ATTORNEY FOR APPELLANT ATTORNEYS FOR APPELLEE
Robert S. O’Dell W. F. Conour
Carmel, Indiana Jeffrey A. Hammond
Timothy F. Devereux
Indianapolis, Indiana
______________________________________________________________________________
In the FILED
Indiana Supreme Court May 27 2010, 1:36 pm
_________________________________ CLERK
of the supreme court,
court of appeals and
tax court
No. 29S02-0908-CV-378
THE TRAVELERS INDEMNITY
COMPANY OF AMERICA, Appellant (Intervenor below),
v.
JERRY JARRELLS, Appellee (Plaintiff below).
_________________________________
Appeal from the Hamilton County Superior Court. No. 29D03-0212-CT-943
The Honorable William J. Hughes, Judge
_________________________________
On Petition to Transfer from the Indiana Court of Appeals, No. 29A02-0807-CV-669
_________________________________
May 27, 2010
Boehm, Justice.
The Worker’s Compensation Act provides that if an employee has received worker’s
compensation benefits and then recovers damages from a third party for the same injury, the
employee is to reimburse the amount of benefits. The trial court held that under the instructions
in this case the jury had already deducted the amount of worker’s compensation payments from
its award and there was therefore no recovery for injuries previously covered by worker’s
compensation. The Court of Appeals reversed, taking the view that the jury’s award included
amounts to be repaid. We agree that both interpretations are plausible but hold that the trial
court’s reading in this case should be affirmed. The employee is therefore not required to repay
his employer’s worker’s compensation carrier after receiving a judgment against a third party
tortfeasor. However, in future trials where the trier of fact finds that the evidence establishes that
the plaintiff has received payment for some of the damages from other sources, the award should
include those damages, but only to the extent that the evidence establishes an obligation to repay.
Facts and Procedural History
Jerry Jarrells was seriously injured in September 2002 when an unbraced, ten-foot
concrete block wall fell on him at a construction site. At the time of the injury, Jarrells was an
employee of LeMaster Steel Erectors, Inc., a subcontractor of R.D.J. Custom Homes, Inc., the
general contractor. Travelers Indemnity Company of America, LeMaster’s worker’s
compensation insurer, paid worker’s compensation benefits for the accident consisting of
disability benefits of $21,025.91 and medical payments of $45,109.76, or a total of $66,135.67.
Jarrells sued R.D.J. and Armando Delgadillo, another subcontractor, for the same
injuries. He notified Travelers of the lawsuit, and Travelers responded with a notification of its
statutory lien in the amount of $66,135.67, but did not intervene in the personal injury suit prior
to trial. At the jury trial, Jarrells presented evidence of the worker’s compensation payments and
testified that he was aware that if he recovered in the lawsuit, he might have to reimburse
Travelers for those payments.
The jury was instructed as explained below and returned a verdict in favor of Jarrells,
valuing his total damages at $925,000. The jury assigned 55% of the fault to R.D.J., 0% to
Delgadillo, 30% to LeMaster, a non-party, and 15% to Jarrells, producing an award of 55% of
$925,000, or $508,750. After Jarrells notified Travelers of the judgment, Travelers demanded
reimbursement from Jarrells in the amount of $22,495.75, which it calculated by reducing its
$66,135.67 expenditure to account for comparative fault and a share of Jarrells’ attorney’s fee.
Jarrells responded that Travelers was not entitled to any of the judgment proceeds because the
jury “already reduced the award by the amount of the work comp benefits and the award should
not be reduced further after judgment.”
Travelers then moved to intervene in the trial court and reopen the case. The trial court
permitted Travelers to intervene, and after some procedural skirmishing not relevant here,
Travelers moved for summary judgment, seeking a declaration that it was entitled to a statutory
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lien on the proceeds of Jarrells’ judgment against R.D.J. The trial court denied that motion and
granted summary judgment to Jarrells rejecting Travelers’ claimed lien. The trial court ruled that
Travelers’ requested relief would impose a double setoff on the recovery because the jury had
already deducted the worker’s compensation benefits from the gross award. For this proposition,
the court cited Pendleton v. Aguilar, 827 N.E.2d 614, 621 (Ind. Ct. App. 2005), trans. denied.
Travelers appealed, and in three separate opinions the Court of Appeals reversed with
instructions to enter judgment for Travelers and determine the value of its lien. Travelers Indem.
Co. of Am. v. Jarrells, 906 N.E.2d 912, 919 (Ind. Ct. App. 2009). We granted transfer.
Standard of Review
The trial court denied Travelers’ motion for summary judgment and, on its own motion,
granted summary judgment for Jarrells. When reviewing summary judgment orders, we use the
same standard of review used by the trial court: summary judgment is appropriate only when the
evidence shows no genuine issue of material fact and the moving party is entitled to a judgment
as a matter of law. Ind. Trial Rule 56(C); Kovach v. Caligor Midwest, 913 N.E.2d 193, 197 (Ind.
2009). “We construe all factual inferences in the nonmoving party’s favor and resolve all doubts
as to the existence of a material issue against the moving party.” Kovach, 913 N.E.2d at 197.
I. Worker’s Compensation Payments and the Collateral Source Statute
The common law collateral source rule prohibited presentation of evidence that a plaintiff
in a personal injury action had received payments from sources other than the defendant. See,
e.g., Pendleton, 827 N.E.2d at 620. In 1986 Indiana enacted the Collateral Source Statute,
Indiana Code § 34-44-1-1 et seq. (2004). The stated purposes of the statute are to enable an
accurate assessment of the “prevailing party’s pecuniary loss” and to provide “that a prevailing
party not recover more than once from all applicable sources for each item of loss sustained.”
I.C. § 34-44-1-1. The statute specifically addresses worker’s compensation benefits, and
provides that presentation of evidence of worker’s compensation benefits is permitted to
establish “proof of the amount of money that the plaintiff is required to repay.” I.C. § 34-44-1-
2(2). The statute expressly allows proof of payments from some collateral sources, including
worker’s compensation, and also directs the trier of fact to “consider” the payments allowed to
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be admitted into evidence. I.C. § 34-44-1-3. In these respects the statute departs from its
treatment of other collateral sources—for example any plaintiff’s insurance that might cover
some element of damages—that are not presented to the trier of fact. The Collateral Source
Statute’s treatment of worker’s compensation fits with the Worker’s Compensation Act’s
provision for repayment of benefits to the employer or its insurance carrier in the event that an
injured employee recovers from a third party for the employee’s injuries that also qualify for
worker’s compensation. See generally I.C. § 22-3-2-13.
If the jury is to consider evidence of collateral source payments such as worker’s
compensation that the plaintiff is required to repay, the only plausible interpretation of these
provisions is that the jury should include the amount of any collateral source payments that the
plaintiff is required to repay in its award to the plaintiff. If, however, there is no evidence of an
obligation to repay, then the jury should not include the amount of collateral source payments in
its award. The defendant, therefore, is benefited by evidence of the collateral source payments,
and the plaintiff gets the benefit of proof of obligation to repay.
II. The Jury’s Award to Jarrells
In this case, the trial court gave the pattern jury instruction with the addition of the last
sentence, which is not in issue here (the “Collateral Source Instruction”):
If you find that Jerry Jarrells is entitled to recover, you shall consider evidence of
payment made by some collateral source to compensate Jarrells for damages
resulting from the accident in question. In determining the amount of Jarrells’
damages, you must consider the following type of collateral source payments:
Payments for worker’s compensation.
In determining the amount received by Jarrells from collateral sources, you may
consider any amount Jarrells is required to repay to a collateral source and the
cost to Jarrells of collateral benefits received. Jarrells may not recover more than
once for any item of loss sustained.
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See Indiana Pattern Jury Instructions—Civil No. 11.07 (2d ed. 2007). This instruction was
tendered by Jarrells and was accepted by the court without objection relevant to any issue before
us.1
The parties dispute whether, under this instruction, the jury deducted the amount of
worker’s compensation benefits that Jarrells had received from the total damage in arriving at its
$925,000 damage figure, or, in the alternative, fixed the damages on the assumption that Jarrells
would repay Travelers out of the proceeds of the judgment. Because we agree that both parties
present plausible interpretations, we find this instruction confusing and hold that it should not be
used in future trials. If Travelers had participated in the trial and objected to the instruction, this
ambiguity would warrant a new trial. T.R. 51(C); see Penn Harris Madison School Corp. v.
Howard, 861 N.E.2d 1190, 1195 (Ind. 2007). But there was no objection to the instruction, and
Travelers, as a post-trial intervenor, takes the trial as it finds it. T.R. 24; State Farm Mut. Auto.
Ins. Co. v. Hughes, 808 N.E.2d 112, 116 (Ind. Ct. App. 2004); Panos v. Perchez, 546 N.E.2d
1253, 1255 (Ind. Ct. App. 1989) (“[T]he intervention of a party after judgment binds the
intervenor to all prior orders and judgments in the case.”).
The trial court cited Pendleton, 827 N.E.2d 614, in holding that the jury had deducted the
amount of worker’s compensation benefits that Jarrells had received in fixing damages at
$925,000. Pendleton was a truck driver injured in a collision with a truck driven by Aguilar.
Pendleton received worker’s compensation benefits for his injuries and subsequently brought a
personal injury action against Aguilar. The jury was given the Collateral Source Instruction and
awarded a judgment to Pendleton. Aguilar filed a post-trial motion for setoff, requesting that the
trial court reduce the judgment against him in the amount of worker’s compensation benefits that
Pendleton had received. Pendleton, 827 N.E.2d at 617. The trial court granted the motion, and
the Court of Appeals reversed, holding that by granting the motion the trial court had allowed a
double set-off against Pendleton. Id. at 621.
Pendleton’s worker’s compensation was governed by Florida law, and his worker’s
compensation benefits were paid by a Florida insurance guaranty fund which did not seek
1
Delgadillo objected only on the ground there was no evidence of the cost to Jarrells of any collateral benefits. No
other objection was raised.
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reimbursement for its payments. Id. at 619. We agree with Judge Vaidik’s view in the Court of
Appeals that Pendleton is not controlling here because there was no evidence that Pendleton was
required to repay any of the worker’s compensation benefits he received. Travelers, 906 N.E.2d
at 920 (Vaidik, J., concurring). Pendleton therefore does not address how a jury would calculate
damages under the instruction if it was presented with this evidence, as occurred in Jarrells’
case.2
This case turns on how the jury valued Jarrells’ injuries at $925,000. We presume the
jury followed the instructions. See Tipmont Rural Elec. Membership Corp. v. Fischer, 697
N.E.2d 83, 90 (Ind. Ct. App. 1998). But by directing the jury to “consider” the worker’s
compensation benefits paid and also to “consider” the obligation to repay, the instruction is less
than clear how the jury is to take these payments into consideration. The jury could have
interpreted this instruction in at least two ways. The trial court concluded that the jury deducted
the amount of worker’s compensation payments from the amount of Jarrells’ damages in order to
prevent Jarrells from “recover[ing] more than once for any item of loss sustained.” The Court of
Appeals found that the amount of worker’s compensation payments should be included in the
jury’s value of damages to permit Jarrells to fulfill the obligation to repay. Travelers, 906
N.E.2d at 919.
Travelers urges us to accept the Court of Appeals’ interpretation of the judgment. We
concede the possibility that the jury included the amount of worker’s compensation payments
made to Jarrells in its award based on its assumption that he would have to repay Travelers for
those payments. We think, however, this is less likely.
First, the trial court is in the best position to determine what the jury may have intended.
See Murray v. Fairbanks Morse, 610 F.2d 149, 153 (3d Cir. 1979) (“[t]he trial judge is in the best
position to evaluate the evidence and assess whether the jury's verdict is rationally based” in
determining whether the jury verdict was excessive); Taulbee v. Mullins, 336 S.W.2d 597, 598
2
Jarrells also cites Walkup v. Wabash National Corporation, 702 N.E.2d 713 (Ind. 1998), as support for his position.
In Walkup, we declined to enforce a worker’s compensation lien in a situation where an employee had received
collateral source payments from his employer’s uninsured motorist coverage carrier. The uninsured motorist policy
explicitly excluded worker’s compensation payments from its coverage. We held that the lien was unenforceable
because the payments from the uninsured motorist policy, by definition, excluded worker’s compensation. Id. at
715. We do not find Walkup to be persuasive here.
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(Ky. 1960) (“Having conducted the trial, [the trial judge] was in a better position than [the
appellate court] to determine the basis of the jury verdict.”).
Second, the jury was informed of the amount of the worker’s compensation payments
necessary to deduct from its judgment for Jarrells to avoid a double recovery. That amount,
$66,135.67, was presented at trial, but as Travelers’ calculation of its lien demonstrates, the rules
for calculating a post-judgment lien are complex. See I.C. § 22-3-2-13. Here, no evidence was
presented to the jury regarding the actual amount that Jarrells would be required to repay to
Travelers if Travelers asserted a lien, and there was no instruction as to the rules governing this
calculation. The jury therefore could not have determined how much to add to the judgment if it
wanted to provide for Jarrells’ repayment to Travelers as opposed to “considering” it by
eliminating the damages already covered by worker’s compensation benefits.
Finally, the stated purpose of the Collateral Source Statute is to prevent double recovery.
I.C. § 34-44-1-1. This purpose was emphasized to the jury in the final sentence of the Collateral
Source Instruction. It is therefore plausible that the jury followed the instruction by deducting
the amount of the worker’s compensation payments from its verdict for Jarrells. It also appears
the parties assumed that the jury’s award would not include amounts already compensated by
worker’s compensation benefits. In closing argument R.D.J.’s attorney pointed out that Jarrells
may be required to repay worker’s compensation benefits in an amount he estimated as
$68,000.00. It was presumably in the defendant’s interest to obtain a lower judgment by
deploying the repayment obligation to reduce the award. This argument reflects the assumption
that the jury would award the lesser amount after “considering” the worker’s compensation
benefits.
Conclusion
The trial court’s order denying Travelers’ motion for summary judgment and granting
summary judgment in favor of Jarrells is affirmed.
Shepard, C.J., and Dickson, Sullivan, and Rucker, J.J., concur.
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