1. Workers' Compensation--subrogation interest in third-party
negligence recovery--prejudgment interest
Defendants were not entitled to prejudgment interest where
plaintiff was injured in a motor vehicle collision with a third
party, received workers' compensation benefits, was awarded
damages and prejudgment interest in a third-party negligence
action against the operator of the motor vehicle, and defendants
were properly allocated funds from the third-party recovery for
their subrogation interest. The language of N.C.G.S. § 97-
10.2(f)(1) is clear and unambiguous, needs no interpretation, and
does not provide for defendants to collect a pro rata share of
the prejudgment interest.
2. Workers' Compensation--third-party negligence recovery--
prejudgment interest--disbursal to plaintiff
Although defendants argued that they were entitled to a pro
rata share of a workers' compensation plaintiff's prejudgment
interest award on a third-party negligence recovery in order to
prevent double recovery by plaintiff, disbursal of prejudgment
interest is not specifically addressed in N.C.G.S. § 97-
10.2(f)(1) and the plain language of N.C.G.S. § 97-10.2(f)(1)(d)
unambiguously directs disbursal to plaintiff of “any amount
remaining.” Appeal by defendants from opinion and award entered 12
February 1998 by the North Carolina Industrial Commission. Heard
in the Court of Appeals 29 October 1998.
Darrell B. Cayton, Jr., for plaintiff-appellee.
Young, Moore & Henderson P.A., by J. Aldean Webster III, for
defendant-appellants.
McGEE, Judge.
Defendants appeal from an opinion and award of the North
Carolina Industrial Commission (Commission) dated 12 February
1998 denying defendants a pro-rata share of pre-judgment interest
recovered by plaintiff in a third party negligence action. The
opinion and award of the Commission reversed the third party
distribution order entered by a deputy commissioner 26 July 1996.
The Commission found that plaintiff was injured on 16 August
1991, "when he was involved in a motor vehicle collision with a
vehicle driven by a third party, Eula Norris Hargis." The
Commission determined the accident arose "out of and in the
course of [plaintiff's] employment with the defendant-employer,"
and that plaintiff was entitled to receive workers' compensation
benefits. The parties entered into a Form 21 agreement for
compensation for disability, which was approved by the Commission
on 28 October 1991. Defendants paid compensation and medicalexpenses to plaintiff in the amount of $44,378.40. Plaintiff
filed a third party negligence action against Eula Norris Hargis,
the operator of the vehicle. Plaintiff was awarded $95,000 in
damages and $5,000 in pre-judgment interest in a jury trial in
December 1993.
Defendants had already paid workers' compensation benefits
to plaintiff in the amount of $44,378.40. Pursuant to N.C. Gen.
Stat. § 97-10.2(f)(1)(1991), defendants had a subrogation
interest in plaintiff's third party recovery equaling the total
amount of workers' compensation payments made to plaintiff. The
Commission properly allocated these funds to defendants, and
these funds are not at issue.
Defendants contend they are entitled to a pro-rata share of
the pre-judgment interest plaintiff received on his third party
recovery. The executive secretary of the Commission ordered the
distribution of the third party recovery on 3 February 1994. In
pertinent part, the order stated, "The sum of $44,378.40 plus
interest if applicable, subject to counsel fee, shall be paid
the workers' compensation carrier in full settlement of its
subrogation interest."
Plaintiff requested a reconsideration of this order on 24
February 1994, arguing that defendants were not entitled to a
share of the pre-judgment interest. The executive secretary ofthe Commission reaffirmed his order on 14 March 1994, and
plaintiff paid defendants the amount of their subrogation lien
from his third
party recovery. Plaintiff also paid defendants their pro-rata
share of the pre-judgment interest on 20 July 1994, an amount
equaling $1,566.67.
Plaintiff appealed, arguing that defendants were not
entitled to a pro-rata share of the pre-judgment interest that
plaintiff had received on his third party recovery. In an
opinion and order dated 26 July 1996, the deputy commissioner
concluded that defendant-carrier was entitled to receive its pro-
rata share of the pre-judgment interest award "[i]n full
satisfaction of its subrogation lien."
Plaintiff appealed to the Full Commission, and based upon
the foregoing facts, the Commission made the following
conclusions of law:
1. The plaintiff is entitled to receive
interest on his portion of the money judgment
that represents compensatory damages,
N.C.G.S. §24-5(b); Absher v. Vannoy-Lankford
Plumbing Co., 78 N.C. App. 620, cert. denied,
316 N.C. 730 (1985). Interest shall be
calculated based on the amount the plaintiff
is actually entitled to receive after the
defendant-carrier's subrogation lien amount
is subtracted. Absher v. Vannoy-Lankford
Plumbing Co., 78 N.C. App. 620, cert. denied,
316 N.C. 730 (1985).
2. However, as the Workers' Compensation
Statute does not specifically address
interest, pro-rated or otherwise, in addition
to full satisfaction of the subrogation lien,
the undersigned find they cannot award such
interest to defendant-carrier absent some
authority given to them to do so.
The Commission ordered defendants to return to plaintiff the
$1,566.67 in pre-judgment interest. Defendants appeal the order
of the Commission.
[1]Defendants argue they are entitled to their pro-rata
share of the pre-judgment interest plaintiff received on his
third party recovery in order to be fully reimbursed. We
disagree and find defendants' argument contrary to the plain
meaning of N.C. Gen. Stat. § 97-10.2(f)(1)(1991).
N.C. Gen. Stat. § 97-10.2(f)(1)(1991) states:
If the employer has filed a written admission
of liability for benefits under this Chapter
with, or if an award final in nature in favor
of the employee has been entered by the
Industrial Commission, then any amount
obtained by any person by settlement with,
judgment against, or otherwise from the third
party by reason of such injury or death shall
be disbursed by order of the Industrial
Commission for the following purposes and in
the following order of priority:
a. First to the payment of actual court
costs taxed by judgment and/or
reasonable expenses incurred by the
employee in the litigation of the third-
party claim.
b. Second to the payment of the fee of the
attorney representing the person making
settlement or obtaining judgment, andexcept for the fee on the subrogation
interest of the employer such fee shall
not be subject to the provisions of G.S.
97-90 but shall not exceed one third of
the amount obtained or recovered of the
third party.
c. Third to the reimbursement of the employer
for all benefits by way of compensation
or medical compensation expense paid or
to be paid by the employer under award
of the Industrial Commission.
d. Fourth to the payment of any amount
remaining to the employee or his
personal representative.
In disbursing any remaining amounts, section d. of the
statute unambiguously states that "any amount remaining" from a
judgment against a third party shall be disbursed "to the
employee or his personal representative." N.C. Gen. Stat. § 97-
10.2(f)(1)d.
Our Supreme Court has held that "[w]hen language used in [a]
statute is clear and unambiguous, [the Court] must refrain from
judicial construction and accord words undefined in the statute
their plain and definite meaning." Hieb v. Lowery, 344 N.C. 403,
409, 474 S.E.2d 323, 327 (1996) (citation omitted). The
Commission correctly determined that N.C. Gen. Stat. § 97-
10.2(f)(1) "does not specifically address interest, pro-rated or
otherwise," and that it could not "award such interest to
defendant-carrier absent some authority[.]" We agree that the
language of the statute does not provide for defendants tocollect a pro-rata share of the pre-judgment interest; the
language of the statute is clear and unambiguous and needs no
interpretation. Defendants' subrogation lien was fully satisfied
by plaintiff's payment of $44,378.40 to defendants from his third
party recovery. From the third party recovery, defendants were
paid the sum of $44,378.40, less one-third in attorney's fees and
$349 in expenses, by direction of the executive secretary of the
Commission. Pursuant to N.C. Gen. Stat. § 97-10.2(f)(1)c.,
defendants were reimbursed "for all benefits . . . paid or to be
paid by the employer under award of the Industrial Commission."
The statute simply does not state that defendants are entitled to
any pre-judgment interest.
[2]Defendants also argue that they are entitled to their
pro-rata share of plaintiff's pre-judgment interest award to
prevent double recovery by plaintiff. Our Court addressed a
similar issue in Absher v. Vannoy-Lankford Plumbing Co., 78 N.C.
App. 620, 337 S.E.2d 877 (1985), disc. review denied, 316 N.C.
730, 345 S.E.2d 385 (1986). In Absher, the employee filed an
action for personal injury in Superior Court and the defendant
filed an answer asserting that the employee's injuries were
caused by joint and concurring negligence of her employer. A
jury awarded plaintiff damages in the amount of $26,400.
Pursuant to N.C. Gen. Stat. § 97-10.2(e), the trial court"reduced the employee's award by $20,108.16, the amount which
plaintiff's employer would otherwise have been entitled to
receive by way of subrogation, and entered judgment awarding
plaintiff the principal sum of $6,291.84 plus 8% interest from
the date the action was instituted." Absher at 621, 337 S.E.2d
at 877. On appeal to our Court, we held that the employee was
not entitled to interest on the entire award where that award had
been reduced by the amount she had received in workers'
compensation benefits. We stated that:
Under G.S. 24-5, plaintiff is entitled
to receive interest on the portion of her
"money judgment" that represents
"compensatory damages." Because plaintiff had
already received a workers' compensation
award of $20,108.16, the judgment awarded
plaintiff $6291.84 in damages. The trial
court arrived at that figure by following the
requirements of G.S. 97-10.2(e). After the
reductions required by statute are made, it
can be determined what amount plaintiff is
actually entitled to receive. Interest should
be calculated based on the amount plaintiff
is actually entitled to receive.
Id. at 623-24, 337 S.E.2d at 879.
As stated in Absher, pre-judgment interest is to be
calculated based upon the amount of money plaintiff is entitled
to receive once an employer's subrogation lien for workers'
compensation payments has been satisfied. Absher at 624, 337
S.E.2d at 879. In the present case, plaintiff was awarded$95,000 by the jury and received $5,000 in pre-judgment interest.
Pursuant to N.C. Gen. Stat. § 97-10.2(f)(1), defendants received
$44,378.40 of plaintiff's third party recovery as reimbursement
for workers' compensation payments previously made. Following
the jury award, the Commission's executive secretary entered an
order in employee's workers' compensation action dividing the
pre-judgment interest between the employee and employer on a pro-
rata basis, with the employer receiving $1,566.67. A deputy
commissioner also determined the employer was entitled to receive
this amount. The Commission, citing Absher, held that plaintiff
was entitled to the entire pre-judgment interest on the amount he
actually recovered, which was $95,000 less the $44,378.40 paid to
defendants.
Neither Absher nor N.C. Gen. Stat. § 97-10.2(f)(1) direct
that defendants receive a share of plaintiff's pre-judgment
interest award. Disbursal of pre-judgment interest is not
specifically addressed in N.C. Gen. Stat. § 97-10.2(f)(1).
However, the plain language of N.C. Gen. Stat. § 97-10.2(f)(1)d.
unambiguously directs disbursal to plaintiff of "any amount
remaining." Therefore, defendants' other assignments of error
need not be addressed.
The opinion and award of the Industrial Commission is
affirmed. Affirmed.
Judges JOHN and WALKER concur.
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