Amy Alexander, et al. v. Nam Duong and Sentinel Insurance Company, Case No. 120,320 (Okla. App. December 2, 2022)
Oklahoma’s workers’ compensation laws have endured a long and tortured constitutional tug-of-war between trial lawyers and business advocates/subrogation professionals. In 2011, Oklahoma completely overhauled its workers’ compensation laws, entitling the new legislation the “Workers’ Compensation Code.”[1] Sections of the new Code were challenged and were found by the courts to be unconstitutional.
In 2013, the Oklahoma legislature passed a major workers’ compensation overhaul, known as the “Opt-Out Act” and codified in an entirely new section of the statutes.[2] The Act repealed the 2011 Workers’ Compensation Code, replacing it with the Administrative Workers’ Compensation Act (Administrative Act).[3] It also renamed the Workers’ Compensation Court as the Court of Existing Claims and created a new administrative agency, the Workers’ Compensation Commission, to decide claims for injuries occurring on or after February 1, 2014.[4] The legislation created a new Title 85A of the Oklahoma Workers’ Compensation Act to operate in parallel with existing Title 85, and once again reforming that state’s workers’ compensation laws – including the laws addressing subrogation.[5] It became effective as of February 1, 2014.
On February 26, 2016, the Oklahoma Workers’ Compensation Commission, ruling on an appeal under the provisions of the Opt-Out Act, found the Act to be unconstitutional and “not enforceable.”[6] In Vasquez v. Dillards, Inc., the Commission determined that the Opt-Out Act established a dual system under which injured workers are not treated equally. As a result, the Commission ruled that “the Oklahoma Option is invalid under the Oklahoma Constitution.”[7] On April 19, 2016, the Supreme Court issued a highly-anticipated ruling which held that the state’s Workers’ Compensation Commission did have the power to determine whether a provision of the state’s workers’ compensation law was unconstitutional.[8] This decision flowed from a February 26, 2016 ruling by the Oklahoma Workers’ Compensation Commission determining that the it did not have the power to determine the constitutionality of the Oklahoma opt-out portion of the 2013 amendments to the Workers’ Compensation Act. In a 7 to 2 decision, the Oklahoma Supreme Court simply ruled that the Oklahoma Workers’ Compensation Commission does have the power to determine whether a provision of the Act is unconstitutional and remanded the case back to the Commission.
On August 7, 2019, a federal district court held 85A O.S. § 43 was constitutional under Article 23, § 7 of the Oklahoma Constitution.[9] There have also been more recent challenges to the constitutionality of the new Act based on the Oklahoma Constitution and the ability of a workers’ compensation carrier to seek subrogation and/or reimbursement of workers’ compensation death benefits in Oklahoma.
Wrongful Death and Survival Actions
Injuries and Deaths Prior to February 1, 2014. Prior to the overhaul of the Workers’ Compensation Act in 2011, § 44 was the workers’ compensation subrogation statute.[10] Section 44 did not allow for subrogation or reimbursement for death/indemnity benefits paid to beneficiaries of an employee killed in the course and scope of employment.[11] It specifically provided:
(b) Notwithstanding subsection (d) of this section, the employer or his insurance carrier shall not have the right of subrogation to recover money paid by the employer or his insurance carrier for death claims or death benefits under the Workers’ Compensation Act from third persons, with all common law rights against other than the employer and his employees preserved and to be in those persons who could have had such rights had there been no death claim or death benefits under the Workers’ Compensation Act.[12]
The right to subrogate for death benefits was not authorized because it was viewed as in conflict with Oklahoma Constitution, Article 23 § 7.[13] Section 348(C) merely provided for the employer or employer’s workers’ compensation insurance carrier’s subrogation rights to recover the expenses of the employee’s last illness or accident to the injured worker’s claims against negligent third parties.[14]
Injuries and Deaths after February 1, 2014. The new § 43 specifically provides for and allows for both subrogation and reimbursement rights in a case involving the death of an employee as well as the right of a workers’ compensation carrier to file a subrogated wrongful death action in order to recover the death benefits it has paid. Section 348(B)—applicable only to pre-February 1, 2014, deaths—provides as follows:
(B) The employer or employer’s insurance carrier shall have the right of subrogation to recover money paid by the employer or employer’s insurance carrier for death claims or death benefits under the Workers’ Compensation Code from third persons, with all common law rights against other than the employer and his or her employees preserved and to be in those persons who would have had such rights had there been no death claim or death benefits under the Workers’ Compensation Code.[15]
One of the reasons for the overhaul of the workers’ compensation system was specifically to give employers and carriers this right of subrogation and reimbursement in wrongful death cases. However, there have been several constitutional challenges to the new law based on Article 23, Section 7 of the Oklahoma Constitution, which reads:
The right of action to recover damages for injuries resulting in death shall never be abrogated, and the amount recoverable shall not be subject to any statutory limitation, provided however, that the Legislature under the Workers’ Compensation Law for death resulting from injuries suffered in employment covered by such law, in which case the compensation so provided shall be exclusive, and the Legislature may enact statutory limits on the amount recoverable in civil actions or claims against the state or any of its political subdivisions.[16]
The following cases have challenged the ability of a workers’ compensation carrier to seek subrogation and/or reimbursement of workers’ compensation death benefits in Oklahoma:
- Rogers v. Sims and UPS. On April 5, 2016, a district judge in Grady County (Chickasha) declared unconstitutional the portion of § 43 that authorizes subrogation in a work-related death claim.[17] District Judge Richard Van Dyck listened to lengthy oral arguments before issuing his decision. The plaintiff’s husband, a UPS driver, was killed because of the negligence of a third party in a truck accident in October of 2014. UPS paid the widow and child death benefits and sought full recovery of its payment from the settlement of the third-party case. Judge Van Dyck ruled from the bench that Article 23, § 7 of the Oklahoma Constitution prohibits the legislature from limiting the recovery in a wrongful death action against a negligent third party except in cases involving the state or other units of government covered by the Oklahoma Tort Claims Act. The judge specifically ruled that any subrogation right granted employers or their insurance carriers by § 43 is “in violation of Article 23, § 7 of the state constitution.” The Constitution says that you cannot place a limit on wrongful death damages, and he concluded that subrogation is an effort by UPS to take the money back from the family. If upheld, this would put Oklahoma back where they were before the new Act with regard to subrogation of death benefits. UPS did not appeal the decision to the Oklahoma Supreme Court.
- Amy Alexander, et al. Nam Duong and Sentinel Insurance Company. On March 11, 2022, the trial court in this case also ruled in favor of the defendant, holding that § 43 was unconstitutional in so far as it allowed the subrogation of wrongful death benefits by the subrogated workers’ compensation carrier.[18] The plaintiff has indicated that she intends to appeal to the Oklahoma Supreme Court.
- Alondra Solis v. Travelers Casualty Insurance Company. On August 6, 2020, another district court in Oklahoma similarly ruled that there can be no subrogation of workers’ compensation benefits in death cases because of the Oklahoma Constitution.[19] It held that 85A O.S. §43 is unconstitutional because it “did, in cases involving the death of an employee while acting in the scope of employment, exactly what Oklahoma’s Constitution, Article 23, section 7 forbids.” In that case, however, the workers’ compensation carrier, Farmington Casualty Company, appealed to the Oklahoma Supreme Court.[20]
- Wendy Goodner, et al. Helena Agri-Enterprises, et al. v. Phoenix Counseling Services, Ottawa County, CJ-2022-00044 (Okla. District Court 2022).
- Akins v. C&J Energy Services, Inc. On August 7, 2019, a federal district court held 85A O.S. § 43 was constitutional under Article 23, § 7 of the Oklahoma Constitution.[21] It quoted language from Updike Advertising System v. State Industrial Commission, a 1955 Oklahoma Supreme Court ruling holding that “the right of subrogation against a third-party tortfeasor never existed in favor of an employer of insurance carrier.”[22] After comparing the workers’ compensation subrogation statutes of other states, the judge ruled that § 43 was not unconstitutional—noting that not only does § 43 not prevent a wrongful death plaintiff from filing or prosecuting a wrongful death action against a third-party tortfeasor, it actually provides that the wrongful death plaintiff is entitled to recover from the third-party tortfeasor regardless of who initiates the wrongful death lawsuit—the deceased employee’s beneficiaries or the subrogated workers’ compensation carrier/employer.
- On August 24, 2022, the Oklahoma Supreme Court issued an order declaring the Alexander, Solis, and Goodner cases to be companion cases for purposes of their appeals. They will be briefed separately and contain separate records but will be companion cases.
Alexander v. Duong and Sentinel Insurance Company
Meanwhile, on December 2, 2022, the Oklahoma Court of Appeals issued a 2 to 1 split decision in the Amy Alexander, et al. v. Nam Duong and Sentinel Insurance Company case.[23] The court noted the presumption that every statute is constitutional and reversed the trial court’s ruling that § 43A was unconstitutional, declaring that this statute does not violate the Oklahoma Constitution.
The facts of the Alexander case are that Jeremy Alexander worked for Rent-A-Center and was killed in an auto accident with Nam Duong. His employer’s workers’ compensation carrier (Sentinel Insurance Co.) paid death benefits to Jeremy’s wife, who later filed a wrongful death action into which Sentinel attempted to intervene. The trial court granted the intervention, and the plaintiffs filed a Motion for Summary Judgment arguing that §43 was a statutory limitation on death benefits which was prohibited by Article 23, Section 7 of the Oklahoma Constitution. The trial court granted the plaintiff’s motion and Sentinel appealed. The Court of Appeals held that §43A is constitutional and remanded the case for apportionment of a settlement which had taken place but was not part of the record on appeal. The court referred to the federal court decision in Akins v. C&J Energy Services, Inc., referenced above. It also noted that there is a presumption that every statute is constitutional unless it is determined to be “clearly, palpably, and plainly inconsistent with the Constitution.”
In support of its ruling, the Court of Appeals noted that nothing in §43A prevents a wrongful death plaintiff from filing or prosecuting a wrongful death action against a tortfeasor. In fact, the statute provides that a plaintiff is entitled to recover from any monetary settlement with the tortfeasor—even if it is initiated by a subrogated workers’ compensation carrier. Section 43A also does not limit the damages an employee or his beneficiaries may recover. It is simply an “allocative measure, specifying how and to whom the settlement proceeds are distributed.” The court confirmed that §43 is not a statutory limitation on the death benefits received by the plaintiff. A dissent by Justice P.J. Bell argued that even though the majority opinion is “persuasive”, he felt that §43 directly violated Article 23, Section 7 of the Oklahoma Constitution.
As referenced above, on August 24, 2022, the Oklahoma Supreme Court ordered that Alexander v. Duong, Solis v. Farmington, and Goodner v. Helena Agri-Enterprises be made companion cases, with separate briefing, and will be assigned to the Court of Civil Appeals, Oklahoma City Division, where Alexander was already pending. Alexander was appealed from a summary judgment order, and, per Oklahoma Supreme Court rules, was fast tracked without any further briefing. We anticipate a ruling by the Court of Appeals in the Solis and Goodner cases. Meanwhile, counsel for plaintiff in the Alexander decision has indicated that he plans to appeal the case to the Oklahoma Supreme Court.
For more information on workers’ compensation subrogation in Oklahoma or anywhere within the U.S., or specifically with regard to subrogating death benefits, contact Lee Wickert at leewickert@mwl-law.com.
[1] Workers’ Compensation Code, ch. 318, 2011 Okla. Sess. Laws 2549 (codified at OKLA. STAT. tit. 85, §§ 301–413 (2011) (repealed 2013)).
[2] Title 85A. Act of May 6, 2013, ch. 208, 2013 Okla. Sess. Laws 862 (codified at OKLA. STAT. tit. 85A, §§ 1–400 (Supp. II 2013)).
[3] 85A O.S. Supp.2014 1 et seq.
[4] OKLA. STAT. tit. 85A, § 400(a), (i) (Supp. II 2013).
[5] 2013 Okla. Sess. Law Serv. Ch. 208 (S.B. 1062). This “Omnibus Bill” has three parts: (1) The Administrative Act (transforms the old “court-based” workers’ compensation system into a new “administrative” system), (2) The Oklahoma Injury Benefit Act (the “option” which allows the employer to establish an occupational accident plan, and (3) The Workers’ Compensation Arbitration Act (which allows employers to implement an alternative dispute resolution process to resolve any dispute under the Administrative Act.
[6] Jonnie Yvonne Vasquez v. Dillards, Inc., CM-2014-11060 (Oklahoma Workers’ Compensation Commission February 26, 2016). Found at https://www.ok.gov/ wcc/documents/Vasquez.pdf.
[7] Id.
[8] Robinson v. Fairview Fellowship Home For Senior Citizens, Inc., 371 P.3d 477 (Okla. 2016).
[9] Akins v. D&J Energy Services, Inc., 2019 WL 3728284 (W.D. Okla. 2019).
[10] Okla. Stat. Ann. Tit. 85, § 44 (repealed by Okla. Stat. Ann. Tit. 85, § 348 (2011).
[11] Id.
[12] Id.
[13] Earnest, Inc. v. LeGrand, 621 P.2d 1148 (Okla. 1980); Updike Advertising System v. State Industrial Comm’n, 282 P.2d 759 (Okla. 1955); McBride, supra; Holley v. Ace American Ins. Co., 313 P.3d 917 (Okla. 2013).
[14] McBride, supra.
[15] Okla. Stat. Ann. Tit. 85, § 348(B).
[16] Okla. Const. art. 23, §7.
[17] Anna Lise Rogers v. Sims and United Parcel Service, Grady County, CJ-2015-22 (State District Court 2016).
[18] Amy Alexander, et al. v. Nam Duong and Sentinel Insurance Company, Bryan County, CJ-2018-88 (Okla. District Court 2022).
[19] Alondra Solis v. Travelers Cas. Ins. Co., Ottawa County, CJ- 2018-172 (State District Court 2020).
[20] Alondra Solis v. Travelers Cas. Ins. Co., Ottawa County, Case No. 119037 (Okla. 2021).
[21] Akins v. D&J Energy Services, Inc., 2019 WL 3728284 (W.D. Okla. 2019).
[22] Akins v. C&J Energy Services, Inc., 2019 WL 3728284 (W.D. Okla. 2019).
[23] Amy Alexander, et al. v. Nam Duong and Sentinel Insurance Company, Case No. 120,320 (Okla. App. December 2, 2022).