Statutes: Appeal and Error. Statutory interpretation presents
a question of law, for which an appellate court has an
obligation to reach an independent conclusion irrespective of
the decision made by the court below.
Workers' Compensation: Judgments: Appeal and Error.
Distribution of the proceeds of a judgment or settlement
under Neb. Rev. Stat. § 48-118.04 (Reissue 2010) is left
to the trial court's discretion and reviewed for an abuse
of that discretion.
Judges: Words and Phrases. A judicial abuse of discretion
requires that the reasons or rulings of a trial judge be
clearly untenable, unfairly depriving a litigant of a
substantial right and a just result.
Workers' Compensation: Subrogation. Neb. Rev. Stat.
§ 48-118 (Reissue 2010) grants an employer who has paid
workers' compensation benefits to an employee injured as
a result of the actions of a third party a subrogation
interest against payments made by the third party.
Workers' Compensation. A settlement of a third-party
claim is void under Neb. Rev. Stat. §48-118.04(1)
(Reissue 2010) unless the settlement is either agreed upon in
writing by the employee and employer or its insurer or
determined by the court to be fair and reasonable.
Workers' Compensation: Insurance. In determining the
fairness and reasonableness of a settlement of a third-party
claim under the Nebraska Workers' Compensation Act, a
court considers liability, damages, and the ability of the
third person and his or her liability insurance carrier to
satisfy any judgment.
Workers' Compensation: Subrogation. The policies behind
the Nebraska Workers' Compensation Act favor a liberal
construction in [296 Neb. 973] favor of an employer's
statutory right to subrogate against culpable third parties.
Workers' Compensation: Insurance: Case Disapproved.
In re Estate of Evertson, 23 Neb.App. 734, 876
N.W.2d 678 (2016), is disapproved to the extent that the
court considered payment of premiums and comparative risk in
allocating none of the proceeds of a workers'
compensation settlement to the insurer.
Workers' Compensation: Subrogation: Equity. Although Neb.
Rev. Stat. § 48-118.04(2) (Reissue 2010) calls for a
fair and equitable distribution, subrogation in workers'
compensation cases is based on statute, and not in equity.
Workers' Compensation: Insurance: Equity. A distribution
of the proceeds of a judgment or settlement under Neb. Rev.
Stat. § 48-118.04(2) (Reissue 2010) must be fair and
equitable to both the employee and the employer or its
from the District Court for Douglas County: J Russell Derr,
Judge. Affirmed in part, and in part reversed and remanded
A. Jorgensen, of Morrow, Willnauer, Klosterman & Church,
L.L.C., for appellant. Ronald L. Brown, of Brown & Theis,
L.L.R, for appellee Norman Kroemer.
Gregory F. Schreiber and Albert M. Engles, of Engles,
Ketcham, Olson & Keith, P.C., and, on brief, Brock S.J.
Hubert, for appellee Omaha Track Equipment, L.L.C.
Wright, Miller-Lerman, Cassel, Stacy, Kelch, and Funke, JJ.
injured employee proposed to settle his third-party suit for
$150, 000. His employer, which had a subrogation interest of
over $200, 000, contested the settlement. The district court
determined that the settlement was fair and reasonable but
[296 Neb. 974] allocated none of it to the employer. Because
of the disputed litigation risk, approval of the settlement
was not an abuse of discretion. But under our statutory
scheme, the allocation of zero to the employer was legally
untenable. We affirm in part and in part reverse, and remand
relevant time, Ribbon Weld, LLC, and Omaha Track Equipment,
L.L.C. (OTE), were both wholly owned subsidiaries of The Tie
Yard of Omaha, now known as Omaha Track, Inc. Ribbon
Weld's employees occasionally used OTE's shop to
service their equipment and, while doing so, used OTE's
tools. Norman Kroemer, a Ribbon Weld employee, sustained an
eye injury in connection with the use of OTE's tools at
and Ribbon Weld entered into a compromise lumpsum settlement
for $80, 000, which the Nebraska Workers' Compensation
Court approved. After payment of the lump sum, Ribbon
Weld's subrogation interest totaled $207, 555.01.
then sued OTE, The Tie Yard of Omaha, and Ribbon Weld. The
suit alleged negligence. Kroemer made Ribbon Weld a party
"for the limited purpose provided by [Neb. Rev. Stat.
§] 48-118 [(Reissue 2010)]." OTE asserted numerous
affirmative defenses, including comparative negligence. In
Ribbon Weld's answer, it asked that any recovery by
Kroemer be subject to its subrogation right.
and OTE engaged in mediation to settle the third-party claim.
Ultimately, they negotiated a compromise settlement of claims
in the amount of $150, 000. Although Ribbon Weld did not
contribute or share in litigation expenses, it contested the
district court held a settlement and allocation hearing under
Neb. Rev. Stat. § 48-118.04 (Reissue 2010). Kroemer
testified about the accident and injury, which occurred as he
and a coworker endeavored to cut through a "spot-weld on
[an] Allen wrench." Kroemer planned to hold the Allen
wrench [296 Neb. 975] and socket with a pair of pliers as his
coworker operated a "Milwaukee grinder with the
wheel." When Kroemer's coworker started the grinder,
the wheel exploded, sending shrapnel into Kroemer's face
and left eye. Kroemer was wearing safety glasses but not a
face shield. After undergoing three surgeries, Kroemer
ultimately sustained a 95-percent loss of vision in his eye.
Due to the injury, Kroemer no longer physically qualified for
a commercial driver's license. He returned to work with
Ribbon Weld, but had restrictions of light-duty work and no
dusty conditions. Ribbon Weld subsequently sold its business,
and Kroemer lost his employment a short time later.
district court received evidence concerning the value of
Kroemer's case. One expert opined that "there was a
very substantial probability (80%-90%) of a jury verdict for
the defendants were the case to proceed to trial." He
stated that a jury could have easily determined that
Kroemer's comparative fault was greater than 50 percent.
Another expert valued Kroemer's claim in the range of
$850, 000 to $1, 250, 000, before consideration of
comparative negligence. But he also opined that the
settlement of $150, 000 was in Kroemer's best interests,
due to the high probability of a jury verdict for the
defendants. Ribbon Weld's expert opined that it was
"more than likely (70-80% chance) that a Plaintiff's
verdict would be reached, " that a jury would likely
assess "contributory negligence" in the range of 25
to 35 percent, and that Kroemer would have likely recovered
in excess of $500, 000 if the case proceeded to trial. Ribbon
Weld's expert believed that the settlement was inadequate
given the value of the case and that the settlement appeared
to have been accepted with the intention of no, or very
minimal, payback to Ribbon Weld of the subrogation amount.
district court determined that the settlement of $150, 000
was reasonable. It made the following allocation: $94, 834.27
to Kroemer, $55, 165.73 for attorney fees and expenses, and
$0 to Ribbon Weld. [296 Neb. 976] Ribbon Weld appealed, and
we granted its petition to bypass review by the Nebraska
Court of Appeals. We subsequently ordered supplemental
briefing, which we have considered in resolving this appeal.
ASSIGNMENTS OF ERROR
Weld assigns that the district court erred in (1) finding the
settlement to be fair and reasonable and (2) finding that an
allocation of $0 to Ribbon Weld was fair and equitable.
STANDARD OF REVIEW
interpretation presents a question of law, for which an
appellate court has an obligation to reach an independent
conclusion irrespective of the decision made by the court
of the proceeds of a judgment or settlement under §
48-118.04 is left to the trial court's discretion and
reviewed for an abuse of that discretion. A judicial abuse
of discretion requires that the reasons or rulings of a trial
judge be clearly untenable, unfairly depriving a litigant of
a substantial right and a just result.
first set forth two principles of law under the Nebraska
Workers' Compensation Act (the Act). First, §
48-118 grants an employer who has paid workers'
compensation benefits to an employee injured as a result of
the actions of a third party a subrogation interest against
payments made by the third party. Second, a settlement of a
third-party claim [296 Neb. 977] is void under §
48-118.04(1) unless the settlement is either agreed upon in
writing by ...