The Arkansas Court of Appeals case, Little Rock Ambulance Authority v. James Binkley, involves an appeal regarding a workers’ compensation claim stemming from a motor vehicle accident on December 16, 2014. Appellee Binkley, a paramedic, sustained serious injuries when an ambulance he was in was struck by a police vehicle. Following the accident, Binkley’s claim was accepted by the Arkansas Municipal League Workers’ Compensation Trust, which initiated benefit payments.
Binkley sought a settlement from the City of Maumelle and the Municipal Vehicle Program (MVP), ultimately receiving $25,000. However, the Arkansas Workers’ Compensation Commission later reversed the administrative law judge's findings, ruling that Binkley was entitled to a full reimbursement of $8,333.33 from the unauthorized third-party settlement. The Commission also determined that the appellants failed to demonstrate an entitlement to a credit of $5,139.95 for overpayment of permanent partial disability benefits. Furthermore, Binkley was denied attorney’s fees, prompting his cross-appeal.
The appellate court affirmed the direct appeal while reversing and remanding the decision on the cross-appeal regarding attorney’s fees. The case highlights issues of subrogation rights under Arkansas law, particularly the restriction that the Arkansas Municipal League's interest in the settlement is limited to one-third of the recovery.
A check for $8,333.33 was issued to the Arkansas Municipal League for Mr. Binkley, who has a 100% disability rating for his eye, entitling him to 105 weeks of benefits. As of July 7, 2016, Mr. Binkley signed a Claimant’s Lump Sum Request, which the Commission approved shortly thereafter. He accrued benefits totaling $33,406.14, of which $33,318.00 has been paid, leaving a balance of $88.14. For future permanent partial disability (PPD), calculations indicate amounts owed of $29,756.30 and $35,848.01, leading to a total authorization for a lump sum payment of $65,692.45.
A dispute arose regarding funds disbursed to the Arkansas Municipal League and its subrogation rights, with Mr. Binkley’s new attorney, Eddie Walker, asserting that the Municipal League should return funds from a third-party settlement, claiming he was not made whole. The appellants also argued that PPD benefits were overpaid due to miscalculations. Following a hearing, the Administrative Law Judge (ALJ) found that overpayments were made but denied a refund for the third-party settlement. Mr. Binkley appealed, and the Commission reversed the ALJ’s findings, ruling that the respondents failed to demonstrate entitlement to a credit for alleged overpayments and ordered full reimbursement of the $8,333.33 paid in relation to the unauthorized settlement, citing that Mr. Binkley was not barred from this refund by estoppel or other doctrines.
The Commission also clarified that attorney’s fees would not be awarded in this case, as they apply only to indemnity benefits, which were not awarded. The decision of the Commission is now subject to appeal.
Appellate courts review the Commission's decisions by viewing evidence favorably towards the Commission's findings, affirming the decision if supported by substantial evidence—defined as evidence that reasonable minds could agree upon. Reversal of a Commission decision occurs only if it is clear that fair-minded individuals could not have reached the same conclusion. The Commission has discretion in determining the credibility of testimony and resolving conflicting evidence.
In this case, appellants argue that the Commission's decision contradicts legal standards and facts. They assert that because appellee agreed to and facilitated payment of their subrogation interest, he cannot rescind that agreement. Appellants claim they are also entitled to a credit for Permanent Partial Disability (PPD) overpayment, acknowledging the Commission's finding that appellee was not made whole by the third-party settlement, which negates their right to subrogation.
Despite this acknowledgment, appellants argue that a binding agreement was reached regarding subrogation, wherein they considered their interest satisfied in exchange for a portion of the settlement. They contend that the Commission's requirement for repayment of subrogation funds is erroneous, asserting that subrogation serves to prevent unjust enrichment and achieve equity among parties.
According to Arkansas law, specifically section 11-9-410(b)(1), employers or carriers have the right to pursue third-party actions for employee injuries, but such settlements are subject to the approval of a court or the Workers’ Compensation Commission, following adequate notice to the compensation carrier. The right to subrogation arises only after the insured is made whole, preventing double recovery. The insured's right to be fully compensated takes precedence over the insurer's right to subrogation, which only comes into effect when the insured's recovery exceeds their total damages.
Appellee disbursed funds from a $25,000 third-party settlement without appellants having a lien, and appellants did not contest appellee’s assertion that the settlement did not fully compensate him, indicating that appellants' right to subrogation had not yet arisen. Therefore, the payment does not fulfill any subrogation interest. Arkansas Code Annotated section 11-9-410(c)(1) mandates that settlements under specified subsections require court or Workers’ Compensation Commission approval, particularly for disbursements related to compensation. In this case, the Commission found that there was no evidence of such approval, which is statutorily necessary.
Appellants' claim that appellee is estopped from recovering the funds based on laches or unclean hands lacks supporting evidence; no proof was presented showing appellee acted improperly or disadvantaged appellants. Consequently, the Commission concluded that appellants failed to substantiate their estoppel claim against appellee for reimbursement of the $8,333.33 mistakenly paid.
Regarding appellants' entitlement to a credit of $5,195.35 against future disability benefits due to overpayment of prior permanent partial disability (PPD) benefits, appellants indicated they paid $100,510.45 based on a 41 percent body-as-a-whole rating from Dr. Baskin, having waived a hearing on this matter. Despite later claiming inconsistencies in Dr. Baskin’s report concerning disfigurement and an eye injury, the Commission noted that appellants should have reviewed the report prior to waiving their rights. The Commission found no merit in appellants' arguments, as they did not dispute appellee's 5 percent whole-person rating for loss of olfactory nerve function or the 8 percent for residual mental status impairment, leading to a total of 13 percent whole-body impairment. This results in an entitlement of $27,085.50 for the specified impairments. Appellants contested Dr. Baskin’s 24 percent whole-person impairment rating for appellee’s eye injury, asserting that Arkansas law equates total eye loss to 105 weeks of benefits at the total-disability rate.
Appellants argue that appellee should receive $64,785 for the loss of his right eye, based on a total disability rate of $617 per week. They challenge Dr. Baskin's inclusion of a 10 percent body rating for facial disfigurement, claiming it exceeds the $3,500 maximum allowed under Arkansas Code Annotated section 11-9-524(a) for serious and permanent facial or head disfigurement. Appellants calculate that combining $27,085.50 for olfactory nerve function and mental impairment with the aforementioned amounts results in total PPD benefits of $95,370.50, and they assert they overpaid appellee by $5,139.95.
However, the Commission determined that facial impairment and facial disfigurement are distinct issues. The Commission clarified that Dr. Baskin's assessment of permanent anatomical impairment of the face does not equate to a disfigurement rating under the cited statute. The Commission utilized the American Medical Association (AMA) Guides to assess anatomical impairment and found Dr. Baskin's 10 percent rating for facial impairment was supported by objective evidence. Thus, the Commission concluded that appellants did not overpay benefits and are not entitled to a credit against future benefits.
On cross-appeal, appellee seeks attorney's fees for the denial of appellant's credit request, reimbursement ordered to him, and for prevailing on appeal. He argues the Commission erred in denying fees based on its view that it had not awarded indemnity benefits but merely ordered reimbursement from an unauthorized third-party settlement. According to Arkansas Code Annotated section 11-9-715(a)(B)(ii), fees are allowed only on the amount of compensation that is controverted and awarded. Previous court rulings emphasize that attorney's fees should burden the party that necessitated the litigation, reinforcing the principle that an insured should be made whole before an insurer's right to subrogation arises. In Logan County v. McDonald, the Commission's decision to award a controverted attorney’s fee was upheld, recognizing the employee had not been made whole by a third-party settlement.
Appellants did not contest appellee's assertion that he had not been fully compensated by the third-party settlement, which meant that appellants' subrogation rights did not activate. Consequently, appellee incurred legal expenses to defend his awarded benefits in the Workers’ Compensation Commission case, demonstrating direct proof of controversion. The court referenced Liberty Mutual Insurance Company v. Youngblood, contrasting it with Burton v. Chartis Claims, Inc., highlighting that Youngblood's legal expenses during a made-whole hearing constituted valid controversion, unlike the mere intervention seen in Burton. Appellants sought to reclaim funds from the third-party settlement and claimed they had overpaid PPD benefits, which was an effort to recoup amounts already disbursed to appellee. The court determined that this constituted controversion, warranting attorney’s fees for appellee, and reversed the Commission's denial of fees related to the $8,333.33 reimbursement from the settlement and the finding of no overpayment of $5,139.95. According to Arkansas Code Annotated section 11-9-715(b)(1), since appellee prevailed on appeal, he was entitled to additional attorney’s fees. The Commission's denial of appellants' overpayment credit and subrogation payment request was overturned, affirming that appellee was entitled to fees for defending his benefits. The court found substantial evidence supporting the Commission's decision regarding the third-party settlement and alleged overpayment but ruled that the denial of attorney's fees was erroneous. The case was reversed and remanded to the Commission for a determination of appropriate attorney’s fees. The decision was affirmed on direct appeal and reversed and remanded on cross-appeal.
