Opinion
W.C. No. 4-412-966.
May 4, 2006.
FINAL ORDER
The claimant seeks review of an order of Administrative Law Judge Harr (ALJ Harr) dated October 28, 2005, that denied the claimant's motion for an order requiring the Subsequent Injury Fund (SIF) to pay 25 percent of the claimant's attorney fees and costs incurred in obtaining a penalty award against the respondent-insurer. We affirm.
The facts appear not to be in dispute. ALJ Henk entered an order dated April 25, 2002, which assessed penalties against the respondent-insurer. ALJ Henk further ordered that 75 percent of this penalty be paid to the claimant and 25 percent of the penalty be paid to the SIF pursuant to § 8-43-304(1), C.R.S. 2005. Subsequent to the Court of Appeals decision affirming the ALJ's order, the claimant filed an application for hearing on the issue of whether the SIF should pay a pro rata share of the attorney fees and litigation expenses incurred in obtaining the penalty award. The claimant filed a motion for summary judgment on the same issue. ALJ Harr denied the motion for summary judgment and this appeal followed.
There appears to be no dispute that the SIF did not participate in the efforts to secure penalties against the insurer. The claimant argues that the SIF was a passive beneficiary under the "common fund doctrine" recognized in County Workers' Compensation Pool v. Davis, 817 P.2d 521 (Colo. 1991), and that the ALJ erred in failing to so conclude. The "common fund doctrine" provides that when an injured party's tort claim is settled for an amount greater than its insurer's subrogation claim, and the insurer has not actively participated in the tort litigation, a court may order the insurer to pay a reasonable share of the attorney fees and court costs incurred in the course of the litigation. County Workers Compensation Pool v. Davis, supra; see also Castellari v. Partners Health Plan of Colorado, Inc., 860 P.2d 593 (Colo.App. 1993) (common fund doctrine operates to prevent passive beneficiaries from being unjustly enriched by requiring them to bear a fair share of the costs of litigation).
SIF contends that Davis is not applicable because it involved a private insurer who had been repaid all of the workers' compensation benefits it had paid out from the proceeds of a settlement of a third party lawsuit against the tortfeasor. Moreover, SIF points out that the present version of § 8-43-304(1) provides that any person who is found to have violated the Act "shall" be punished by a fine, 75 percent payable to the aggrieved party and 25 percent payable to the SIF. The SIF argues that the word "shall" is mandatory and makes clear a legislative intent that SIF have an unfettered right to a percentage of penalties awarded, without paying a portion of the attorney fees and litigation expenses generated in collecting the penalty.
The percentage of penalties payable to SIF under § 8-43-304 has varied over the years. Prior to July 1, 1991, the entire penalty was payable to SIF. 1990 Colo. Sess. Laws, ch. 62 at 510. For injuries occurring on or after July 1, 1991 through June 30, 1992, the entire penalty was payable to the aggrieved party. 1991 Colo. Sess. Laws, ch. 219 at 1323. For injuries occurring on or after July 1, 1992 and currently, 75 percent of the penalty is payable to the aggrieved party and 25 percent is payable to SIF. 1992 Colo. Sess. Laws, ch. 238 at 1828. The SIF argues that the last amendment making 25 percent of the penalty payable to the SIF was enacted to address the increased burden on the SIF that was threatening the solvency of the SIF. See United Airlines v. Industrial Claim Appeals Office 993 P.2d 1159 (Colo. 2000); Waddell v. Industrial Claim Appeals Office, 964 P.2d 552 (Colo.App. 1998) (Briggs J., specially concurring).
The SIF was established in 1945 and is a part of the Colorado Department of Labor and Employment, Division of Workers' Compensation, under the management and administration of the Director of the Division of Workers' Compensation. Section 8-46-101(5), C.R.S. 2005. The purpose of establishing the SIF was to provide partially disabled workers with added opportunities for employment by relieving subsequent employers from the harsh results of the "full responsibility" rule. Sears, Roebuck Co. v. Baca, 682 P.2d 11 (Colo. 1984); Horizon Land Corp. v. Industrial Commission, 34 Colo. App. 178, 524 P.2d 638 (1974). Before the SIF was created, an employer who hired a partially disabled worker was responsible for the entire disability award if the worker suffered a subsequent injury and was declared permanently and totally disabled. Colorado Fuel Iron Corp. v. Industrial Commission, 151 Colo. 18, 379 P.2d 153 (1962). Currently, the SIF is funded in part by a portion of all penalties imposed under § 8-43-304(1), C.R.S. 2005. See also § 8-46-102, C.R.S. 2005, et. seq. (allocating to the SIF funds from various assessments and other moneys paid out under other specified circumstances); Moland v. Industrial Claim Appeals Office, 111 P.3d 507 (Colo.App. 2004).
Section 8-43-304(1) is silent concerning whether the SIF may be held liable for a portion of attorney fees and costs incurred in obtaining a penalty award. However, the statute at issue in County Workers' Compensation Pool v. Davis, former § 8-52-108(1) [now § 8-41-203(1)(b), C.R.S. 2005], was also silent on this issue. The Supreme Court apparently considered that silence to have created an ambiguity that rendered the statute subject to judicial construction. Accordingly, we conclude that the silence in § 8-43-304(1) also creates an ambiguity that requires further construction here.
The overall purpose of statutory construction is to effect the intent of the General Assembly. The best guide to the intent of the legislature is the language of the statute itself, and therefore, words and phrases in a statute must be given their plain and ordinary meanings. Snyder Oil Co. v. Embree, 862 P.2d 259 (Colo. 1993).
Here, because the statute is silent on the dispositive issue, there are no particular words or phrases to examine. However, we may also consider the entire SIF scheme and the legislative intent reflected therein, so as to give consistent, harmonious, and sensible effect to § 8-43-304(1). See Peregoy v. Industrial Claim Appeals Office, 87 P.3d 261 (Colo.App. 2004); Spracklin v. Industrial Claim Appeals Office, 66 P.3d 176 (Colo.App. 2002). Further, we must be mindful that the legislature intended to reach a just and reasonable result, and that a public interest is favored over any private interest. See § 2-4-201(1)(c) and (e), C.R.S. 2005. A construction that would lead to an absurd outcome is to be avoided. Guido v. Industrial Claim Appeals Office, 100 P.3d 575 (Colo.App. 2004).
Considering these rules of construction, we are persuaded that the legislature did not intend that the SIF be subject to an apportionment of attorney fees and costs incurred in obtaining a penalty award. As the SIF argues, it is clear that in apportioning the penalty proceeds, the legislature was providing an additional source of funds for the SIF, in light of the threat to the insolvency of the SIF. It seems incongruous to us that the legislature also intended that a portion of what had been allocated to the SIF from the penalty proceeds would then be taken back as a matter of "equity" to relieve the claimant of the costs in obtaining the penalty award. Indeed, arguably, it is not "equitable" for any portion of the penalty proceeds to be awarded to the SIF because it has suffered no actual consequences from the violation that gave rise to the penalty. Rather, it appears to us that the intent of the allocation to the SIF was a legislative decision to favor a public interest in the solvency of the SIF. over the private interest of a claimant who has incurred fees and costs in obtaining a penalty award.
Moreover, we are not persuaded to reach a different conclusion by the holdings in County Workers Compensation Pool v. Davis, supra, and Castellari v. Partners Health Plan of Colorado, Inc. In Davis, the supreme court relied heavily on the fact that the insurer would be unjustly enriched because it elected not to pursue its right to participate in the litigation against the third-party tortfeasor. Castellari follows the same reasoning. That unfairness does not result here, because the SIF has no right to participate in litigation against a tortfeasor that owed no duty to the SIF. Accordingly, we conclude that the ALJ did not err in denying the claimant's motion to allocate a portion of the attorney fees and costs to the SIF.
IT IS THEREFORE ORDERED that the ALJ's order dated October 28, 2005, is affirmed.
INDUSTRIAL CLAIM APPEALS PANEL
____________________________________ Dona Halsey
____________________________________ Thomas Schrant
Susan Pena, Denver, CO, Family Dollar Stores, Inc., Workers' Compensation Manager, Denver, CO, Suzanne Liening, Travelers Insurance Company, Dallas, TX, Subsequent Injury Fund, Div of Workers' Comp — Inter. Mail Ralph Ogden, Esq., Denver, CO, (For Claimant).
Marc F. Bendinelli, Esq., Plaza North, Denver, CO, (For Claimant).
Trecia Sigle, Esq., Greenwood Village, CO, (For Respondent Employer and Insurer).
Vincent E. Morscher, Esq., SIF/Civil Rights Unit, Denver, CO, (For Subsequent Injury Fund).