W.C. No. 4-128-129Industrial Claim Appeals Office.
January 22, 1997
FINAL ORDER
The claimant seeks review of a final order of Administrative Law Judge Wheelock (ALJ) which allowed the respondents to offset their liability for workers’ compensation benefits by proceeds which the claimant received from settlement of a third-party lawsuit. We affirm.
The ALJ found that the claimant sustained a compensable injury arising out of an auto accident on March 26, 1992. The claimant, and the workers’ compensation insurer for her employer, Colorado Compensation Insurance Authority (CCIA), brought suit against a third party who allegedly caused the claimant’s injuries.
On November 3, 1994, the CCIA agreed to a settlement of its claim against the third party. The CCIA received $5,408, and the ALJ found that the settlement agreement preserved the CCIA’s right to offset its future liability for workers’ compensation by any proceeds the claimant might receive in the future.
Thereafter, the claimant dismissed her lawsuit against the third party and agreed to binding arbitration. Ultimately, the claimant settled with the third party for the net amount of $497,588.96. The CCIA then sought to offset its liability for workers’ compensation benefits, after November 3, 1994, by the net proceeds of the claimant’s settlement.
The ALJ held that § 8-41-203(1), C.R.S. (1996 Cum. Supp.), permits the CCIA to reduce its liability by the net amount of the claimant’s third-party settlement. Moreover, the ALJ held that the CCIA did not waive its right to future offsets by entering into the separate settlement with the third party.
I.
On review, the claimant contends that the provisions of the CCIA’s settlement with the third party preclude it from claiming an offset against liability for future workers’ compensation benefits. In support of this proposition, the claimant cites an introductory paragraph of the CCIA settlement agreement with the third party in which it is stated that the CCIA and the third party “desire to settle all claims asserted, or which could have been asserted, by [CCIA] or Latanya L. Andrews” against the third party. The claimant reasons that this provision logically should be construed as “a waiver of the rights to recover for any benefits to which subrogation rights apply.” We disagree with this argument.
It is well established that § 8-41-203(1) assigns a claimant’s cause of action against a third party to the workers’ compensation insurer, but only to the extent of benefits actually paid by the carrier. Otherwise, the right of recovery against the third party remains with the claimant, as does the right to control the course of litigation against the third party Metcalfe v. Bruning Division of AMI, 868 P.2d 1145 (Colo.App. 1993). Moreover, the mere fact that the workers’ compensation insurer settles that portion of the lawsuit which has been assigned to it does not constitute “waiver” of the insurer’s statutory right to reduce future compensation liability by amounts the claimant may receive in a separate settlement with the third party. Jordan v. Fonken Stevens, P.C., 914 P.2d 394 (Colo.App. 1995).
Further, the interpretation of a settlement agreement is, in the absence of any ambiguity, a question of law. To the extent the language in the written instrument is plain, clear, and no absurdity is involved, the settlement must be enforced as written Cary v. Chevron, U.S.A., 867 P.2d 117 (Colo.App. 1993).
Here, as the ALJ found, paragraph “D” of the CCIA’s settlement agreement with the third party states that the CCIA “does not hereby release or waive any rights of recovery or set-off from Latanya Andrews of sums paid to Latanya Andrews in the future.” We agree with the ALJ that this provision establishes that neither the CCIA, nor the third party defendant, understood the settlement agreement as an attempt to inhibit the claimant from pursuing her separate claims against the third party, including those to which workers’ compensation subrogation might apply in the future. Rather, as the ALJ held, the settlement agreement contemplates only that the CCIA is surrendering its right to seek any future damages from th third party, and settling only that portion of the lawsuit which was assigned to it by virtue of its payment of workers’ compensation benefits. The introductory paragraph cited by the claimant merely acknowledges that the CCIA desires to settle all claims, including those which might have been brought by the claimant, which were legally assigned to the CCIA. In our view, no other reading of the settlement agreement is plausible.
The claimant also argues that, because the CCIA did not allow her to participate in negotiations concerning settlement of the CCIA’s claim, the CCIA should be barred from asserting its right of offset. The claimant reasons that the CCIA was acting as an “agent” for the claimant when it settled with the third party, and that the “CCIA’s actions in connection with established law bound [the claimant] to the terms of” the CCIA’s settlement with the third party. Finally, the claimant asserts that she should have the “same rights to notification and participation” that workers’ compensation insurers have when claimants are seeking approval of a settlement with a third party. These arguments are without merit.
The claimant’s assertion that the CCIA was acting as her “agent” when entering into the settlement with the third party is incorrect. To the contrary, the CCIA had no authority to settle any aspect of the lawsuit except that portion assigned to it by payment of workers’ compensation benefits through November 3, 1994. As was held in Metcalfe v. Bruning Division of AMI, supra, the claimant retained the authority to settle the balance of the lawsuit, and it was in no way “bound” by the CCIA’s settlement. To the extent the claimant may have misunderstood the law, that is not a problem which may be ascribed to the CCIA.
Further, there is no merit to the claimant’s argument that, because workers’ compensation insurers have a right to approve settlements between claimants and third parties, claimants should have the same right with respect to settlements entered into between workers’ compensation insurers and third parties. A workers’ compensation insurer’s interest in a claimant’s settlement stems from § 8-41-203(2), C.R.S. (1996 Cum. Supp.), which provides that a claimant may not settle a third-party lawsuit in an amount less than the worker’s compensation lien without written approval by the insurer. The obvious purpose of this provision is to protect the rights of workers’ compensation insurers against improvident settlements by claimants. Eckhardt v. Village Inn, 826 P.2d 855 (Colo. 1992).
However, a claimant has no such interest when a workers’ compensation insurer seeks to settle that portion of a third-party lawsuit which has been “assigned” to the insurer. Once the workers’ compensation insurer pays benefits, the claimant has received that to which she is entitled, and is not concerned with whether or not the workers’ compensation insurer is successful in recovering the full amount of such payments from the third party. Thus, the claimant is not damaged if the insurer agrees to settle for an amount less than it paid the claimant. Moreover, the claimant’s rights with respect to future compensation benefits are in no way prejudiced by any agreement between the compensation carrier and the third party as to benefits already paid.
Finally, the claimant has made reference to Sneath v. Express Messenger Service, (Colo.App. No. 96CA0030, December 12, 1996) (not selected for publication). However, we consider that case to be inapposite. Sneath concerned a situation in which the workers’ compensation insurer expressly and impliedly advised the claimant’s attorney that the claimant was not to seek recovery of disputed workers’ compensation benefits from the third party. This case, unlike Sneath, contains no evidence of such directions by the CCIA, and therefore, no basis for establishing an estoppel.
II.
The claimant also contends that the ALJ’s order violated her right to due process by addressing issues outside those noticed for hearing, and by affecting rights of parties not present. However, the response to the claimant’s application for hearing expressly raised the issue of whether the CCIA has the right to “offset claimant’s third party recovery against future compensation owed.” The ALJ expressly addressed this issue, and in no way exceeded the parameters of her authority in doing so Metcalfe v. Bruning Division of AMI, supra (ALJ has authority to determine entitlement to future workers’ compensation benefits and respondents’ right to an offset against future benefits).
IT IS THEREFORE ORDERED that the ALJ’s order dated August 5, 1996, is affirmed.
INDUSTRIAL CLAIM APPEALS PANEL
___________________________________ David Cain
___________________________________ Kathy E. Dean
NOTICE
This Order is final unless an action to modify or vacate theOrder is commenced in the Colorado Court of Appeals, 2 East 14thAvenue, Denver, Colorado 80203, by filing a petition to reviewwith the court, with service of a copy of the petition upon theIndustrial Claim Appeals Office and all other parties, withintwenty (20) days after the date the Order was mailed, pursuant to§§ 8-43-301(10) and 307, C. R. S. (1996 Cum. Supp.).
Copies of this decision were mailed January 22, 1997 to the following parties:
Latanya Andrews, 4601 Lochshin, Houston, TX 77084
Sprint Express, Inc., P.O. Box 60156, Grand Junction, CO 81506-8758
Colorado Compensation Insurance Authority, Attn: Brandee L. DeFalco-Galvin, Esq. (Interagency Mail)
Kathleen Robinson, Esq., 802 S. Tejon, Colorado Springs, CO 80903 (For the Claimant)
Peter A. Goldstein, Esq., 312 S. Weber St., Ste. A, Colorado Springs, CO 80903 (For the Claimant)
By: ______________________________________________