ST. LOUIS — In a recent ruling, the Eastern District of the Missouri Court of Appeals upheld a lower court’s decision in a dispute between two former employees and Grinnell Mutual Reinsurance Company, over a workers' compensation subrogation lien.
The lien, which allows insurers to recover payments made to employees if those employees later receive a legal settlement from a third party, was at the center of a conflict after Jason Wolk and Jeffrey Meyer won a multi-million dollar settlement in a separate personal injury lawsuit, according to a court opinion filed Oct. 22 in the Missouri Court of Appeals-Eastern Division.
The case began when Wolk and Meyer, both employed by J. Wolk Construction LLC, suffered injuries at work.
Grinnell Mutual compensated them through workers' compensation, paying Wolk nearly $901,000 and Meyer approximately $816,000.
Later, Wolk and Meyer pursued additional damages in a personal injury suit against third parties, ultimately settling with one defendant for $1 million, from which each repaid Grinnell a portion, $113,517.05 each, of the benefits they received.
In anticipation of a further settlement from their personal injury lawsuit, Wolk, Meyer and Grinnell Mutual entered into an agreement in April 2021.
The settlement agreement outlined how any future recovery from the personal injury case would be divided, setting conditions to satisfy Grinnell’s subrogation lien.
Key terms included a 40% attorney fee deduction, a 30% allocation for loss of consortium claims by the employees' wives, and a distribution of the remaining funds among Wolk, Meyer, and Grinnell to cover the lien, according to the opinion.
Ultimately, Wolk and Meyer received a substantial award in the personal injury suit, with Wolk awarded $11 million and Meyer $13.5 million.
Their wives received additional awards for loss of consortium.
The defendants, however, agreed to cap their liability at $20 million, which Wolk and Meyer divided equally.
However, when it came time to satisfy Grinnell’s lien, disagreements arose over how to apply the terms of the April 2021 settlement agreement, leading Wolk and Meyer to seek a declaratory judgment from the court on interpreting the agreement under Missouri’s subrogation statute, Section 287.150.3.
The trial court ruled that Grinnell was entitled to recover its lien according to the statute and the settlement agreement, which limited Grinnell’s recovery to the total amount it had originally paid in workers' compensation benefits.
The court calculated Wolk’s repayment at $787,452.78 and Meyer’s at $702,312.42 after accounting for their previous repayments from the $1 million settlement.
Wolk and Meyer argued that Grinnell’s lien should be reduced by attorney fees and other costs, claiming they were misled in the settlement agreement due to a mutual mistake, as they had not anticipated the $20 million outcome.
The appellate court found no evidence of mutual mistake, noting that the larger-than-expected settlement was not a material fact affecting the agreement.
It also rejected the argument that the agreement should be rescinded on grounds of "equity and reasonableness," stating that rescission requires evidence of fraud, which was not present.
The appellate court affirmed the trial court’s ruling, concluding that Grinnell’s recovery was properly limited to the amount it originally paid in benefits, consistent with the terms of the agreement.
The appellants are represented by Joseph T. Neely and Anthony R. Behr.
The respondent is represented by Lori Ann Schmidt and Brian K. McBrearty.
Attorneys for the parties declined to comment on the matter.
Missouri Court of Appeals-Eastern District case number: ED112371