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Dragon v. Cheesecake Factory

Supreme Court of Nebraska

July 20, 2018

Keith T. Dragon, appellant,
v.
The Cheesecake Factory and its Workers' Compensation Insurer, Indemnity Insurance Company of North America, appellees.

         1. Workers' Compensation: Statutes: Appeal and Error. The meaning of a statute is a question of law, and an appellate court is obligated in workers' compensation cases to make its own determinations as to questions of law.

         2. Workers' Compensation: Appeal and Error. Determinations by a trial judge of the Workers' Compensation Court will not be disturbed on appeal unless they are contrary to law or depend on findings of fact which are clearly wrong in light of the evidence.

         3. Legislature: Statutes: Time. Generally, legislation that is passed takes effect 3 calendar months after the Legislature adjourns unless the Legislature evidences otherwise.

         4. Statutes: Time. Statutes covering substantive matters in effect at the time of the transaction or event govern, not later enacted statutes. But where there has been an amendment to a statute which was a procedural change and not a substantive change, upon the effective date of the amendment, it is binding upon a tribunal.

         5.___:___. Procedural amendments to statutes are ordinarily applicable to pending cases, while substantive amendments are not.

         6. Statutes: Words and Phrases. A substantive amendment is one that creates a right or remedy that did not previously exist and which, but for the creation of the substantive right, would not entitle one to recover. A procedural amendment, on the other hand, simply changes the method by which an already existing right is exercised.

         7. Limitations of Actions: Statutes. Laws prescribing the time within which particular rights may be enforced generally relate to remedies only and not substantive rights.

         [300 Neb. 549] 8. Workers' Compensation: Statutes. 2018 Neb. Laws, L.B. 953, is a procedural amendment to Neb. Rev. Stat. § 48-139(4) (Cum. Supp. 2016).

         9. Workers' Compensation: Time. The reasonable controversy doctrine has long been applied to excuse waiting-time penalties for delayed benefit payments under Neb. Rev. Stat. § 48-125 (Cum. Supp. 2016).

         10.___:___. The reasonable controversy doctrine has no application to late-payment penalties under Neb. Rev. Stat. § 48-139(4) (Cum. Supp. 2016).

         11. Attorney Fees. If an attorney seeks a fee for his or her client, that attorney should introduce at least an affidavit showing a list of the services rendered, the time spent, and the charges made.

          Appeal from the Workers' Compensation Court: Daniel R. Fridrich, Judge.

          Brynne E. Holsten Puhl, of Atwood, Holsten, Brown, Deaver & Spier Law Firm, P.C., L.L.O., for appellant.

          Marc N. Middleton, of Adelson, Testan, Brundo, Novell & Jimenez, and David A. Castello for appellees.

          Danny C. Leavitt for amicus curiae Nebraska Association of Trial Attorneys.

          Heavican, C.J., Miller-Lerman, Cassel, Stacy, and Funke, JJ., and Strong, District Judge.

          Stacy, J.

         In this workers' compensation case, the parties reached a lump-sum settlement and filed a verified release with the court using the process set out in Neb. Rev. Stat. § 48-139(3) and (4) (Cum. Supp. 2016). The employer did not pay the amounts owed under the settlement within 30 days after the release was filed, and the employee moved for late payment penalties under § 48-139(4). The Workers' Compensation Court overruled the motion and dismissed the employee's petition with prejudice. The employee appealed.

         While the case was pending on appeal, the Legislature amended the process for finalizing lump-sum settlements under [300 Neb. 550] § 48-139(4). Because we conclude this recent amendment is procedural in nature, we apply it to this pending matter.[1] Doing so, we find the employee is entitled to a late payment penalty, and to that extent only we vacate the order of dismissal with prejudice, reverse the decision of the Workers' Compensation Court, and remand the cause with directions. In all other respects, we affirm.

         BACKGROUND

         Keith T. Dragon worked as a dishwasher for The Cheesecake Factory in Omaha, Nebraska. On February 9, 2017, Dragon filed a petition for workers' compensation benefits, alleging he was injured in the course and scope of his employment. The parties agreed to settle Dragon's claim for a lump-sum payment of $5, 000. Both parties were represented by counsel, and they agreed to use the verified release procedure under § 48-139(3) rather than seek court approval of their settlement.[2]

         On May 1, 2017, the employer filed with the Workers' Compensation Court a verified release containing the language required by § 48-139(3), thus triggering the 30-day payment period under § 48-139(4).[3] On June 8, the employer mailed Dragon the settlement check. Thereafter, Dragon filed a motion in the Workers' Compensation Court seeking a late payment penalty of $2, 500 under § 48-139(4) and an award of attorney fees under Neb. Rev. Stat. § 48-125 (Cum. Supp. 2016).

         At the hearing on the motion for late payment penalties, the employer conceded the lump-sum settlement was paid more [300 Neb. 551] than 30 days after the release was filed, but it opposed the imposition of a late payment penalty on two grounds.

         First, the employer argued the "reasonable controversy" doctrine[4] should preclude an award of late payment penalties, because the payment delay was the result of a reasonable dispute over child support liens. Second, the employer argued Dragon had waived any claim for a late payment penalty under § 48-139(4). This argument was based on the version of § 48-139(4) in effect at that time, which provided: "Upon making payment owed by the employer as set forth in the release, such release shall be a full and complete discharge from further liability for the employer on account of the injury . . . ." Given this statutory language, the employer argued that even though the settlement payment was made more than 30 days after the release was filed, the release sprung into effect as soon as payment was made and extinguished all claims Dragon had under the Nebraska Workers' Compensation Act, including a claim for late payment penalties or attorney fees.

         The Workers' Compensation Court agreed with the employer's interpretation of § 48-139(4) and entered an order overruling Dragon's motion for a late payment penalty. In doing so, the court relied on this court's analysis in Holdsworth v. Greenwood Farmers Co-op.[5]

         In Holdsworth, the lump-sum settlement payment was made 42 days after the verified release was filed and the employee moved for a 50-percent waiting-time penalty and attorney fees. When Holdsworth was decided, § 48-139 did not have its own late payment penalty provision, so the employee sought penalties under § 48-125 (Reissue 2010). That statute generally authorized a waiting-time penalty for "all delinquent [300 Neb. 552] payments after thirty days' notice has been given of disability or after thirty days from the entry of a final order, award, or judgment of the compensation court."[6] Section 48-125(2) authorized an employee who received a waiting-time penalty, and who also received an award, to recover reasonable attorney fees.

         In Holdsworth, the Workers' Compensation Court awarded the employee waiting-time penalties under § 48-125 and the employer appealed. This court reversed, finding that once the verified release was filed with the compensation court pursuant to § 48-139(3), the employee effectively waived '"all rights under the Nebraska Workers' Compensation Act, '" including any rights to late payment penalties and fees the employee may have had under § 48-125.[7] A key part of this court's analysis in Holdsworth was the broad language required to be included in the verified release under § 48-139(3). We reasoned this broad release language was unambiguous and resulted in "a full waiver of any and all rights given to workers in the Nebraska Workers' Compensation Act," including the right to waiting-time penalties and attorney fees.[8]

         After our decision in Holdsworth, the Legislature amended § 48-139 to specifically include a penalty provision for late payments of lump-sum settlements.[9] Thus, in 2017, when the parties in this case reached their lump-sum settlement, § 48-139(4) provided:

A release filed with the compensation court in accordance with subsection (3) of this section shall be final and conclusive as to all rights waived in the release unless procured by fraud. Amounts to be paid by the [300 Neb. 553] employer to the employee pursuant to such release shall be paid within thirty days of filing the release with the compensation court. Fifty percent shall be added for payments owed to the employee if made after thirty days after the date the release is filed with the compensation court. Upon making payment owed by the employer as set forth in the release, such release shall be a full and complete discharge from further liability for the employer on account of the injury, including future medical, surgical, or hospital expenses, unless such expenses are specifically excluded from the release, and the court shall enter an order of dismissal with prejudice as to all rights waived in the release.

         The Workers' Compensation Court analyzed this statutory language and concluded it did "not cure the problem illuminated by Holdsworth." The court reasoned that under Holdsworth, once the broad statutory release language becomes effective, it results in a full and complete discharge from all liability under the act, including a claim for late payment penalties and attorney fees. The Workers' Compensation Court observed that because amendments to § 48-139(4) made the release effective '"[u]pon making payment ... as set forth in the release ..., '" the release in this case became effective once the employer paid Dragon. Thus, even though the settlement payment was late, it served to discharge the employer from all liability, including liability for late payment penalties and attorney fees.

         The Workers' Compensation Court thus overruled Dragon's motion for penalties and attorney fees and dismissed his petition with prejudice. Dragon timely appealed, and we moved the case to our docket on our own motion[10] to address the impact of the 2014 amendment to § 48-139(4).

          [300 Neb. 554] ASSIGNMENT OF ERROR

         Dragon assigns the Workers' Compensation Court erred in ruling he was not entitled to a late payment penalty under the 2014 version of § ...


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