Holley v. Ace American Insurance Co. , 313 P.3d 917 ( 2013 )

REIF, V.C.J.

1 This Court is asked to decide whether Oklahoma law prohibiting subrogation of workers' compensation death benefits prevents Ace American Insurance Company (Insurer) from recouping death benefits it has paid to the widow of an Oklahoma worker killed at a jobsite in Texas. Insurer paid widow death benefits provided by Texas law and is seeking subrogation from tort damages widow also recovered in a Texas wrongful death case.

12 Insurer and widow agree that (1) the deceased worker's contract for employment was made in Oklahoma, (2) worker was killed in the scope of his employment at employer's jobsite in Texas, and (8) widow could elect to receive workers' compensation death benefits under either Texas law or Oklahoma law. The parties further agree that widow recovered both workers' compensation death benefits from employer and tort damages from third parties as provided by Texas law. They disagree, however, over the law that governs insurer's right to be subrogated from widow's tort damages to the extent of the workers' compensation death benefits it paid widow.

{ 3 Insurer has basically argued that Texas law allowing subrogation applies, because the workers' compensation death benefits and widow's tort recovery were both based on Texas law. The gist being that Oklahoma law cannot be applied, because widow did not invoke Oklahoma law to be compensated for the loss of her husband. In contrast, Widow has basically contended that her election to receive compensation for the loss of her husband under Texas law did not waive other rights given under Oklahoma workers' compensation law as a consequence of the deceased worker's Oklahoma contract of employment. In essence, Widow asserts that Oklahoma's subrogation prohibition applies to all benefits paid for the job-related death of an Oklahoma worker including those provided by Texas law or any other jurisdiction.

[ 4 Widow brought a declaratory judgment suit to resolve this controversy. The trial court ruled in favor of widow. Upon appeal by Insurer, the Court of Civil Appeals agreed that widow could seek other "benefits" under Oklahoma law, notwithstanding her election to seek compensation under Texas law. However, the Court also concluded that statutory law required widow to commence a proceeding by filing a claim to preserve and pursue further "benefits," like the subrogation prohibition. Noting that widow had never filed a claim with the Oklahoma Workers' Compensation Court, the Court of Civil Appeals ruled Texas law allowing subrogation applied, and not Oklahoma's anti-subrogation rule. Widow filed a petition for certiorari, seeking review of the opinion of the Court of Civil Appeals. This Court has previously accepted this case for review.

T5 The resolution of the controversy between the parties has required the trial court and Court of Civil Appeals to construe Oklahoma statutory law set forth in 85 0.8. 2001, § 4 ¹ and 85 0.8.8upp.2005, § 44(b)². This was the applicable law at the time of the worker's death on July 29, 2008. Statutory construction presents a question of law and lower court rulings in this regard are reviewed de novo. State ex rel. Oklahoma Tax Comm'n v. Sun Co., 2009 OK 11, 18, 222 P.3d 1046, 1048.

T6 The text of § 4 makes it clear that an Oklahoma employment contract is protected by "all the provisions of the Workers' Compensation Act of this state ... irrespective of where accident resulting in injury may occur." The text of § 44(b) similarly unequivocally provides that; "[The employer or his insurance carrier shall not have the right of subrogation to recover money paid ... for death claims or death benefits under the Workers' Compensation Act."

T7 The chief problem with the holding of the Court of Civil Appeals lies in construing the prohibition on seeking subrogation as a "benefit." Not every valuable right under the Workers' Compensation Act is a "benefit." See First Nat'l Bank of Belleville v. Poul Hughes Trucking Co., 1982 OK CIV APP 28, 11 6-10, 645 P.2d 1054, 1055 (interest on an unpaid award is not a benefit). The statutory prohibition against subrogation is not a "benefit," but rather a public policy protection and substantive element of the right to receive and obligation to pay death benefits.

18 "The right of an employee to compensation arises from the contractual relationship existing between the employee and the employer on the date of injury, and the statutes then in force form part of that contract and determine the substantive rights and obligations of the parties." Knoit v. Halliburton Services, 1988 OK 29, 14, 752 P.2d 812, 818. "The right to compensation and the obligation to pay such benefits are vested, and become fixed by law at the time of the injury." Id. (emphasis added). More particularly, this Court has said "Rights of survivors of a deceased employee [to] claim death benefits ... become fixed upon date of death and are determinable under the law in effect on that date." Independent School District No. 89 v. McReynolds, 1974 OK 186, 528 P.2d 313 (syllabus).

1 9 On July 29, 2008, the date of deceased worker's death, the statutory and contractual obligation of employer and insurer to pay death benefits contained the express element that this obligation was without a right of subrogation. The coordinate right of the deceased Oklahoma worker and his dependents that became vested and fixed by law was to receive death benefits free from any right of subrogation on the part of employer or insurer. The obligation and right were thus established "irrespective of where accident resulting in injury may occur." The legislature evinced no intent to make this element of the death benefit obligation and right dependent upon (1) the amount of the death benefit, (2) the forum in which the death benefits are determined, or 8) the jurisdiction in which a widow or other dependent might seek compensation from third parties.

T10 This conclusion is further supported by reading sections 4 and 44 together. See tion 44(b) prohibits subrogation of "money paid by the employer or his insurance carrier for death claims or death benefits under the Workers' Compensation Act." § 44(b) (emphasis added). Under section 4, dependents of an Oklahoma worker who is killed while working in another state can obtain death benefits under the Workers' Compensation Act in one of two ways. The dependents can either (1) "commence and maintain [an] action for benefits and compensation in the State of Oklahoma," or (2) receive "benefits or compensation provided under any law of the state where injury [or death] occurred." If the benefits or compensation paid under the laws of another state result from a final determination of an action in the other state, the dependents are "precluded from [al] right of action under the Workers' Compensation Act of this state." The context indicates they are precluded from a right of action in Oklahoma for benefits or compensation. This is the only express consequence of an election to receive "benefits or compensation" under the laws of another state. Nothing in section 4 changes the fact that death benefits paid under the law of another state (whether by adjudicated claim or not) constitute "money paid by the employer or his insurance carrier ... under the Workers' Compensation Act," and are thus protected from subrogation.

111 In addition to the foregoing considerations, the protection of death benefits from subrogation, like the exemption of benefits from creditors' claims provided by 85 0.8.8upp.2005, § 48, is a general public policy protection provided by Oklahoma's Workers' Compensation Act. Any doubt about the application of such protections should be resolved in favor of the protection. See In re Allen's Guardianship, 1938 OK 271, 182 Okla. 512, 78 P.2d 700.

{ 12 Finally, we find nothing in the Workers' Compensation Act to indicate that the recipient of death benefits could only enforce general policy protections, like the subrogation prohibition and the creditors' exemption, by filing a claim with the Oklahoma Workers' Compensation Court. An effort by a widow or dependent to enforce either the subrogation prohibition or creditors' exemption does not involve prosecution of an action for "recovering further benefits and compensation," as provided by § 4; it is simply the assertion of a public policy protection that vests and becomes fixed at the time of the deceased worker's death.

13 In conclusion, we hold the trial court correctly construed and applied 85 0.8.2001, § 4 and 85 0.S.Supp.2005, § 44(b), in ruling that Insurer could not seek subrogation for death benefits it paid widow for her husband's job-related death on July 29, 2008. The fact that the amount of the benefits was determined by Texas law is immaterial to the existence and enforcement of the parties' rights and duties under Oklahoma law concerning the issue of subrogation. In addition, we hold the trial court's declaratory judgment in favor of widow on this issue was a proper way to resolve the actual controversy between widow and Insurer over Insurer's claimed right to subrogation. 12 O.S.Supp. 2004, § 1651.³ Widow was not required to file a claim with the Oklahoma Workers' Compensation Court to decide this issue, despite the fact that this issue concerned a right and obligation founded on the Oklahoma's Workers' Compensation Act. The provision in § 44(b) prohibiting subrogation in death benefit cases was not "compensation" or a "benefit" that the workers' compensation court could award or withhold. It was instead a substantive element of the right to receive and the obligation to pay death benefits that became vested and fixed on July 29, 2008, upon worker's death.

1 14 Based on the foregoing considerations, we conclude the Court of Civil Appeals erred in construing the applicable law and in reversing the judgment of the trial court. Accordingly, we vacate the opinion of the Court of Civil Appeals and affirm the judgment of the trial court.

CERTIORARI PREVIOUSLY GRANTED; COURT OF CIVIL APPEALS OPINION VACATED; JUDGMENT OF THE TRIAL COURT AFFIRMED.

1 15 COLBERT, C.J., REIF, V.C.J., WATT, EDMONDSON, and GURICH, JJ., concur. 1 16 KAUGER (separate writing), WINCHESTER, TAYLOR, and COMBS, JJ., dissent.

1 . Title 85 0.$.2001, § 4 (later repealed by Laws 2011, but in effect at the time of the death the worker) provides, in pertinent part, that:

From and after the passage and effective date of the Workers' Compensation Act, all the provisions of the Workers' Compensation Act of this state, Sections 1 et seq. of this title, shall apply to employers and to employees, irrespective of where accident resulting in injury may occur, whether within or without the territorial limits of the State of Oklahoma, when the contract of employment was entered into within the State of Oklahoma, and the said employee was acting in the course of such employment and performing work outside the territorial limits of this state under direction of such employer. In such case the injured employee may elect to commence and maintain his action for benefits and compensation in the State of Oklahoma as provided in the Workers' Compensation Act and the Court is hereby vested with jurisdiction thereof as fully as if such injury or accident had occurred within this state. Such right of election shall, however, not preclude the injured employee from recovering any benefits or compensation provided under any law of the state where injury occurred, and if such action be so commenced in such other state, or under the law of another state, and is prosecuted to final determination, such employee shall thereupon be precluded from his right of action under the Workers' Compensation Act of this state. Provided, the injured employee may exercise his right of election to file his claim or commence his said action or proceeding in the State of Oklahoma, at any time prior to final adjudication or determination of his rights under the laws of another state, and the fact that he shall have been furnished or provided with medical, surgical, hospital or other treatment care, or paid temporary disability compensation in such other state, or under the laws thereof, shall not preclude such injured employee from recovering further benefits and compensation under the Workers' Compensation Act of this state. Provided, further, no award made by the Court of this state shall include any compensation paid by the employer or insurance carrier before commencement of the action or proceeding in this state and any payments so made shall be treated as compensation voluntarily paid and credit therefor shall be allowed.

2 . Title 85 0.S.Supp.2005, § 44(b), (later repealed by Laws 2011 and replaced by 85 § 348 allowing subrogation), provides:

(b) Notwithstanding subsection (d) of this section, the employer or his insurance carrier shall not have the right of subrogation to recover money paid by the employer or his insurance carrier for death claims or death benefits under the Workers' Compensation Act from third persons, with all common law rights against other than the employer and his employees preserved and to be in those persons who would have had such rights had there been no death claim or death benefits under the Workers' Compensation Act.

3 . District courts may, in cases of actual controversy, determine rights, status, or other legal relations, including but not limited to a determination of the construction or validity of any foreign judgment or decree, deed, contract, trust, or other instrument or agreement or of any statute, municipal ordinance, or other governmental regulation, whether or not other relief is or could be claimed, except that no declaration shall be made concerning liability or non-liability for damages on account of alleged tortious injuries to persons or to property either before or after judgment or for compensation alleged to be due under workers' compensation laws for injuries to persons. The determination may be made either before or after there has been a breach of any legal duty or obligation, and it may be either affirmative or negative in form and effect; provided however, that a court may refuse to make a determination where the judgment, 'if rendered, would not terminate the controversy, or some part thereof, giving rise to the proceeding.