Key Points

  • The Oklahoma Supreme Court held that 85A O.S. Section 43, which gives an employer or carrier that joins a third-party suit a first lien on two-thirds of the net proceeds, does not violate Article 23, section 7 of the Oklahoma Constitution.
  • The court found that Section 43 leaves dependents free to sue the third-party tortfeasor and that the Legislature may extend indemnity and subrogation rights to workers' compensation death benefits.
  • The court characterized the insurer's claim as one for indemnity under Section 43(A)(1) and said the decision applies equally to the subrogation provision in Section 43(B).
  • The court criticized a federal district court for deciding the unsettled state-law question without certifying it and for relying on Arizona and Utah cases.
  • The court vacated the Court of Civil Appeals opinion and the trial court order and remanded the case to the trial court.

The Oklahoma Supreme Court held on Oct. 19 that an employer and its workers' compensation insurer may take a share of a family's wrongful death settlement to recoup death benefits they paid. The court rejected the family's argument that the arrangement violates a state constitutional provision barring statutory limits on wrongful death recoveries.

Justice Gurich wrote for the court, and six other justices joined the opinion. Justice Jett concurred in the result, and Justice Winchester did not participate. The ruling went for Rent-A-Center Inc. and its insurer, Sentinel Insurance Co. Ltd., which intervened in a suit brought by the family of a Rent-A-Center employee killed in a 2018 highway crash. "There is no constitutional prohibition against the Intervenors recovering a portion of the Plaintiffs' settlement with the third party," the court concluded.

The decision upholds Section 43 of the Administrative Workers' Compensation Act, the 2014 statute that governs what an employer or insurer recovers when an outsider, known as a third party, caused a worker's injury or death. An employer or carrier that joins the family's suit against that third party is "entitled to a first lien on two-thirds (2/3) of the net proceeds recovered in the action that remain after the payment of the reasonable costs of collection." The carrier receives that share or the amount of its lien, whichever is less.

The Court of Civil Appeals had reached the same result by relying on an unpublished federal order and decisions from other states. "Although we agree with the result reached by COCA, we granted certiorari to provide precedential guidance," the Supreme Court wrote.

According to the opinion, Jeremy S. Alexander was driving east on U.S. Highway 70 over the Roosevelt Bridge on March 17, 2018, when Nam Ky Duong, driving west, tried to pass a vehicle on the right shoulder, lost control, crossed the center line and struck Alexander's car head-on. Alexander was working for Rent-A-Center at the time, and Sentinel paid statutory death benefits to his widow and son.

Amy Alexander, his widow, and Tamara Dean, the mother of his minor child, sued Duong and others in Bryan County District Court in May 2018. Duong was charged with first-degree manslaughter but fled to Vietnam before he could be prosecuted, the opinion said. Trial Judge Mark R. Campbell entered summary judgment in a March 11, 2022, order, and Rent-A-Center and Sentinel appealed. The Court of Civil Appeals reversed on Dec. 2, 2022.

The family's challenge rested on Article 23, section 7 of the Oklahoma Constitution. Since 1907, that provision has stated that the right to sue over a death "shall never be abrogated, and the amount recoverable shall not be subject to any statutory limitation." Voters amended it in 1950 to let the Legislature provide workers' compensation for deaths on the job, and the Legislature created the first death benefit in 1951.

The plaintiffs relied on Updike Advertising System v. State Industrial Commission, a 1955 decision issued when state law barred insurers from recovering death benefits through subrogation. The Updike syllabus said "Specific provision therefor would have to be made by the Legislature for same to exist." Gurich wrote that the passage "does not support the Plaintiffs' position but, instead, affirms the authority of the Legislature to add a right of subrogation."

Rent-A-Center and Sentinel argued that Section 43 leaves the heirs free to sue the third party and that the lien is "an instruction on how recovery in a third-party action should be apportioned between the heirs and the employer and/or its insurance carrier," rather than a cap on damages. The court agreed. "Intervenors are accurate in stating there is nothing in Section 43 that takes away the rights of the Plaintiffs to bring a third-party action," Gurich wrote.

The opinion traced decades of legislative change, from a 1951 law that barred subrogation for death benefits to a 2011 rewrite that "greatly expanded the statutory right of subrogation." The 2014 act that replaced the 2011 code contains Section 43. Drawing on a 2015 Court of Civil Appeals decision that addressed a widow's similar challenge to the 2011 statute, Gurich wrote, "We agree that the expansion of the rights of indemnity and subrogation to claims involving death benefits by the Legislature does not offend the Oklahoma Constitution."

The opinion also criticized Akins v. C&;J Energy Services Inc., a 2019 unpublished order from the U.S. District Court for the Western District of Oklahoma that rejected a constitutional challenge to Section 43. The federal judge could have certified the question. "Curiously, finding no Oklahoma authority on point and declining to certify this question to the Oklahoma Supreme Court, (which would have been appropriate with a question of unsettled state law), the order then relies on cases from Arizona" and Utah, Gurich wrote. The court found those decisions distinguishable.

The court treated the insurer's claim as one for indemnity, a right to reimbursement, under Section 43(A)(1), and said its decision "would apply equally to Section 43(B)," the provision allowing an employer or carrier to sue the third party directly.

Lawyers for Sentinel and Rent-A-Center included Phillip P. Owens II of Owens Law Office PC. Blake Sonne represented Amy Alexander. Rex Travis of Travis Law Office represented the Oklahoma Association for Justice, one of three amici.

The court vacated both the Court of Civil Appeals opinion and the trial court's order and sent the case back to the Bryan County court for further proceedings consistent with the opinion. The opinion has not been released for publication and remains subject to revision or withdrawal.