Esquivel v. LABOR COM'N OF UTAH

7 P.3d 777

2000 UT 66

Edward ESQUIVEL, deceased, Norma Esquivel, Richard Esquivel, Angel Esquivel, Edica Esquivel, and Ofelia Herrera, Petitioners, v. LABOR COMMISSION OF UTAH, Redd Roofing & Construction Company, and CNA Insurance Company, Respondents.

No. 990250.

Supreme Court of Utah.

August 15, 2000.

Robert B. Sykes, Ron J. Kramer, Salt Lake City, for petitioners.

Alan Hennebold, Salt Lake City, for Labor Commission.

Theodore E. Kanell, Robert C. Olsen, Stephen P. Horvat, Salt Lake City, for Redd Roofing and CNA Insurance.

David W. Parker, Salt Lake City, for amicus Utah Trial Lawyers Association.

ON CERTIORARI TO THE UTAH COURT OF APPEALS

RUSSON, Associate Chief Justice:

¶ 1 On writ of certiorari, petitioners seek review of the Utah Court of Appeals' decision to affirm the Utah Labor Commission Appeals Board order. The appeals board held that a third-party judgment obtained by petitioners was to be entirely disbursed to offset the future workers' compensation obligations of Redd Roofing and Construction Company ("Redd Roofing") and CNA Insurance Company ("CNA"). See Esquivel v. Labor Comm'n, 1999 UT App 9, 973 P.2d 440. We reverse in part and affirm in part.

BACKGROUND

¶ 2 Edward Esquivel was employed by Redd Roofing in 1993. On April 26, 1993, Esquivel sustained a fatal injury in an accident arising out of and in the course of his employment while working at the Freeport Center in Clearfield, Utah. While operating a roof sweeper, Esquivel fell from one roof onto and through another roof. He was rushed to LDS Hospital but died that night. Soon thereafter, Esquivel's heirs (the "Esquivels") filed for and received death benefits from Redd Roofing pursuant to the Utah Workers' Compensation Act. The benefits were paid by CNA, Redd Roofing's insurer.

¶ 3 Subsequently, the Esquivels filed a wrongful death suit against the Freeport Center. That claim was settled for $375,000 in March of 1994. As a result of the settlement, the Esquivels, Redd Roofing, and CNA entered into an agreement stipulating that the Esquivels reimburse CNA $8263.84 to satisfy CNA's lien for all workers' compensation death and dependency benefits accrued to that point. In addition, as a part of the agreement, CNA reduced benefit payments to the Esquivels from $341 per week to $205 per week for the benefit period remaining under the workers' compensation act. The $205 per week would also be the basis for determining all future workers' compensation for which the Esquivels might be entitled.¹

¶ 4 In 1995, the Esquivels filed another third-party suit. This wrongful death suit was against the maker of the roof sweeper, Gravely International ("Gravely"). The case was tried, and the jury determined the total damages to be $814,029. Redd Roofing, Esquivel's employer, was apportioned 50% of the fault, Gravely was apportioned 25%, and Esquivel himself was apportioned 25% of the fault. However, pursuant to the Utah Liability Reform Act² and the Utah Workers' Compensation Act,³ the Esquivels could not recover for the apportionment of fault attributed to Esquivel himself or his employer. Therefore, the final judgment awarded to the Esquivels was $203,507.25. Attorney fees were $81,402.90 and costs were $53,596.38, leaving $68,507.97 to be disbursed. It is this disbursement that is at issue in the instant case.

¶ 5 Due to the judgment awarded to the Esquivels, CNA discontinued the $205 weekly workers' compensation payments as of April 1, 1996. Thereafter, the Esquivels filed an application for hearing before the Industrial Commission requesting review of CNA's termination of benefit payments. In response, Redd Roofing and CNA claimed that section 35-1-62 of the Utah Code provided that the judgment awarded to the Esquivels relieved CNA from paying further benefits. Redd Roofing and CNA contended that under the statute, CNA was entitled to reimbursement for payments made since the earlier settlement and CNA was further entitled to relief from paying any future benefits. The payments CNA had made since the earlier settlement totaled $21,320.

¶ 6 The Industrial Commission issued its findings of fact and conclusions of law on February 7, 1997. The commission accepted the Esquivels' formula for calculating the disbursement under section 35-1-62(5), concluding that the Esquivels were entitled to keep the entire $68,507.97, and that CNA was not entitled to any reimbursement or credit against future payments. Thus, CNA was ordered to continue making the weekly $205 payments to the Esquivels.

¶ 7 Redd Roofing and CNA moved to have the order reviewed, arguing that the $68,507.97 should be credited against the future workers' compensation payments owed by CNA to the Esquivels and that those obligations should be discounted to present value. Furthermore, CNA waived its claim to reimbursement for the $21,320 in benefits paid prior to April 1, 1996, on condition that the $68,507.97 be paid to offset future payments in accordance with the statute.

¶ 8 In July 1997, the Utah Legislature replaced the Industrial Commission with the Utah Labor Commission. This matter was then assigned to the Utah Labor Commission Appeals Board for review. On January 14, 1998, the appeals board reversed the earlier decision of the commission and allowed CNA to apply the full $68,507.97 against its liability for future workers' compensation benefits. CNA did not have to resume benefit payments until the $68,507.97 had been fully offset. Moreover, CNA could use the present value amount of $83,000, using an 8% discount rate, as its liability for future benefits.

¶ 9 The Esquivels petitioned the Utah Court of Appeals to review the board's decision. The court of appeals affirmed the decision of the appeals board. This court then granted the Esquivels' petition for writ of certiorari to review the court of appeals' action.

¶ 10 The Esquivels allege four issues before this court: (1) that the court of appeals should have used a correction-of-error standard in reviewing the decision of the commission appeals board; (2) that the court of appeals erred in affirming the appeals board's interpretation of the statute for disbursement of proceeds from third-party tort actions; (3) that the court of appeals erred by deciding that the Esquivels had waived their right to challenge the appeals board's order allowing CNA to discount future workers' compensation benefits payable to the Esquivels; and (4) that the appeals board erroneously allowed CNA to discount its future workers' compensation benefits.

STANDARD OF REVIEW

¶ 11 "When exercising our certiorari jurisdiction, we review the decision of the court of appeals, not of the [agency]." Platts v. Parents Helping Parents, 947 P.2d 658, 661 (Utah 1997). The court of appeals' decision is reviewed for correctness, and its conclusions of law are afforded no deference. See Bear River Mut. Ins. Co. v. Wall, 1999 UT 33, ¶4, 978 P.2d 460.

ANALYSIS

I. APPROPRIATE STANDARD OF REVIEW

¶ 12 The Esquivels argue that the court of appeals erroneously afforded deference to the appeals board's decision. Therefore, we must first determine whether the court of appeals applied the appropriate standard of review to the agency's decision. See Newspaper Agency Corp. v. Auditing Div., 938 P.2d 266, 267 (Utah 1997). In this case, the appellate court applied what it termed an intermediate standard of review whereby it upheld the appeals board's statutory interpretation absent a finding of unreasonableness. See Esquivel v. Labor Comm'n, 1999 UT App 9, ¶11, 973 P.2d 440.

¶ 13 However, "[m]atters of statutory construction are questions of law that are reviewed for correctness." Platts v. Parents Helping Parents, 947 P.2d 658, 661 (Utah 1997); see also Jeffs v. Stubbs, 970 P.2d 1234, 1240 (Utah 1998); Pappas v. Richfield City, 962 P.2d 63, 65 (Utah 1998); Facer v. Allen, 958 P.2d 919, 921 (Utah 1998). In addition, "[w]here the issue is a question of law, ... appellate review gives no deference to the trial judge's or agency's determination, because the appellate court has `the power and duty to say what the law is and to ensure that it is uniform throughout the jurisdiction.'" Drake v. Industrial Comm'n, 939 P.2d 177, 181 (Utah 1997) (internal citation omitted).

¶ 14 An exception to this general rule exists if the legislature has either explicitly or implicitly granted discretion to the agency. However, absent a grant of discretion, an agency's interpretation or application of statutory terms should be reviewed under the correction-of-error standard. See Morton Int'l, Inc. v. Auditing Div., 814 P.2d 581, 588 (Utah 1991). Additionally, if the "legislative intent concerning the specific question at issue can be derived through traditional methods of statutory construction, the agency's interpretation will be granted no deference and the statute will be interpreted in accord with its legislative intent." Id. at 589.

¶ 15 In the case before us, the court of appeals determined that the appeals board had been granted broad discretion by Utah Code Ann. § 34A-1-301 (1997), which provides: "The commission has the duty and the full power, jurisdiction, and authority to determine the facts and apply the law in this chapter." Esquivel, 1999 UT App at ¶ 11, 973 P.2d 440.

¶ 16 However, "an agency's statutory construction should only be given deference when there is a grant of discretion to the agency concerning the language in question, either expressly made in the statute or implied from the statutory language." Morton, 814 P.2d at 589; see also Elk Lodges No. 719 & No. 2021 v. Department of Alcoholic Beverage Control, 905 P.2d 1189, 1193 (Utah 1995) (noting that intermediate deference will be given if legislature has expressly or impliedly given discretion to apply or interpret that law but if no explicit grant of discretion by legislature, issues of statutory construction are reviewed for correctness); Hales Sand & Gravel, Inc. v. Audit Div., 842 P.2d 887, 890 n....