. Fund v. Bush, 74 S .W.3d 251, 252 (Ky. 2002); Dix &
Assocs. Pipeline Contractors, Inc. v. Key, 799 S .W .2d 24, 29 (Ky. 1990) .
-4-
Commonwealth . Having thus disposed of the case, the Court of Appeals did not reach
the issue of double recovery .
Appellant moved for discretionary review and Commonwealth filed a cross
motion for review solely to preserve the issue of double recovery . Commonwealth,
Transp . Cabinet v. Taub, 766 S .W.2d 49, 51-52 (Ky. 1988). Since issues pertaining to
Commonwealth's negligence and causation were not preserved for further review,
Appellant's argument that Commonwealth's alleged violation of administrative
regulations adopted pursuant to the Kentucky Occupational Safety and Health Act, KRS
338, constituted negligence per se are moot. We now reverse the Court of Appeals
insofar as it vacated Appellant's judgment in its entirety, and remand this case to the
Hancock Circuit Court with directions to determine an appropriate computation of the
total credit due to Commonwealth in light of the employer's/insurer's failure to assert its
right of subrogation and enter an amended judgment in accordance with that
computation .
I . LIABILITY OF OWNER FOR INJURIES TO
EMPLOYEES OF INDEPENDENT CONTRACTOR.
The Court of Appeals' reliance on Simmons v. Clark Constr. Co . , 426 S.W .2d 930
(Ky. 1968), Jennings v. Vincent's Adm'x, 284 Ky. 614,145 S.W.2d 537 (1940), and
Clemons v. Browning , 715 S.W.2d 245 (Ky. App. 1986), for its holding that
Commonwealth is not liable for Appellant's damages because the work performed by
Intech was neither a nuisance nor inherently dangerous was misplaced. Those cases
apply only when it is sought to hold an owner vicariously liable for the negligence of an
independent contractor. Jennings, 145 S.W .2d at 541 . In both Simmons and Clemons ,
employees of subcontractors were injured because of defective scaffolding erected not
by the owner but by the independent general contractor . Simmons , 426 S.W.2d at 931 ;
Clemons , 715 S .W .2d at 246. The fatal explosion in Jennings was caused by the
negligence
of
employees of the independent contractor, not the owner. Jennings , 145
S .W .2d at 539 . Here, Commonwealth was not held vicariously liable because
of
the
negligence of Intech's employees . It was held directly liable because of its own
negligence.
In holding that the liability of the owner to the employees of an independent
contractor is limited to payment of workers' compensation benefits, the Court of Appeals
relied on language in King v. Shelby Rural Elec. Coop. Corp. , 502 S.W.2d 659 (Ky.
1973), which, if taken out
of
context, would seem to support that position, viz:
We can see no reason why appellant, simply because he was an
employee of an independent contractor, should be placed in a better
position than if he had been an employee of Shelby [owner], in which case
his recovery would be limited without question to the benefits provided by
the Workmen's Compensation Act. Conversely, we see no valid reason
why Shelby should be subjected to more liability simply because it
engaged the services of a qualified independent contractor .
Id . at 663. However, Kin-g, like Simmons , Jennings , and Clemons , was a case in which
an employee of an independent contractor sought to hold the owner vicariously liable for
injuries caused by the contractor's negligence:
The evidence in the case on behalf of Shelby indicated that it did not
exercise any control whatever over the work involved and did not consider
itself to have the right of [sic] the duty to do so .
[T]he liability of Shelby for the negligence of the independent contractor
does not extend to the employees of the independent contractor .
King , 502 S.W .2d at 664. As subsequently explained in Casket/ v. Hammonds
Construction, Inc . , 536 S.W.2d 449 (Ky. 1976), "[t]he opinion [in Kin
does not hold that
an employee of an independent contractor may not recover from the owner in those
instances where the negligence of the owner causes the injury or death of the employee
of the independent contractor." Id . at 451 . Casket/ held that an owner is liable for
injuries sustained by an employee of its independent contractor that were caused by the
owner's own negligence . Id .
Workers' compensation coverage is a voluntary contract between employer and
employee, the terms of which are defined by the provisions of the Act. McNeese
Constr. Co. v. Harris , 273 S.W.2d 355, 357 (Ky. 1954). The employer gives up the right
to claim certain defenses, KRS 342 .610(1), in exchange for the employee's agreement
to accept limited benefits in lieu of damages at law, KRS 342 .690(1) . It is the voluntary
nature of this statutory contract that renders the Act constitutional . See generally
Greene v. Caldwell , 170 Ky. 571, 186 S .W . 648 (1916) (upholding constitutionality of
1916 Kentucky Workmen's Compensation Act and distinguishing State Journal Co. v.
Workmen's Comp. Bd . , 161 Ky. 562,170 S .W . 1166 (1914), which had held the
mandatory 1914 Act unconstitutional) . The Court of Appeals' interpretation of the
quoted language in King would give an independently negligent nonparty to this
statutory contract the same advantages otherwise afforded only to the injured party's
employer. The trial court properly held Commonwealth liable for damages incurred by
Appellant because of Commonwealth's own negligence .
II. DOUBLE RECOVERY.
KRS 342 .700(1) provides :
5 Commonwealth does not claim that it is an "up-the-ladder" employer of Appellant .
KRS 342.690(1) ; KRS 342 .610(2)(b) . The installation of the fluid capture system was
not a "regular or recurrent" part of Commonwealth's business, trade or occupation .
KRS 342 .610(2)(b) ; Fireman's Fund Ins . Co . v. Sherman & Fletcher, 705 S .W .2d 459,
462 (Ky. 1986). Compare Gesler v. Ford Motor Co. , 185 F.Supp.2d 724, 728 (W.D. Ky.
2001) (demolition and removal of automobile body anti-corrosion system so that new
system could be installed in its place was not a regular or recurrent part of automobile
manufacturer's business), with Sharp v. Ford Motor Co. , 66 F .Supp.2d 867, 869-70
(W.D. Ky. 1998) (loading and unloading manufactured vehicles was a regular or
recurrent part of automobile manufacturer's business) .
Whenever an injury for which compensation is payable under this chapter
has been sustained under circumstances creating in some other person
than the employer a legal liability to pay damages, the injured employee
may either claim compensation or proceed at law by civil action against
the other person to recover damages, or proceed both against the
employer for compensation and the other person to recover damages, but
he shall not collect from both . If the injured employee elects to proceed at
law by civil action against the other person to recover damages, he shall
give due and timely notice to the employer and the special fund of the
filing of the action . If compensation is awarded under this chapter, the
employer, his insurance carrier, the special fund, and the uninsured
employer's fund, or any of them, having paid the compensation or having
become liable therefor, may recover in his or its own name or that of the
injured employee from the other person in whom legal liability for damages
exists, not to exceed the indemnity paid and payable to the injured
employee, less the employee's legal fees and expense . The notice of civil
action shall conform in all respects to the requirements of KRS
411 .188(2) .
(Emphasis added .) The statute separately defines the respective rights of the injured
employee and the employer/insurer when the employee's injuries were caused by the
negligence of a third party . The employer/insurer "owns" a subrogation right to the
amount of compensation it paid to the injured employee, and the employee "owns" the
right to any other damages for which the third-party tortfeasor is legally liable. The
emphasized language in the statute clearly precludes double recovery by the employee
and does not condition that preclusion upon whether the employer actually pursues its
subrogation rights
The statute has been a part of our Workers' Compensation Act since its initial
enactment in 1916 . See AIK v. Bush, 74 S .W.3d at 254, for a brief statutory history .
Shortly after its enactment, our predecessor Court held that the statute allowed the
employee to assert claims against both the employer and the third-party tortfeasor,
The employer/insurer might conclude that its subrogation right is not worth pursuing
in view of the fact that the statute requires that the employee's legal fees and expenses
be deducted from the amount recovered by the employer/insurer. See AIK v. Bush, 74
S.W.3d at 258 .
- 8-
albeit in different forums, but "to the extent he collects from one he may not collect from
Book v. City of Henderson , 176 Ky. 785, 197 S .W. 449, 451 (1917)
the other."
(emphasis added) . See also S . Quarries & Contracting Co. v. Hensley, 313 Ky. 640, ,
232 S.W.2d 999, 1002 (1950) ("[I]f the employer, having paid compensation, makes no
claim against the negligent third party, the latter is entitled to be credited on the
judgment rendered against him in favor of an injured employee for such compensation
as may have been paid to such employee by the employer."); Dillman v. John Diebold &
Sons Stone Co. , 241 Ky. 631, 44 S .W .2d 581, 583 (1931) ("Dillman, the employee of
the principal contractor, may maintain his action for damages against appellee, the
subcontractor, notwithstanding the fact that he had been paid compensation by the
insurer of his immediate employer, subject, however, to appellee's right in the event of a
recovery to have the judgment credited by the compensation so paid .") ; Napier v. John
P. Gorman Coal Co . , 242 Ky. 127, 45 S .W.2d 1064, 1065 (1931) ("The amount of
compensation received by the injured employee, or, in the event of fatal injury, by the
dependents, must be credited upon the amount recovered from the wrongdoer, and only
the excess of the damages over the compensation collected is recoverable ."); Berry v.
Irwin , 224 Ky. 565, 6 S .W.2d 705, 706 (1928) (same quote as Southern Quarries );
Williams v. Brown, 205 Ky. 74, 265 S.W. 480, 481 (1924) ("The one thing certain from a
reading of the section of the statute above quoted is that the injured employe cannot
have full compensation and collect money on a judgment for full damages for the same
injury . That would be double compensation .") .
In Davis v. Buley , 634 S.W.2d 161 (Ky. App. 1982), the Court of Appeals held
that "KRS 342.700(1) expresses a clear legislative intent that an injured employee
should not be allowed to recover from both the compensation carrier and a third-party
tortfeasor." Id . at 163. See also Old Republic Ins. Co. v. Ashley, 722 S .W.2d 55, 59
(Ky. App. 1986) ("The policy behind KRS 342.700(1) that an injured employee should
not recover from both the workers' compensation carrier and a third-party tortfeasor has
long been recognized by Kentucky courts ."); 6 Arthur Larson & Lex K. Larson, Larson's
Workers' Compensation Law ยง 110 .02, at 110-3 (Matthew Bender 2004) ("It is equally
elementary that the claimant should not be allowed to keep the entire amount both of
his or her compensation award and of the common law damage recovery ."). That is not
to say that the employer/insurer could not assign its subrogation rights to the worker, as
was done in Weinberg v. Crenshaw , 896 S.W.2d 22 (Ky . App. 1995). However, there
was no assignment in this case - only a decision by Intech, for whatever reason, to
forego its subrogation rights .
In his separate opinion, the Chief Justice would hold that when the employer or
carrier entitled to subrogation under KRS 342.700(1) decides not to pursue its
subrogation rights, the common law collateral source rule and/or KRS 411 .188(2)
assigns those rights to the worker as a matter of law. Post , at
(slip op. at 3-5).
However, neither KRS 342.700(1) nor KRS 411 .188(2) so provides . Both statutes
provide only that the failure of the subrogee to assert its rights results in the loss of
those rights. Neither provides that those rights are thereby transferred to the subrogor
in order to permit double recovery. In Zurich Am. Ins . Co . v. Haile, 882 S .W.2d 681 (Ky.
1994), we specifically rejected such an interpretation of KRS 411 .188:
Had this case not been settled forthwith under terms excluding the
amounts paid by Zurich, dismissing Zurich's subrogation claim would have
resulted, quite possibly, in a windfall verdict for the plaintiff, the very same
double recovery which KRS 342 .700(1) was written to prevent . We are
not inclined or required to interpret the statute[KRS 411 .188] to permit
such an absurdity.
Id. at 686.
- 1 0-
Nor is the common law collateral source rule relevant to this issue.
But it is suggested that, under the common law, appellee would
have been entitled to recover for the combined results of the disease and
the accident, and that many compensation acts have been construed as
having the same effect . The act supersedes the common law and creates
a different standard of rights and obligations covering the entire field of
personal injury as defined in the act. It provides for compensation and not
for damages, and common-law principles fixing the measure of damages
for injuries caused by negligence are no longer applicable or controlling .
Robinson-Pettet Co . v. Workmen's Comp . Bd . , 201 Ky. 719, 258 S .W. 318, 319-20
(1924). See also Evansville Printing Corp. v. Suqq , 817 S .W.2d 455, 457 (Ky. App .
1991) (Workers' Compensation Act evidences legislative policy and supersedes
common law).
In denying double recovery to the worker, KRS 342 .700(1) operates similarly as
KRS 304.39-060(2)(a), which abolishes tort recovery by a person injured in an
automobile accident who has not rejected the provisions of the Motor Vehicle
Reparations Act for amounts paid or payable in reparations benefits.
The effect of this statute is to abolish the claims for lost wages and
medical expenses of a person injured in an automobile accident against
the person who caused the injury to the extent that basic reparations are
payable therefor . The injured person can assert a claim only for those
damages which' exceeded the amounts payable as basic reparation
benefits . If it elects to do so, the basic reparations obligor may intervene
as the real party in interest to recover the sums payable by it as reparation
benefits .
Carta v. Dale , 718 S.W.2d 126, 128 (Ky. 1986) (emphasis added) (internal citations
omitted) . See also Ohio Cas. Ins. Co. v. Ruschell , 834 S.W .2d 166, 168 (Ky. 1992)
(claimant has no tort claim whatsoever for those elements of damages paid or payable
under the no-fault statute).
Any windfall obtained by Commonwealth from Intech's decision to forego its
subrogation rights is no different than if Intech had never filed its intervening complaint
in this action . Either way, KRS 342.700(1) precludes Appellant from recovering from
Commonwealth those elements of damages that he had already recovered from Intech
by way of workers' compensation benefits.
Accordingly, we reverse the Court of Appeals insofar as it vacates the entire
judgment against Commonwealth, but we remand this cause to the circuit court for an
appropriate computation of the total credit due to Commonwealth in light of the
employer's/insurer's failure to assert its right of subrogation and to enter an amended
judgment in accordance with that computation . Upon remand, the parties may be heard
and evidence taken, if necessary, as to the proper determination of the aforementioned
credit .
Graves, J., concurs . Lambert, C.J., concurs in part and dissents in part by
separate opinion, with Scott, and Wintersheimer, JJ ., joining that dissenting opinion .
Cooper, J ., concurs in part and dissents in part by separate opinion, with Johnstone,
and Roach, JJ, joining that opinion . Scott, J., concurs in part and dissents in part by
separate opinion, with Lambert, C.J., and Wintersheimer, J., joining that opinion .
COUNSEL FOR APPELLANT/CROSS-APPELLE E:
Jeanie Owen Miller
214 West Third Street
P .O . Box 712
Owensboro, KY 42302-0712
COUNSEL FOR APPELLEE/CROSS-APPELLANT:
Marvin P. Nunley
McCarroll, Nunley & Hartz
111 East Third Street
P.O. Box 925
Owensboro, KY 42302-0925
AS MODIFIED : FEBRUARY 23, 2006
RENDERED : AUGUST 25, 2005
TO BE PUBLISHED
(9jourf of 14tuturkV
2003-SC-000708-DG
AND
2004-SC-0219-DG
LEWIS F. KRAHWINKEL, JR .
APPELLANT/CROSS-APPELLEE
ON REVIEW AND CROSS-REVIEW FROM COURT OF APPEALS
NO. 2002-CA-000124 and 2002-CA-000193
HANCOCK CIRCUIT COURT NO. 97-CI-00004
V.
COMMONWEALTH ALUMINUM
CORPORATION
APPELLEE/CROSS APPELLANT
OPINION BY CHIEF JUSTICE LAMBERT 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 tortfeasor, 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, even 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 .' 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 Actor benefit from it in the
instant case.
The common law, rather than the Workers' Compensation Act, governs
Krahwinkel's claim against Commonwealth . The common law rule, known as the
collateral source rule, states "that it is the tortfeasor'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, 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.
' Long v. Reiss , 160 S .W.2d 668 (Ky . 1942)
2 Sexton v . Taylor County , 692 S.W.2d 808 (Ky. App. 1985) .
3 Rest. 2 Torts s. 920 (1979).
4 Louisville & Nashville RR Co. v. Corothers , 65 SW 833, 834 (Ky. 1901) ; Barr. v.
Searcv , 280 Ky. 535, 133 SW2d 714, 715 (1939).
5See Baptist Health Care Sys . v. Miller , -SW3d - (Ky. 2005) ; Schwartz v. Hasty , SW3d- (Ky. 2005) .
The statute at issue, KRS 342.700(1) is an inartful attempt to codify the
well-settled common-law principle that a tortfeasor 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 carrier'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
carrier 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
tortfeasor 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. 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 ."' Clearly KRS 342 .700(1) is for the
benefit of employers or their workers compensation carriers to permit them to recover
6 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 (Ky. App. 1918) ("The spirit
of the law, and not the letter, should control its construction, and the object to be
accomplished should be considered .") .
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 tortfeasor'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 absurd conclusion. Statutes should be given a practical construction to carry out
their manifest purposes .'
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 .
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, 15 Ky. L. Rptr. 578, 24 S.W. 118 (Ky.
App. 1983) (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).
6
8
RENDERED : FEBRUARY 23, 006
TO BE PUBLISHED
,$uyrrmt (90urf of ~firufurhv
2003-SC-0708-DG
AND
2004-SC-0219-DG
LEWIS F. KRAHWINKEL, JR .
V.
APPELLANT/CROSS-APPELLEE
ON REVIEW AND CROSS-REVIEW FROM COURT OF APPEALS
2002-CA-124 AND 2002-CA-193
HANCOCK CIRCUIT COURT NO . 97-CI-4
COMMONWEALTH ALUMINUM
CORPORATION
APPELLEE/CROSS-APPELLANT
OPINION BY JUSTICE COOPER
CONCURRING IN PART AND DISSENTING IN PART
I concur with the modified majority opinion except insofar as it remands the case
to the Hancock Circuit Court with directions to compute the amounts that must be
deducted from the judgment in order to preclude a double recovery by Appellant . The
modified majority opinion cites no authority for this unnecessary procedure. Appellant,
in his Petition for Rehearing, cited only Whittaker v. Hardin , 32 S.W.3d 497 (Ky. 2000),
and Mastin v. Liberal Markets, 674 S .W.2d 7 (Ky. 1984), both of which hold that the
plaintiff is entitled to have a trier of fact allocate elements of damages that should be
credited . Whittaker , 32 S .W.3d at 498; Mastin, 674 S .W.2d at 14.
Whittaker was an appeal from a workers' compensation case in which the
employer/insurer sought credit for amounts received by the claimant in settlement of a
civil action against the third-party tortfeasor. The claimant had received a lump sum
settlement with no allocation to specific categories of damages . Whittaker , 32 S.W.3d
at 498. Thus, no independent factfinder had ever determined how much of the lump
sum tort settlement corresponded with the amounts and categories of benefits awarded
in the workers' compensation claim. Whittaker held that an Administrative Law Judge
had jurisdiction to make those findings under KRS 342.325. Id. at 499. Mastin was an
appeal from a circuit court order denying enforcement of a workers' compensation
award. Mastin , 674 S.W .2d at 8-9. See KRS 342.305. The claimant had settled her
tort action against one of the third-party tortfeasors pursuant to a settlement agreement
that allocated damages by categories, but allocated most of the damages to pain and
suffering, Mastin, 674 S .W.2d at 9, a category for which there is no corresponding
workers' compensation recovery .
The preclusion against double recovery applies only insofar as a category of
damages recovered in the tort settlement duplicates a category of benefits awarded in
the workers' compensation award or settlement. Id. at 12-14 ; Hillman v. Am. Mut. Liab.
Ins . Co. , 631 S.W.2d 848, 850 (Ky. 1982) . In Mastin, the employer was not a party to
the tort settlement, thus had not concurred in the allocation of damages . Mastin held
that the employer was entitled to have an independent factfinder hear evidence and
allocate the damages in order to determine the amount creditable against the workers'
compensation award. Mastin, 674 S.W .2d at 14. Mastin also agreed with the claimant's
argument that the tort settlement might represent less than her actual damages as
determined by an independent factfinder,' and that if the factfinder found that the
settlement represented less than her actual damages, the employer/insurer was entitled
' Such often occurs when the plaintiff settles for the tortfeasor's liability insurance
policy limits which are less than the plaintiff's actual damages .
- 2-
to a credit only against its proportional share of the total damages. Id. at 13. Mastin
remanded the case to the circuit court to hear evidence, make appropriate findings of
fact, and apply those facts to the legal principles set forth in the opinion . Id . at 15 .2
Here, except for one item in the settlement that might allow Commonwealth an
additional credit (see note 3, infra), we already know exactly how much Appellant was
paid in workers' compensation benefits and the categories of those payments . We also
know exactly how much Appellant was awarded in his judgment against Commonwealth
and the categories of those damages. Whether a category of workers' compensation
benefits corresponds to a category of damages awarded in a judgment is a question of
law, not fact; thus, a remand to the circuit court for additional findings of fact is
unnecessary in this case. In the interest of judicial economy, we can and should
determine now what categories of workers' compensation benefits received should be
credited against the judgment and perform the simple task of subtraction ourselves,
thus avoiding yet another round of expensive and time-consuming appeals . That is
precisely what we did in AIK Selective Self Insurance Fund v. Bush , 74 S.W.3d 251 (Ky.
2002), with respect to amounts that were known to have been received and paid . Id. at
258 . We only remanded to the circuit court the task of allocating credits with respect to
amounts that were unknown or might not have been paid - thus required the production
of additional evidence . Id. Here, both the categories of damages in the tort judgment
and the categories of benefits awarded by the workers' compensation board have
already been determined by an independent factfinder - the jury with respect to the
2 One of those legal principles was that the employer/insurer was not entitled to credit
for the workers' compensation attorney fee that it commuted from the "back end" of the
award and paid to the claimant's attorney pursuant to KRS 342 .320(2) . Mastin, 674
S .W.2d at 12. Since the employer/insurer in this case could not have recovered the
attorney fee, if any, paid to Appellant's workers' compensation attorney, any such
payment would play no role in determining credits in this case.
- 3-
judgment and the AW with respect to the workers' compensation award. There are no
unknown amounts or categories requiring additional findings of fact, thus no reason for
a remand.
The amounts to be credited against the judgment are, of course, subject to the
75% limit required by the jury's comparative fault finding . AIK v. Bush, 74 S.W.3d at
253-55 ; U .S. Fid . & Guar. Co. v. Fox, 872 S.W.2d 91, 93-94 (Ky. App. 1993) . Applying
the principles set forth in those cases and in Mastin and Hillman , the entire judgment for
permanent impairment ($7,500 .00) must be vacated because it is duplicated in its
entirety by 75% of the workers' compensation payments for permanent partial disability
benefits ($30,456 .68 X 0.75 = $22,842.51); and the entire judgment for lost wages
($7,500 .00) must be vacated because it is duplicated in its entirety by 75% of the
workers' compensation payments for temporary total disability benefits ($18,240 .57 X
0.75 = $13,680.43) . Hillman , 631 S.W.2d at 850; Fox, 872 S.W.2d at 93-94. The entire
judgment for medical expenses ($13,253 .27) must be reduced by 75% of the workers'
compensation payments paid for medical expenses ($15,292 .15 X 0.75 = $11,469.11),
leaving a judgment for medical expenses in the amount of $1,784 .16.3 AIK, 74 S.W.3d
at 258. There can be no reduction of the $7,300 .00 judgment for pain and suffering
because that item of damages is not covered by workers' compensation . Hillman , 631
S.W.2d at 850 . Nor can there be any reduction of the judgment because of the
additional sums paid to Appellant for waivers of future medical expenses, the right to
3 The record does not reflect whether the remaining $1,784.16 in medical expenses
were included in the $4,500.00 buyout of future medical expenses. (Plaintiff's exhibit
no. 1, which apparently contained an itemization of medical expenses, is not in the
record on appeal. This is the only possible issue that might be resolved on remand.
However, if Commonwealth believed it was entitled to a credit for this item, it could have
supplemented the record on appeal with that information . It chose not to do so. By
remanding this case, the modified majority opinion gives Commonwealth a second bite
at the apple on this issue.)
- 4-
reopen, and vocational rehabilitation, since none of those items were included in the
judgment .
Accordingly, I would not remand this case to the Hancock Circuit Court but would
simply vacate those portions of the judgment that duplicate workers' compensation
payments received, leaving a total judgment of $9,084 .16, plus costs and interest.
Johnstone, and Roach, JJ., join this opinion .
AS MODIFIED : FEBRUARY 23, 2006
RENDERED : AUGUST 25, 2005
TO BE PUBLISHED
,$UFrrMr Courf of
irufurhv
2003-SC-000708-DG
AND
2004-SC-000219-DG
LEWIS F. KRAHWINKEL, JR.
V
APPELLANT/CROSS-APPELLEE
ON REVIEW AND CROSS-REVIEW FROM COURT OF APPEALS
NO. 2002-CA-000124 and 2002-CA-000193
HANCOCK CIRCUIT COURT NO. 97-CI-00004
COMMONWEALTH ALUMINUM
CORPORATION
APPELLE/CROSS-APPELLANT
OPINION BY JUSTICE SCOTT CONCURRING IN PART AND
DISSENTING IN PART
I concur with the majority on the issue of liability, and with the
modifications to the Opinion to the extent it recognizes the trial court's right to
make the initial "credit decision ." I disagree and dissent however, on the
Appellees' right to any offset of the Workers' Compensation settlement amounts.
I also join Chief Justice Lamberts' dissent.
In dissenting, I would ask how would an assignment of an
employer/insurer's "subrogation rights" to the Appellant make any difference in
this instance (as suggested), since the logic of the majority opinion gives pre
eminence to the language of KRS 342.700(1), which states "[b]ut, he shall not
collect from both," and then allows the defendantlobligor to "offset" the items
subject to subrogation - since they weren't claimed by the subrogor (pursuant to
the compensation settlement) . This logic totally ignores the very next part of
KRS 342.700(1), which gives the right to prevent any "double recovery"to the
specific entities named therein who "[p]aid the compensation, or having become
liable therefore, may recover it." Under no stretch of the imagination is the
Appellee one of the named entities. Moreover, there was a settlement
agreement in this case, between the Appellant and the employer (through its
compensation carrier), which clearly envisioned that the Appellant would get the
benefit of the subrogation items, even though no specific written assignment was
prepared or executed.
The civil courts and administrative tribunals of this Commonwealth depend
on "settlements" as much to manage and alleviate their dockets as do our
criminal courts on "plea bargains ." Undue interference with these mechanisms
depletes our trial resources and ultimately redounds to the detriment of our
citizens. The settlement between the Appellant and the employer/insurer met the
settlement goals set by each and was acceptable to the Board ; that is until this
"stumbling block."
As pointed out by Appellant's counsel at oral arguments - had the majority
opinion been law at the time - there would have been no settlement to start with!
This is the wrong way to go to get to the right place.
I just dissent.
Lambert, C .J ., and Wintersheimer, J ., joins this opinion .
,Suprmt (gaurf of Amfurkv
2003-SC-0708-DG
AND
2004-SC-0219-DG
LEWIS F . KRAHWINKEL, JR.
V.
APPELLANT/CROSS-APPELLEE
ON REVIEW AND CROSS-REVIEW FROM COURT OF APPEALS
2002-CA-124 AND 2002-CA-193
HANCOCK CIRCUIT COURT NO. 97-CI-4
COMMONWEALTH ALUMINUM
CORPORATION
APPELLEE/CROSS-APPELLANT
ORDER DENYING PETITION FOR REHEARING
AND GRANTING MODIFICATION
The Court, having considered the Petition for Rehearing filed by Appellant,
Lewis F. Krahwinkel, Jr., hereby denies said Petition to the extent that it requests
rehearing, but grants its request for modification . Thus, the To Be Published
opinion in the above-styled appeal, rendered August 25, 2005, is hereby modified
by the substitution of a new opinion, attached hereto, in lieu of the opinion
originally rendered . Said modification is made for the limited purpose of affording
the parties the right to be heard at the trial court level on the issue of what
amounts should be credited against the judgment in this case in light of this
Court's ruling. The remainder of the original opinion remains unchanged .
Lambert, C .J ., Graves, Scott, and Wintersheimer, J.J . would grant
modification . Cooper, Johnstone, and Roach, J.J ., would not grant modification .
ENTERED: February 23, 2006
Some case metadata and case summaries were written with the help of AI, which can produce inaccuracies. You should read the full case before relying on it for legal research purposes.
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.