Liberty Northwest Ins. Corp. v. Golden

*66RICHARDSON, P. J.

Petitioners seek review of a third-party distribution order of the Workers’ Compensation Board issued under ORS 656.593(3). They contend that the lien provided under ORS 656.593(1) should be paid from the third-party settlement before any of the proceeds are allocated or distributed to any beneficiaries of the worker. They also contest the Board’s calculation of the amount of the lien. We remand.

Theresa Lester (decedent) was killed when she was hit by a truck while working as a flagger for petitioner Oregon Asphalt Paving (employer). She was survived by her husband and two minor children. Petitioner Liberty Northwest Insurance Corporation (Liberty) was the workers’ compensation insurer for employer. It accepted a workers’ compensation claim and pays benefits to decedent’s husband and children: $806.84 per month to husband and $150 per month for each child. ORS 656.204.

Respondent, the personal representative of decedent’s estate, brought a wrongful death action for the benefit of the husband and the children against the driver of the truck that hit decedent. The truck driver’s carrier offered to settle the action for $300,000. Liberty did not object to the amount of the settlement1 and respondent petitioned the probate court for an order apportioning the settlement to the beneficiaries under ORS 30.040. With the husband’s concurrence, the probate court allocated one-half of the settlement to each child and nothing to husband.

Respondent then petitioned the Board to resolve a dispute as to the distribution of the settlement proceeds, particularly the amount that Liberty could recover on its lien. Liberty requested that all of the costs of the claim, including benefits paid to the husband and the children, be paid under ORS 656.593. The Board held that the claim costs attributable to an individual beneficiary should be payable only from the amount of the settlement allocated to that beneficiary by the probate court. Because none of the proceeds was allocated to husband, it held that the claim costs related to him were not to be recoverable from the settlement.

*67Liberty argues that, under ORS 656.593, there is a single lien for the costs of providing benefits under the workers’ compensation claim and that lien is against all the settlement proceeds from an action under ORS 656.593(1) after the distributions specified in ORS 656.593(l)(a) and (b).

Respondent argues that the Board properly exercised its discretion in determining a ‘ ‘just and proper distribution.” ORS 656.593(3). She notes that decedent and her husband had not been living together for almost one year before the fatal injury and that decedent had filed for dissolution of the marriage. She argues that the children suffered the loss from their mother’s death and it, therefore, is just that they receive all of the proceeds. The husband, she contends, suffered no loss and is entitled to no part of the settlement.

Allocation of damages among beneficiaries of a wrongful death action under ORS 30.030 is not the same as the distribution of the proceeds between the workers’ compensation paying agency and the decedent’s estate under ORS 656.593(3). The beneficiaries of a wrongful death action, ORS 30.020, are not the same as beneficiaries under the Workers’ Compensation Act. ORS 656.204. The issue for the probate court, under ORS 30.030, is the amount that each beneficiary in the wrongful death action is to receive, according to that beneficiary’s loss. Under ORS 656.593(3), the issue for the Board is what amount is just and proper for the paying agency to receive on its lien.

The Board, however, utilized the criteria under ORS 30.030 in deciding what is just and proper for the paying agency to receive. The Board essentially agreed with the probate court that husband had suffered no loss and should receive none of the proceeds from the settlement. From that conclusion, the Board held that it was therefore just and proper that Liberty not be paid the portion of its claim costs attributable to benefits paid to him. That puts the cart before the horse.

The structure of ORS 656.593 is that the paying agency’s lien attaches to the gross proceeds of the settlement after the costs of obtaining it are subtracted, ORS 656.593(l)(a), and one-third of the balance is distributed to *68the estate for the beneficiaries. ORS 656.593(l)(b). After those deductions, the paying agency is to receive what is just and proper toward payment of its lien and the remainder is distributed to the beneficiaries. The probate court may determine, under ORS 30.030, the allocation of the amounts distributed pursuant to ORS 656.593. The action of the probate court cannot determine the amount available for discharge of the paying agency’s lien by allocating settlement proceeds to the beneficiaries designated under the Workers’ Compensation Law.

Respondent argues that Scarino v. SAIF, 91 Or App 350, 755 P2d 139, rev den 306 Or 660 (1988), authorizes the probate court to distribute proceeds of a wrongful death action before the paying agency’s lien is paid. That case is distinguishable. There, as a result of the decedent’s death from an occupational disease, the personal representative of the estate brought a wrongful death action in federal district court pursuant to Washington law. A probate court in Washington distributed part of the judgment in the action to decedent’s spouse, who was a beneficiary under Oregon’s Workers’ Compensation Act, and the balance to persons who were not workers’ compensation beneficiaries but were beneficiaries of the wrongful death action. We held that the part of the judgment payable to persons who were not workers’ compensation beneficiaries was not subject to SAIF’s lien for workers’ compensation benefits, because that part of the judgment was not obtained by an action under ORS 656.593(1), i.e., it was not obtained by the worker’s beneficiaries from a third party. See also Robertson v. Davcol, Inc., 99 Or App 542, 783 P2d 43 (1989).

Here, the settlement was of an action brought for the benefit of persons who are workers’ compensation beneficiaries. The distribution of settlement proceeds under ORS 656.593 is to the beneficiaries as a class, not to individuals. Individual allocation of damages is done by the probate court under ORS 30.030. There is a single lien and a single settlement.

The Board has some discretion to determine what is just and proper for the paying agency to receive, but that discretion must be exercised in the proper legal framework. *69Because the Board used the wrong legal standard, we remand for reconsideration.

In the second assignment of error, Liberty contends that the Board incorrectly calculated the amount of its lien. Liberty argues that, under ORS 656.593(l)(c), the lien includes “the present value of its reasonably to be expected future expenditures for compensation.” It essentially disputes the formula that the Board used in determining the present value of future benefits. Liberty and respondent presented expert testimony on the proper calculation. The Board accepted the testimony of respondent’s expert. There is substantial evidence to support the determination.

Remanded for reconsideration of distribution; otherwise affirmed.

Petitioners do not contend that the settlement is void because they did not approve it in writing. ORS 656.587.