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ATTORNEY FOR APPELLANT Robert S. O'Dell Carmel, Indiana

ATTORNEYS FOR APPELLEE W. F. Conour Jeffrey A. Hammond Timothy F. Devereux Indianapolis, Indiana

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Indiana Supreme Court
_________________________________ No. 29S02-0908-CV-378 THE TRAVELERS INDEMNITY COMPANY OF AMERICA, v. JERRY JARRELLS,

In the

FILED
May 27 2010, 1:36 pm
of the supreme court, court of appeals and tax court

CLERK

Appellant (Intervenor below),

Appellee (Plaintiff below). _________________________________

Appeal from the Hamilton County Superior Court. No. 29D03-0212-CT-943 The Honorable William J. Hughes, Judge _________________________________ On Petition to Transfer from the Indiana Court of Appeals, No. 29A02-0807-CV-669 _________________________________ May 27, 2010 Boehm, Justice. The Worker's Compensation Act provides that if an employee has received worker's compensation benefits and then recovers damages from a third party for the same injury, the employee is to reimburse the amount of benefits. The trial court held that under the instructions in this case the jury had already deducted the amount of worker's compensation payments from its award and there was therefore no recovery for injuries previously covered by worker's compensation. The Court of Appeals reversed, taking the view that the jury's award included amounts to be repaid. We agree that both interpretations are plausible but hold that the trial court's reading in this case should be affirmed. The employee is therefore not required to repay his employer's worker's compensation carrier after receiving a judgment against a third party

tortfeasor. However, in future trials where the trier of fact finds that the evidence establishes that the plaintiff has received payment for some of the damages from other sources, the award should include those damages, but only to the extent that the evidence establishes an obligation to repay. Facts and Procedural History Jerry Jarrells was seriously injured in September 2002 when an unbraced, ten-foot concrete block wall fell on him at a construction site. At the time of the injury, Jarrells was an employee of LeMaster Steel Erectors, Inc., a subcontractor of R.D.J. Custom Homes, Inc., the general contractor. Travelers Indemnity Company of America, LeMaster's worker's compensation insurer, paid worker's compensation benefits for the accident consisting of disability benefits of $21,025.91 and medical payments of $45,109.76, or a total of $66,135.67. Jarrells sued R.D.J. and Armando Delgadillo, another subcontractor, for the same injuries. He notified Travelers of the lawsuit, and Travelers responded with a notification of its statutory lien in the amount of $66,135.67, but did not intervene in the personal injury suit prior to trial. At the jury trial, Jarrells presented evidence of the worker's compensation payments and testified that he was aware that if he recovered in the lawsuit, he might have to reimburse Travelers for those payments. The jury was instructed as explained below and returned a verdict in favor of Jarrells, valuing his total damages at $925,000. The jury assigned 55% of the fault to R.D.J., 0% to Delgadillo, 30% to LeMaster, a non-party, and 15% to Jarrells, producing an award of 55% of $925,000, or $508,750. After Jarrells notified Travelers of the judgment, Travelers demanded reimbursement from Jarrells in the amount of $22,495.75, which it calculated by reducing its $66,135.67 expenditure to account for comparative fault and a share of Jarrells' attorney's fee. Jarrells responded that Travelers was not entitled to any of the judgment proceeds because the jury "already reduced the award by the amount of the work comp benefits and the award should not be reduced further after judgment." Travelers then moved to intervene in the trial court and reopen the case. The trial court permitted Travelers to intervene, and after some procedural skirmishing not relevant here, Travelers moved for summary judgment, seeking a declaration that it was entitled to a statutory 2

lien on the proceeds of Jarrells' judgment against R.D.J. The trial court denied that motion and granted summary judgment to Jarrells rejecting Travelers' claimed lien. The trial court ruled that Travelers' requested relief would impose a double setoff on the recovery because the jury had already deducted the worker's compensation benefits from the gross award. For this proposition, the court cited Pendleton v. Aguilar, 827 N.E.2d 614, 621 (Ind. Ct. App. 2005), trans. denied. Travelers appealed, and in three separate opinions the Court of Appeals reversed with instructions to enter judgment for Travelers and determine the value of its lien. Travelers Indem. Co. of Am. v. Jarrells, 906 N.E.2d 912, 919 (Ind. Ct. App. 2009). We granted transfer. Standard of Review The trial court denied Travelers' motion for summary judgment and, on its own motion, granted summary judgment for Jarrells. When reviewing summary judgment orders, we use the same standard of review used by the trial court: summary judgment is appropriate only when the evidence shows no genuine issue of material fact and the moving party is entitled to a judgment as a matter of law. Ind. Trial Rule 56(C); Kovach v. Caligor Midwest, 913 N.E.2d 193, 197 (Ind. 2009). "We construe all factual inferences in the nonmoving party's favor and resolve all doubts as to the existence of a material issue against the moving party." Kovach, 913 N.E.2d at 197. I. Worker's Compensation Payments and the Collateral Source Statute The common law collateral source rule prohibited presentation of evidence that a plaintiff in a personal injury action had received payments from sources other than the defendant. See, e.g., Pendleton, 827 N.E.2d at 620. In 1986 Indiana enacted the Collateral Source Statute, Indiana Code

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