Wyphoski v. Sparks Nugget, Inc.

Steffen, C. J.,

dissenting:

Respectfully, I dissent.

The majority states that “[tjhere is an inherent injustice in allowing a claimant to keep funds to which he is not legally entitled, and we recognized in Ransier1 that there are ‘valid policy reasons to allow recoupment.’ ” I agree. However, I reluctantly joined with the majority in Ransier denying relief to SIIS primarily because of our focus on the plight of a claimant who has received and expended his worker’s compensation, only to be subject to a judgment of recoupment after his award is later overturned on appeal.

Although I still sympathize for the worker under such circumstances, I am no longer able to accept as a valid principle of law or equity that one who is not entitled to receive compensation, but who has nevertheless succeeded in obtaining an award, is able to retain the unjustifiable windfall achieved at the expense of another. This is so despite the great disparity between the personal assets of the employee on the one hand, and his or her employer or the State Industrial Insurance System (SIIS) on the other.

As a practical matter, it would probably be comparatively rare when either SIIS or a self-insured employer would be able to *416recoup payments unjustifiably paid to a claimant. Nevertheless, a judgment for recoupment should be provided to SIIS or the self-insured employer who has been vindicated on appeal.

In the case of Dep’t of Ind. Relations v. Circus Circus, 101 Nev. 405, 705 P.2d 645 (1985), we properly required the prompt payment of benefits to claimants notwithstanding a pending challenge to the propriety of the award in the court system. We noted, however, that if the self-insured employer prevailed on appeal, its remedy was to seek recovery by way of recoupment. This rule was later recognized in Imperial Palace v. Dawson, 102 Nev. 88, 715 P.2d 1318 (1986), and more recently in Falline v. GNLV Corp., 107 Nev. 1004, 823 P.2d 888 (1991). Then, in Ransier, we in effect said “April Fools,” and declared to an undoubtedly amazed SIIS that recoupment was not available despite a successful ruling by this court on the underlying merits of its appeal. Predictably, the instant case now also slams the door on self-insured employers who were previously informed in Circus Circus that recoupment for unwarranted payments would be the available remedy for prevailing on appeal.

I believe that this court undermines the fundamental principle of our civil justice system that “where there is a wrong there is a remedy,” when it denies the availability of even paper relief to an injured party who prevails on appeal. Perhaps a compromise could be achieved if, in these difficult cases, the Legislature would require that all employers share equally in the cost of unwarranted compensation. That would at least eliminate the imposition of a personal welfare burden on single employers whose accounts are charged with compensation payments that were awarded in error. Barring this, such employers should at least have the prospect of an offset in the event of future claims (probably the most likely of the remote practical effects of a judgment for recoupment).2 If the offset proved to be a significant *417burden on the worker, presumably the State has other sources of welfare available in such cases, where the effect of the burden would be shared by a much larger pool of taxpayers. In any event, I suggest that it is unfair that a vindicated employer be penalized for paying compensation later determined to be unjustified.

For the reasons noted above, and others not discussed, I am in full agreement with the district court’s reasoning, including the determination that since it was undisputed that the claimant did not suffer from either an industrial injury or illness, she was outside the ambit of the workers’ compensation scheme, and the Nugget was therefore entitled to prosecute a civil action to recoup the monies that it had been forced to pay her. I also agree with the Nugget that under the circumstances of this case, where the Nugget is forced to absorb a loss not required by law, without the possibility of recoupment, there has been a denial of due process.

Ransier v. SIIS, 104 Nev. 742, 766 P.2d 274 (1988).

The Legislature, in enacting NRS 616.5435 provided, in pertinent part, that:

If the final resolution of the claim is in favor of the insurer or employer, any amount paid to the claimant in excess of the uncontested amount must be deducted from any future benefits related to that claim, other than medical benefits, to which the claimant is entitled. The deductions must be made in a reasonable manner so as not to create an undue hardship to the claimant.

(Emphasis added.)

Of course, the referenced statute has no application to the instant case since it was determined that the claimant did not suffer from an industrial-related injury. Therefore, there will be no further payments related to that claim, and thus no specific right of offset is granted by this statute. However, it is certainly impossible to conclude from this statute, that the Legislature intended that SIIS or self-insured employers would have no right of offset or recoupment from payments made to a claimant outside the workers’ compen*417sation scheme. Where, as here, it has been determined beyond cavil, that payments were exacted from the self-insured employer for an injury suffered by an employee that had no causal relationship to his employment, the right of recoupment is manifest. There is simply no basis in law for holding the employer responsible for such payments, which is precisely what the majority does in denying the employer a right of recoupment.