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ATTORNEY FOR APPELLANT Paul A. Brizendine Floyds Knobs, Indiana

ATTORNEYS FOR APPELLEE Timothy W. Wiseman Lynne D. Lidke Indianapolis, Indiana ATTORNEYS FOR AMICUS CURIAE DEFENSE TRIAL COUNSEL OF INDIANA Rori L. Goldman Ty M. Craver Indianapolis, Indiana James D. Johnson Evansville, Indiana

ATTORNEYS FOR AMICUS CURIAE INDIANA TRIAL LAWYERS ASSOCIATION Trevor J. Crossen Stephen M. Wagner Carmel, Indiana

______________________________________________________________________________

In the

FILED
of the supreme court, court of appeals and tax court

Indiana Supreme Court
_________________________________ No. 93S02-0906-EX-276 JIMMIE C. SMITH, v.

Apr 15 2010, 2:07 pm

CLERK

Appellant (Plaintiff below),

CHAMPION TRUCKING COMPANY, INC. Appellee (Defendant below). _________________________________ Appeal from the Worker's Compensation Board of Indiana, Application No. C-172793 The Honorable Linda Hamilton, Chairperson _________________________________ On Petition to Transfer from the Indiana Court of Appeals, No. 93A02-0808-EX-701 _________________________________ April 15, 2010 Boehm, Justice. We hold that under Indiana's Worker's Compensation Act, an employer's worker's compensation liability for an employee's benefits terminates if the employee settles a claim against a third party for the same injury without first obtaining the employer's consent to the settlement. The Board's decision dismissing Smith's Application for Adjustment of Claim is affirmed.

Facts and Procedural History In August 2003, Jimmie Smith, a truck driver employed by Champion Trucking Co., was injured in an Ohio accident with a third-party motorist. Smith's initial medical expenses in the amount of $4,342.42 were paid by Champion's worker's compensation coverage. He continued to work for a year after the accident, but left Champion's employ in August 2004.1 According to Smith, he continued to suffer pain related to the accident, and in January 2005 he applied for an adjustment of his worker's compensation claim, asserting a permanent impairment and also seeking compensation for additional medical expenses. Meanwhile, Smith retained counsel to explore the possibility of recovering from Jeremy Bittner, the third party motorist. At some point, Smith's worker's compensation attorney

notified Champion of his intention to sue Bittner, and on July 6, 2005, Champion responded by notifying Smith's attorney in the third-party matter that Champion was entitled to a lien on any settlement proceeds in the amount of Champion's worker's compensation payments to Smith. Smith settled with Bittner for $10,342 on July 22, 2005. According to Smith, he accepted the settlement because, although Bittner was 95% at fault for the accident, he had only $12,000 in liability insurance. The settlement agreement released Bittner from liability for the accident. Smith does not claim that Champion was notified of the time and place of the settlement negotiations, or had any role in the negotiation. Smith's attorney paid 75% of the medical lien amount ($3,256.74) to Champion and retained 25% as the attorneys' fee authorized by the worker's compensation statute. In August 2005, less than one month after the settlement, a neurosurgeon evaluated Smith as having suffered a 19% potential permanent impairment, which would warrant approximately $26,500 in additional worker's compensation benefits. Champion moved to dismiss Smith's application for adjustment of claim, and ultimately the Worker's Compensation Board ruled in July 2008 that Smith's settlement with Bittner terminated Champion's liability pursuant to an "absolute bar" provision of the statute described below. The Court of Appeals reversed, holding that the provision in question did not apply to Smith's claim because his worker's compensation case had not yet been resolved. Smith v. Champion Trucking Co., 901 N.E.2d 620, 624 (Ind. Ct. App. 2009). Further, the court noted,

1

The parties dispute whether Smith quit or was fired.

2

Champion was aware of both the settlement negotiations before they were concluded and also the pending application for adjustment of claim and Champion was therefore free to challenge the amount received from Bittner as inadequate, but failed to do so. Id. at 623. We granted transfer. Standard of Review The Board's factual findings are to be affirmed if they are supported by substantial evidence. Walker v. State, 694 N.E.2d 258, 266 (Ind. 1998). "To the extent the issue involves a conclusion of law based on undisputed facts, it is reviewed de novo." DePuy, Inc. v. Farmer, 847 N.E.2d 160, 164 (Ind. 2006). Here, the Board's ruling rested largely on undisputed facts and the question is one of statutory interpretation to be reviewed de novo. Porter Dev., LLC v. First Nat'l Bank of Valparaiso, 866 N.E.2d 775, 778 (Ind. 2007). Settlements with Third Parties Under Indiana's Worker's Compensation Act Section 13 of Indiana's Worker's Compensation Act (WCA), titled "Claims Against Third Persons; Subrogation; Procedures," contains a number of potentially relevant provisions.2 Smith argues that none of the provisions of Section 13 bars his claim. Champion responds that this case is governed by language from Paragraph 1, which provides that if an injured employee has received worker's compensation and later settles a claim against a responsible third party, "then from the amount received by the employee," the employer is to be reimbursed for its expenditures, "and the liability of the employer or the employer's compensation insurance carrier to pay further compensation or other expenses shall thereupon terminate." Ind. Code

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