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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Berger v. Wien Air Alaska (1/20/00) sp-5231

Berger v. Wien Air Alaska (1/20/00) sp-5231

     Notice:  This opinion is subject to correction before publication in
the Pacific Reporter.  Readers are requested to bring errors to the attention of
the Clerk of the Appellate Courts, 303 K Street, Anchorage, Alaska 99501, phone
(907) 264-0608, fax (907) 264-0878.



             THE SUPREME COURT OF THE STATE OF ALASKA
                                 

MARSHA BERGER,                )
                              )    Supreme Court No. S-8922
             Appellant,       )
                              )    Superior Court No.
     v.                       )    3AN-97-8502 CI
                              )
WIEN AIR ALASKA and           )    O P I N I O N
UNDERWRITERS AT LLOYDS,       )
                              )    [No. 5231 - January 21, 2000]
             Appellees.       )
______________________________)




          Appeal from the Superior Court of the State of
Alaska, Third Judicial District, Anchorage,
                 Sigurd E. Murphy, Judge pro tem.


          Appearances: Chancy Croft, Chancy Croft Law
Office, Anchorage, for Appellant.  Patricia L. Zobel and John D.
Harjehausen, DeLisio, Moran, Geraghty & Zobel, Anchorage, for
Appellees.


          Before:  Matthews, Chief Justice, Eastaugh,
Fabe, Bryner, and Carpeneti, Justices.  


          FABE, Justice.


I.   INTRODUCTION
          In this appeal we must determine whether medical expenses
incurred by an employee but paid for by a private insurer or other
collateral sources may offset the employer's credit under AS
23.30.015(g).  The Workers' Compensation Board determined that
because collateral sources paid Marsha Berger's medical expenses,
she could not use those expenses to reduce Wien Air Alaska's credit
arising from her third-party tort award.  Because we hold that AS
23.30.015(g) requires an offset for any medical expenses incurred
by an employee that would have been payable by the employer, we
reverse the Board's decision and remand for a determination of the
amount by which Wien's credit should be reduced.
II.  FACTS AND PROCEEDINGS
          Marsha Berger, a flight attendant for Wien Air Alaska,
suffered serious injuries in an airplane crash on August 30, 1975.
In January 1981 Berger settled her workers' compensation claim
against Wien and its insurer, Underwriters at Lloyds (Lloyds).  She
received $165,000 for her disability benefits, costs, and
attorney's fees.  Under Alaska's Workers' Compensation Act,
however, Wien and Lloyds (collectively Wien) remained liable for
Berger's future medical expenses arising from her 1975 injury. [Fn.
1]
          Berger later sued the State of Alaska for negligence with
respect to the crash.  Pursuant to AS 23.30.015(g), Wien held a
workers' compensation lien on any damages Berger recovered in her
suit.  In May 1983 Berger and Wien entered into an agreement by
which Wien waived its lien against the settlement recovery in
exchange for a $174,705.35 credit for any future medical expenses
that Berger should incur.
          Since that time, Berger has experienced further back
problems and has undergone extensive treatment.  Her treatment has
included "health care for dressing, personal hygiene, laundry,
cooking, housework, transportation to emergency rooms and to
physicians' offices for appointments." Berger's husband has also
provided her home health care since 1984.  Collateral sources --
Berger's private insurer, her husband's private insurer, and the
Veterans Administration (VA) -- covered most of her medical
expenses.  Berger discharged her remaining medical debts in
bankruptcy.
          Berger's injuries worsened in January 1994, and because
she had already incurred over $174,000 in medical expenses, she
sought further workers' compensation benefits from Wien.  Wien
denied Berger's claims, in part because she did not demonstrate
that the previous medical expenses had exhausted Wien's credit. 
Wien argued that the credit remained undiminished since collateral
sources -- not Berger herself -- paid the medical expenses. 
Berger, on the other hand, argued that her medical expenses
otherwise payable by Wien should offset Wien's credit, even though
collateral sources paid those bills.  Both parties agreed to ask
the Board to resolve whether the payment of such medical expenses
by collateral sources reduces an employer's credit for those
expenses under AS 23.30.015(g).
          The Board determined that "the employee's recovery from
collateral sources cannot be used to reduce the defendants'
credit." The Board reasoned that workers cannot generally recover
payments made by their private insurers absent a subrogation
agreement.  The Board also viewed Berger's position as an attempt
to receive a double recovery, which is generally disfavored under
workers' compensation law.  The superior court affirmed the Board's
decision.  Berger appealed.
III. DISCUSSION
     A.   Standard of Review
          When a superior court acts as an intermediate court of
appeal, this court does not give deference to its decision. [Fn. 2]
Rather, "we independently [and directly] scrutinize the merits of
the administrative determination."[Fn. 3]  Specifically, "this
court reviews the Board's reading of AS 23.30 under the independent
judgment standard."[Fn. 4]  Because the Board's interpretation of
AS 23.30.015(g) presents a question of law, this court will "adopt
the rule of law that is most persuasive in light of precedent,
reason and policy."[Fn. 5]   
     B.   Under AS 23.30.015(g), All Medical Expenses "Payable"by
Wien Reduce Its Credit, Regardless of Berger's Collateral Sources.
     
          1.   The language of the statute requires a credit
reduction by any "amount payable"by the employer.
          When an employee recovers on a third-party claim, the
employee must reimburse the employer for amounts it has already
paid in conjunction with the work-related injury. [Fn. 6]  And when
the employee receives a tort recovery that exceeds the amounts paid
by the employer, the employer receives a credit against which
future medical expenses are offset -- provided those expenses are
in fact payable by the employer. [Fn. 7]  Moreover, "[i]f the
excess is not sufficient to cover future benefits, the employer
will again be liable."[Fn. 8]
          The language of AS 23.30.015(g) requires a credit
reduction by any "amount payable"by the employer, and it does not
preclude such an offset when collateral sources pay for the medical
benefits:
          If the employee or the employee's
representative recovers damages from the third person, the employee
or representative shall promptly pay to the employer the total
amounts paid by the employer under (e)(1)(A) - (C) of this section
insofar as the recovery is sufficient after deducting all
litigation costs and expenses.  Any excess recovery by the employee
or representative shall be credited against any amount payable by
the employer thereafter.

(Emphasis added.)  Thus, when an employer would be otherwise
responsible under the workers' compensation statute for an
employee's medical expenses, the employer's credit decreases.  This
is true regardless of how those bills were paid or discharged.
          Under Alaska's Workers' Compensation Act, employers are
"directly liable to health-care providers for treatment of work-
related injuries."[Fn. 9]  Thus, Wien is liable for the medical
bills that are related to Berger's work-related injuries, and those
bills constitute "amounts payable"under the statute.  The statute
requires that Wien's credit accordingly decrease by the amount for
which Wien would have been responsible under workers' compensation
law.
          2.   The language and purpose of the statute support a
credit offset by the amounts payable by Wien.

          We have observed that "[t]he plainer the statutory
language is, the more convincing the evidence of contrary
legislative purpose or intent must be."[Fn. 10]  Here, the
language of AS 23.30.015(g) is unambiguous.  The statute states
that amounts "payable"by the employer offset the credit; it does
not refer to the amounts "paid"by the employee.  By focusing on
the amounts payable by the employer, the legislature apparently
intended a credit offset for incurred expenses when the employer
would be liable for those medical expenses under the workers'
compensation scheme.    
          Even if the statute were not facially clear, however, we
have held that the Workers' Compensation Act "should be liberally
construed in favor of the employee in accordance with its
humanitarian purposes."[Fn. 11]  Thus, any doubt about whether the
expenses paid by collateral sources or discharged in bankruptcy
should offset Wien's credit "should be resolved in [Berger's]
favor."[Fn. 12] 
          Moreover, when we interpret a statute, we "look to the
language of the statute construed in light of the purpose of its
enactment."[Fn. 13]  We have already determined that the "clear
purpose"of AS 23.30.015 is "to allow employees to seek damages
from third-party tortfeasors without jeopardizing their
compensation while, at the same time, allowing employers to share
in damage awards."[Fn. 14]  Offsetting Wien's credit without
regard to who paid Berger's medical expenses satisfies this
purpose.
          The statute's repayment provisions enabled Berger to sue
and recover from third-party tortfeasors while still receiving
workers' compensation.  Thus, she was able to "seek damages from
third-party tortfeasors without jeopardizing [her] compensation."
[Fn. 15]  But more importantly, the $174,705 credit has allowed
Wien to share in Berger's recovery.  Wien directly benefits by the
amount of the credit, because the credit saves Wien the first
$174,705 of medical expenses for which it would otherwise be
liable.  And our decision to offset the credit in no way lessens
Wien's share of Berger's recovery.
          Indeed, refusing a credit offset for amounts paid by
collateral sources would allow Wien not only to "share"in Berger's
recovery, but to receive a windfall.  Wien has already recovered a
$174,705 credit from Berger's tort award, but the Board's decision
would have Wien also benefit from Berger's collateral sources. [Fn.
16]  That is, under the Board's refusal to offset Wien's credit,
both the tort award and Berger's collateral sources would alleviate
Wien's obligation to pay workers' compensation.  Wien should not
receive a windfall simply because Berger was able to obtain care
through collateral sources, such as her husband's private insurer
and the VA hospital. [Fn. 17]
          This court has articulated a policy against an employer's
double recovery. [Fn. 18]  We have held that employers and carriers
must share in the costs of recovering an employee's tort award to
avoid "unjust enrichment."[Fn. 19]  Otherwise, employers and
carriers would benefit from both insurance premiums and the third-
party sources. [Fn. 20]  Employers and carriers should not be
"unjustly enriched at the expense of the employee."[Fn. 21]  Under
this reasoning, Wien should not benefit from both Berger's third-
party tort award and Berger's collateral sources.  The credit
exists to benefit Wien by eliminating the first $174,705 of Wien's
liability.  But Berger's other sources of payment -- her private
insurer, her husband's private insurer, the VA hospital, and her
discharge in bankruptcy -- do not exist to relieve Wien of its
statutory duty to compensate Berger for the expenses incurred in
the treatment of her job-related injury. [Fn. 22]    
          3.   The Fifth Circuit has interpreted an analogous
federal statute to offset the employer's credit where collateral
sources pay the employee's medical expenses.

          The Fifth Circuit faced a similar case [Fn. 23] under the
federal Longshore and Harbor Workers' Compensation Act, [Fn. 24]
the statute upon which AS 23.30.015 was modeled. [Fn. 25]  In
Texports Stevedores Co. v. Director, Office of Workers'
Compensation Programs, when the employee received a third-party
recovery, the employer maintained that only the medical expenses
actually paid by the employee could offset its credit under the
Longshore and Harbor Workers' Act. [Fn. 26]  The employee paid only
a fraction of his large medical expenses out of his own pocket;
collateral sources paid the rest. [Fn. 27]  The court concluded
that "the fact that the worker's medical expenses were paid by a
third party insurer does not deprive him of the right to recover
the value of the medical services from his employer's workmen's
compensation insurer."[Fn. 28]  The Fifth Circuit therefore held
that the plaintiff's medical expenses -- although paid by
collateral sources -- could be used to offset the employer's
credit. [Fn. 29]
          Similarly here, the fact that collateral sources paid
Berger's medical expenses should not deprive her of the right to
recover the value of workers' compensation.  Both the employer in
Texports and Wien will have benefitted from the third-party
recovery for the amounts they would otherwise be obligated to pay. 
Hence, as in Texports, the "full amount"of Berger's work-related
medical expenses "may be used to exhaust [her] tort recovery
credit."[Fn. 30]  Indeed, if we did not require a reduction in
Wien's credit, Berger would bear "the entire burden of the
litigation."[Fn. 31]
IV.  SCOPE OF REMAND
          Because we hold that an employer's credit is offset by
any medical expenses that are actually payable by the employer, we
must remand this action to the Board.  Wien contends that certain
of Berger's medical expenses did not result from the plane accident
or are otherwise not "amounts payable"under AS 23.30.015(g). 
Thus, on remand, the Board should determine which expenses --
either paid by collateral sources or discharged in bankruptcy --
Wien was otherwise responsible for under AS 23.30.015(g).  As we
have concluded, any amounts payable by Wien should offset the
credit, regardless of whether collateral sources in fact paid those
expenses.
V.   CONCLUSION
          We hold that Wien's credit is offset by any medical
payments that relate to the injuries Berger sustained in the plane
accident and that are otherwise payable by Wien, even if collateral
sources paid those expenses.  Alaska Statute 23.30.015(g) states
that the employer's credit shall be reduced by any "amount payable"
by the employer, not by any amount "actually paid"by the employee. 
The language of the statute unambiguously requires an offset, and
there is no contrary language to suggest otherwise.  The policy
behind this statute -- to allow employers to share in employees'
damage awards -- also supports our conclusion.  And denying an
offset would allow Wien a double recovery -- the $175,000 credit
plus the amounts the collateral sources have paid.  We therefore
REVERSE the Board's decision not to offset Wien's credit.  We
REMAND so that the Board can determine which medical expenses are
"payable"by Wien and reduce the credit accordingly.


                            FOOTNOTES


Footnote 1:

     See AS 23.30.095.


Footnote 2:

     See Tesoro Alaska Petroleum Co. v. Kenai Pipe Line Co., 746
P.2d 896, 903 (Alaska 1987).


Footnote 3:

     Id.


Footnote 4:

     Rydwell v. Anchorage Sch. Dist., 864 P.2d 526, 528 (Alaska
1993).


Footnote 5:

     Williams v. Utility Equip., Inc., 837 P.2d 1112, 1117 (Alaska
1992) (quoting Guin v. Ha, 591 P.2d 1281, 1284 n.6 (Alaska 1979)).


Footnote 6:

     See AS 23.30.015(g).


Footnote 7:

     See id.


Footnote 8:

     Stone v. Fluid Air Components of Alaska, ___ P.2d ___, 1999 WL
1025231 at *3 (Alaska, November 12, 1999).


Footnote 9:

     Sherrod v. Municipality of Anchorage, 803 P.2d 874, 875
(Alaska 1990) (citing AS 23.30.030).   


Footnote 10:

     Muller v. BP Exploration (Alaska), Inc., 923 P.2d 783, 788
(Alaska 1996).


Footnote 11:

     Forest v. Safeway Stores, Inc., 830 P.2d 778, 781 (Alaska
1992).  This rule of construction applies to injuries sustained
before July 1, 1988.  See id., 830 P.2d at 781 n.7.


Footnote 12:

     Seward Marine Servs., Inc. v. Anderson, 643 P.2d 493, 497
(Alaska 1982).


Footnote 13:

     Konecky v. Camco Wireline, Inc., 920 P.2d 277, 281 (Alaska
1996) (citations omitted).


Footnote 14:

     Forest, 830 P.2d at 781.


Footnote 15:

     Id.


Footnote 16:

     See Restatement of Restitution sec. 1 cmt. (b) (1937) (stating
that a person confers a "benefit"on another "not only where he
adds to the property of another, but also where he saves the other
from expense or loss").


Footnote 17:

     See Texas Employers' Ins. Ass'n v. United States, 558 F.2d
766, 768-69 (5th Cir. 1977) (holding that an employee was entitled
to recover from his workers' compensation carrier the costs of
medical care furnished by Veterans Administration, and stating that
a "contrary holding would be a windfall to the insurance carrier
merely because the employee was a veteran able to obtain care at a
V.A. hospital").


Footnote 18:

     See Cooper v. Argonaut Ins. Cos., 556 P.2d 525, 527 (Alaska
1976); Stone v. Fluid Air Components of Alaska, ___ P.2d ___, 1999
WL 1025231 at *2 (Alaska, November 12, 1999).


Footnote 19:

     Cooper, 556 P.2d at 527. 


Footnote 20:

     See id. (stating that the carrier would receive unjust
enrichment if it could take the benefit of both the employer's
workers' compensation premium and the employee's litigation
effort).


Footnote 21:

     Id. 


Footnote 22:

     See, e.g., Texas Employers' Ins., 558 F.2d at 768-69 (stating
that collateral sources should not be burdened with the costs of a
job-related injury, and that those costs are more appropriately
borne by the employer). 


Footnote 23:

     See Texports Stevedores Co. v. Director, Office of Workers'
Compensation Programs, 931 F.2d 331 (5th Cir. 1991).


Footnote 24:

     33 U.S.C. sec.sec. 901 et seq. (1984).


Footnote 25:

     See Cooper, 556 P.2d 525, 526 n.7 (Alaska 1976) (stating that
the "purpose was to bring the Alaska Workmen's Compensation Act
into line with the federal Longshoremen's and Harbor Workers'
Compensation Act").


Footnote 26:

     931 F.2d at 334.


Footnote 27:

     See id.


Footnote 28:

     Id. (quoting 2 Arthur Larson, The Law of Workmen's
Compensation sec. 61.12(l), at 10-852 (1989)) (internal brackets
omitted).


Footnote 29:

     See id.


Footnote 30:

     Id.


Footnote 31:

     Cooper, 556 P.2d at 527 (noting that the legislature did not
intend the employer's compensation carrier "to secure a windfall"
at the employee's expense, and that the employer or compensation
carrier should be required to "pay its pro rata share"to recover
the third-party tort award).