Vaeao v. Samoa Air, Inc.
Vaeao v. Samoa Air, Inc.
Opinion of the Court
FACTS
Taumata and Potoa’e, on the other hand, argue that the insurer is not subrogated to their rights because they had not accepted "compensation under an award in a compensation order," as provided for under A.S.C.A. § 32.0669(a).
DISCUSSION
I. Subrogation
The Act was essentially modeled on the federal Longshoremen and Harbor Workers Compensation Act (LHWCA), 33 U.S.C. §§ 901 et seq.
The leading case is The Etna. 138 F.2d 37 (3d Cir. 1943). In that case, as in the present case, the employee recovered damages from a third party after receiving LHWCA benefits from his employer. The plaintiff in The Etna, again like the present plaintiffs, submitted that the employer had no right of subrogation because no compensation was paid "under an award in a compensation order" (quoting 33 U.S.C. § 933; 33 U.S.C. §933(a) and (b) from the LHWCA counterpart of A.S.C.A. § 32.0669(a)).
The court held that the equitable right of subrogation was not statutorily precluded by the enactment of the assignment provision, 33 U.S.C. § 933(b). The court observed that:
the right to subrogation . . . under equitable principles, attaches where one, not acting officiously, pays money on account of a legal obligation resting upon him for the imposition whereof another is held pecuniarily responsible.
The Etna, supra, at 39. In light of the legal obligation imposed upon the employer by 33 U.S.C. § 914(a) — the LHWCA counterpart of A.S.C.A. § 32.0660(a), whereby the employer is required to pay compensation promptly without an award unless it controverts liability — the court concluded that equitable subrogation therefore applied to allow
The Etna court further held that the assignment provision allows the employee to recover under either the LHWCA or a third- party action at common law, but it does not provide the option of recovering under both: this, the court stated, was an "implicit recognition that the employer has a right to reimbursement for his outlay under the Compensation Act out of his employee’s adequate recovery from a third person in all cases," regardless of any "award in a compensation order." The Etna, supra, at 40. Thus, the employee does not receive a "double recovery" in the way of common-law damages plus worker’s compensation, which was designed to replace common-law damages.
Although Congress has never added an explicit subrogation right for the employer when the employee sues, the Etna interpretation, almost fifty years old, persists today in the federal courts. "The courts, at least since the Etna, 138 F.2d 37 (3d Cir. 1943), have uniformly held . . . that the employer has a subrogation right to be reimbursed from the worker’s net recovery from a third party for the full amount of compensation benefits already paid." Peters v. North River Ins. Co., 764 F.2d 306, 312 (5th Cir. 1985). The United States Supreme Court, while noting that Congress has never provided an explicit reimbursement right when the employee recovers from the third party, recognized that lower courts had correctly understood that Congress had not contemplated "double recovery" by the employee and that the employer therefore did not lose the right to reimbursement by making compensation payments without an award in a compensation order. Bloomer v. Liberty Mutual Ins. Co., 445 U.S. 74, 79 (1980). The Bloomer Court, like the Etna court, approved this reimbursement whether the recovery was from a judgment or a settlement. Id. at 75, 78.
The cases have in addition pointed to the legislative history of the LHWCA; "'an employer must be reimbursed for any compensation paid to the employee out of the net proceeds of the recovery. ’" Id. at 81 (quoting S. Rep. No. 428, 86th Cong., 1st Sess. 2 (1959)). Thus, both the courts and the legislature have recognized that, under the LHWCA, the employer is entitled to be reimbursed from the net recovery from a third party.
The federal interpretation, adopted by the courts and accepted by Congress, is compelling. First, the language of 33 U.S.C. § 933(a), (b) is virtually the language employed by the Fono in the enactment of
II. Litigation Expenses
In Bloomer v. Liberty Mutual Ins. Co., supra, the Supreme Court settled a split in the Circuits
The Court noted that, although the LHWCA does not expressly provide for the distribution of amounts recovered by a suit brought by the employee, if the employer had sued the third party, it would be entitled to retain the reasonable costs of the suit (including attorney’s fees) under 33 U.S.C. § 933(e). In its view,
[t]he unambiguous provision that the’[employer] shall be reimbursed for all of his legal expenses if he obtains the recovery does . . . speak with considerable force against requiring him to bear a part of the [employee’s] costs when the [employee] recovers on his own.
¡d at 78.
The Court was further concerned that by allowing an employee to deduct a portion of his attorney’s fees from the employer’s reimbursement, the employee would in effect be permitted to recover,
The same goals motivating the LHWCA are embodied in the Act, and we see no reason for not following the federal experience with the LHWCA. The employee should not receive a windfall, in the form of partial payment of litigation expenses, because of the existence of the workmen’s compensation statute.
III. Conclusion
On the foregoing, we conclude that the insurer has an equitable subrogation right to be reimbursed from the movant employees’ net recovery from Samoa Air for the full amount of compensation benefits paid without deduction for a "proportionate" share of the litigation expenses. Continental Insurance Co’s, motion for summary judgment is granted. Cross motions by plaintiffs Taumata and Potoa’e are denied. Judgment will enter declaring that the sum of $75,961.97 be fixed as intervenor Continental’s compensation lien on the proceeds of plaintiff Taumata’s settlement with defendant Samoa Air, and the sum of $1,329.92 be fixed as Continental’s compensation lien on the proceeds of plaintiff Potoa’e’s settlement with defendant Samoa Air.
It is so ordered.
A.S.C \. § 32.0660(a) (emphasis added) provides:
Compensation [under the Act] must be paid periodically, promptly and directly to the individual entitled thereto, without an award, except where liability to pay compensation is controverted by the employer.
A.S.C.A § 32.0669(a) (emphasis added) reads:
If an individual entitled to such compensation determines that some individual other than the employer or an individual or individuals in his employ are liable in damages, he need not elect whether to receive such compensation or to recover damages against such third person, but an acceptance of compensation under an award in a compensation order operates as an assignment to the employer of all rights of the individual entitled to compensation to recover damage against such third person within six months after such award.
See Haleck v. Scanlan, 4 A.S.R. 998, 1002 (1975).
See Annotation, Longshoremen — Attorney’s Fees. 46 A.L.R. Fed. 692, 697 (1980).
The "common fund" doctrine provides that a third person benefiting from litigation instituted by another may be required to bear a portion of the expenses of suit, including attorney’s fees. Bloomer, supra, at 77.
Case-law data current through December 31, 2025. Source: CourtListener bulk data.