Midwest PMS v. Olsen

M idwest PMs and F ederated Mutual insurance coMPany,
its workers’ coMPensation carrier , aPPellants , v.
Gary dean olsen, eMPloyee , and nationwide
aGribusiness insurance coMPany, aPPellees.
778 N.W.2d 727
Filed February 26, 2010. 	No. S-09-735.
1. Jurisdiction: Appeal and Error. A jurisdictional question which does not
involve a factual dispute is determined by an appellate court as a matter of law.
2. Statutes. The meaning of a statute is a question of law.
3. Judgments: Appeal and Error. An appellate court reviews questions of law
independently of the lower court’s conclusion.
4. Jurisdiction: Words and Phrases. Ancillary jurisdiction is the power of a court
to adjudicate and determine matters incidental to the exercise of its primary juris-
diction of an action.
5. Subrogation: Words and Phrases. Generally, subrogation is the right of one,
who has paid an obligation which another should have paid, to be indemnified by
the other.
6. ____: ____. Subrogation is the substitution of one person in the place of another
with reference to a lawful claim, demand, or right, so that the one who is substi-
tuted succeeds to the rights of the other in relation to the debt or claim, and its
rights, remedies, or securities.
7. Subrogation: Liability. The doctrine of subrogation applies where a party is
compelled to pay the debt of a third person to protect his or her own rights or
interest, or to save his or her own property.
8. ____: ____. To be entitled to subrogation, one must pay a debt for which another
is liable.
9. Workers’ Compensation. The final resolution of an employee’s right to workers’
compensation benefits does not preclude an issue from being “ancillary” to the
resolution of the employee’s right to benefits within the meaning of Neb. Rev.
Stat. § 48-161 (Reissue 2004).
Appeal from the Workers’ Compensation Court. Reversed
and remanded for further proceedings.
Todd R. McWha and Luke T. Deaver, of Waite, McWha &
Harvat, for appellants.
David A. 	Dudley 	and Andrea A. 	Ordonez, 	of 	Baylor,
Evnen, Curtiss, Grimit & Witt, L.L.P., for appellee Nationwide
Agribusiness Insurance Company.
H eavican, 	c.J., 	wriGHt, 	connolly, 	G errard, 	stePHan,
MccorMack, and M iller-lerMan, JJ.
492 	279 NEBRASkA REPORTS
Nebraska Supreme Court Online Library
www.nebraska.gov/apps-courts-epub/
11/01/2026 04:48 AM CST

G errard, J.
Under 	the 	Nebraska 	Workers’ 	Compensation 	Act,1 	the
Workers’ Compensation Court has jurisdiction to decide dis-
puted claims for workers’ compensation and “any issue ancil-
lary to the resolution of an employee’s right to workers’
compensation benefits.”2 In this case, the employee settled
his claim, but one of his employer’s insurers is still pursuing
a claim of reimbursement from another insurer. The question
presented in this appeal is whether the compensation court’s
ancillary jurisdiction extends to a claim between insurers when
the employee’s right to benefits is no longer disputed.
BACkGROUND
Gary Dean Olsen suffered an injury to his right shoulder on
January 28, 2004, in an accident arising out of and in the course
of his employment with Midwest PMS. At the time, Midwest
PMS was insured for workers’ compensation by Federated
Mutual Insurance Company (Federated). All of Olsen’s bills
resulting from that injury were paid.
Olsen was injured again in late April 2005. At that time,
Midwest PMS was insured for workers’ compensation by
Nationwide Agribusiness Insurance Company (Nationwide).
Olsen filed a petition in the Workers’ Compensation Court
alleging that the April 2005 accident arose out of and in the
course of his employment with Midwest PMS, resulting in
an injury to his left shoulder and an aggravation of injury to
his right shoulder. Olsen sought permanent partial disabil-
ity benefits.
Both Federated and Nationwide answered the petition.
Federated paid indemnity and medical benefits to Olsen
for injuries following the alleged 2005 accident, but filed
a cross-claim in the Workers’ Compensation Court against
Nationwide, alleging that if Olsen suffered new injuries to
either shoulder in 2005, then Federated should be reimbursed
by Nationwide.
1 See Neb. Rev. Stat. §§ 48-101 to 48-1,117 (Reissue 2004, Cum. Supp.
2008 & Supp. 2009).
2 § 48-161.
MIDWEST PMS v. OLSEN 	493
Cite as 279 Neb. 492

The case proceeded as far as a pretrial order, which pro-
vided that the issues for trial included whether Olsen suffered
a compensable injury in 2005 and whether Federated was
entitled to reimbursement from Nationwide. But those issues
were never determined, because Olsen and Midwest PMS,
through Nationwide, reached a lump-sum settlement agreement
that was approved by the Workers’ Compensation Court on
September 17, 2008. Olsen’s petition was dismissed without
prejudice on September 19.
On October 8, 2008, Federated filed a petition in the
Workers’ Compensation Court against Olsen and Nationwide.
We acknowledge that Midwest PMS is listed as a party on the
petition and subsequent filings, but it is clear that Federated
is representing its own interests, and for simplicity, we will
refer only to Federated. In its petition, Federated alleged that if
Olsen’s 2005 right shoulder injury was a new injury instead of
a progression of the 2004 injury, and if the 2005 left shoulder
injury occurred in the scope and course of Olsen’s employ-
ment, then Federated should be reimbursed by Nationwide for
any indemnity or medical bills paid by Federated for either
2005 injury. Nationwide denied the allegations and alleged that
the Workers’ Compensation Court had no jurisdiction to decide
the dispute between the insurers. Olsen filed an answer alleg-
ing that he had been paid all of the benefits to which he was
entitled and that there was no controversy between Olsen and
Midwest PMS.
The Workers’ Compensation Court agreed with Nationwide.
Both the single judge and review panel of the Workers’
Compensation Court concluded that the court’s ancillary juris-
diction did not extend to an action between two insurers when
there was no employee’s claim pending. The single judge
dismissed the petition for lack of jurisdiction, and the review
panel affirmed that dismissal. Federated appeals.
ASSIGNMENTS OF ERROR
Federated 	assigns, 	consolidated 	and 	restated, 	that 	the
Workers’ Compensation Court erred (1) in concluding that it
did not have subject matter jurisdiction to determine an insur-
ance coverage dispute between two insurers and to determine
494 	279 NEBRASkA REPORTS

whether Federated should be reimbursed by Nationwide for
payments made to Olsen and (2) in finding that it had no sub-
ject matter jurisdiction to decide whether there was a dispute
between Midwest PMS and Olsen regarding unpaid benefits.
STANDARD OF REvIEW
[1-3] A jurisdictional question which does not involve a
factual dispute is determined by an appellate court as a matter
of law.3 The meaning of a statute is also a question of law.4 An
appellate court reviews questions of law independently of the
lower court’s conclusion.5
ANALySIS
The Workers’ Compensation Court’s ancillary jurisdiction
was enacted by the Legislature in response to this court’s
decision in Thomas v. Omega Re-Bar, Inc.6 In Thomas, the
claimant was injured while employed by a subcontractor per-
forming work in Nebraska. The employer notified its workers’
compensation insurer, but the insurer claimed that its coverage
only applied to employees working in Texas. When the claim-
ant filed a petition in the Workers’ Compensation Court, the
employer asked the court to add a different insurer as a party
defendant. The Workers’ Compensation Court found that the
claimant was entitled to benefits, but determined that neither
insurer covered the employer for the claimant’s injuries.7
On appeal, we concluded that the Workers’ Compensation
Court did not have jurisdiction to resolve the coverage dispute.
We rejected the argument that the Workers’ Compensation
Court had jurisdiction over ancillary issues, invoking the famil-
iar proposition that the Workers’ Compensation Court “is a
tribunal of limited and special jurisdiction and has only such
3 R & D Properties v. Altech Constr. Co., ante p. 74, 776 N.W.2d 493
(2009).
4 Harvey v. Nebraska Life & Health Ins. Guar. Assn., 277 Neb. 757, 765
N.W.2d 206 (2009).
5 R & D Properties, supra note 3.
6 Thomas v. Omega Re-Bar, Inc., 234 Neb. 449, 451 N.W.2d 396 (1990).
7 See id.
MIDWEST PMS v. OLSEN 	495
Cite as 279 Neb. 492

authority as has been conferred on it by statute.”8 Finding noth-
ing in the Nebraska Workers’ Compensation Act that “explic-
itly provide[d] the compensation court with subject matter
jurisdiction to hear insurance coverage disputes,” we held that
it did not have such jurisdiction.9
Three justices dissented, interpreting the Nebraska Workers’
Compensation Act “to grant, by implication, ancillary jurisdic-
tion to the court” to resolve insurance coverage issues.10 The
dissenters reasoned that an alleged insurer, as a party, should
be able to raise the defense that it had no policy covering the
accident. And the dissenters thought it unfair that the employee
would be required to proceed in district court to determine
whether the insurer had liability, causing expensive litiga-
tion and unnecessary delay. So, the dissenters suggested that
the Workers’ Compensation Court should have jurisdiction to
resolve insurance coverage issues “when such determination is
ancillary to the resolution of the employee’s right to compen-
sation benefits.”11
In response, the Legislature amended § 48-161, abrogating
Thomas and adopting the dissenters’ language that the Workers’
Compensation Court “shall have jurisdiction to decide any
issue ancillary to the resolution of an employee’s right to
workers’ compensation benefits.” The legislative history of
§ 48-161 suggests that the amendment was made at the request
of the Workers’ Compensation Court and that the Legislature’s
primary concern was that a claimant’s compensation might be
delayed if the Workers’ Compensation Court was unable to
resolve ancillary issues that affected the claimant’s ability to
obtain benefits.12
8 Id. at 452, 451 N.W.2d at 398.
9 Id. at 453, 451 N.W.2d at 399.
10 Id. at 456, 451 N.W.2d at 401 (Fahrnbruch, J., dissenting; White and
Shanahan, JJ., join).
11 Id. at 458, 451 N.W.2d at 401 (Fahrnbruch, J., dissenting; White and
Shanahan, JJ., join) (emphasis in original).
12 See Floor Debate, L.B. 313, Committee on Business and Labor, 91st Leg.,
1st Sess. 10431 (Mar. 5, 1990).
496 	279 NEBRASkA REPORTS

In Schweitzer v. American Nat. Red Cross,13 we noted the
amendment to § 48-161, and explained that the statute “was
amended to vest the Workers’ Compensation Court with the
power to determine insurance coverage disputes in the claims
before it, including the existence of coverage, and the extent
of an insurer’s liability.” Under Schweitzer, there is little
question that had the dispute in this case between Olsen and
his employer not been settled, the Workers’ Compensation
Court would have had jurisdiction to determine which insurer
provided coverage for any benefits Olsen was awarded. But
Schweitzer 	does 	not 	answer 	the 	question 	presented 	here:
Whether the court’s jurisdiction over issues “ancillary to the
resolution of an employee’s right to workers’ compensation
benefits” terminates when the employee’s right to benefits is
no longer at issue.
On the one hand, it is clear from the legislative history and
the Thomas dissent that the primary motivation for amend-
ing § 48-161 was to ensure that a claimant’s benefits were
not delayed by insurance coverage disputes that the Workers’
Compensation Court could not resolve. That concern, obvi-
ously, is not implicated in a situation such as this, when the
employee’s benefits have been finally settled.
[4] But on the other hand, an issue “ancillary to the resolu-
tion of an employee’s right to workers’ compensation benefits”
is no less ancillary to that resolution before the employee has
been paid than after. “Ancillary jurisdiction” is the power of
a court to adjudicate and determine matters incidental to the
exercise of its primary jurisdiction of an action.14 The Workers’
Compensation Court’s primary jurisdiction is exercised just as
effectively by its approval of a lump-sum settlement as by a
determination on the merits of an employee’s right to benefits.
And the claim at issue here rests on questions of fact regard-
ing Olsen’s injury that are generally decided by the Workers’
Compensation Court.
13 Schweitzer v. American Nat. Red Cross, 256 Neb. 350, 358, 591 N.W.2d
524, 530 (1999).
14 Curtice v. Baldwin Filters Co., 4 Neb. App. 351, 543 N.W.2d 474 (1996).
MIDWEST PMS v. OLSEN 	497
Cite as 279 Neb. 492

[5-8] Although Federated’s petition did not identify a legal
theory of recovery, it is apparent that Federated is alleging facts
supporting a claim of subrogation. Generally, subrogation is the
right of one, who has paid an obligation which another should
have paid, to be indemnified by the other.15 It is the substitution
of one person in the place of another with reference to a law-
ful claim, demand, or right, so that the one who is substituted
succeeds to the rights of the other in relation to the debt or
claim, and its rights, remedies, or securities.16 The doctrine of
subrogation applies where a party is compelled to pay the debt
of a third person to protect his or her own rights or interest, or
to save his or her own property.17 To be entitled to subrogation,
one must pay a debt for which another is liable.18
Here, Federated is alleging that Olsen’s medical expenses
should have been paid by Nationwide but that Federated paid
them instead. Federated’s right to recover from Nationwide is
dependent upon Olsen’s injury and his alleged right to recover
for that injury from Nationwide instead of Federated. Such
allegations state a claim of subrogation.19
Under such circumstances, where one workers’ compensa-
tion insurer is asserting a subrogated claim against another
workers’ compensation insurer, it could be argued that the
claim falls within the Workers’ Compensation Court’s pri-
mary jurisdiction, not merely its ancillary jurisdiction.20 But at
the very least, Federated’s claim is ancillary to the Workers’
Compensation Court’s exercise of jurisdiction over Olsen’s
lump-sum settlement with Nationwide—or, more precisely, his
settlement with his employer. We need not determine whether
the district court could exercise jurisdiction over such a claim
15 Leader Nat. Ins. v. American Hardware Ins., 249 Neb. 783, 545 N.W.2d
451 (1996).
16 Id.
17 Chadron Energy Corp. v. First Nat. Bank, 236 Neb. 173, 459 N.W.2d 718
(1990).
18 Leader Nat. Ins., supra note 15.
19 See id.
20 Compare, e.g., Schweitzer, supra note 13.
498 	279 NEBRASkA REPORTS

to conclude that the Workers’ Compensation Court can. And
we need not evaluate the merits of Federated’s subrogation
claim, in light of the settlement, to conclude that the Workers’
Compensation Court has jurisdiction to consider them.
[9] We hold that the final resolution of an employee’s right
to workers’ compensation benefits does not preclude an issue
from being “ancillary” to the resolution of the employee’s right
to benefits within the meaning of § 48-161. And we conclude
that under the circumstances presented here, Federated’s sub-
rogation claim was ancillary to the Workers’ Compensation
Court’s approval of the lump-sum settlement between Olsen
and his employer, Midwest PMS. The Workers’ Compensation
Court erred in concluding otherwise. And having determined
that Federated’s first assignment of error has merit, we need
not consider its argument that there was still a dispute between
Olsen and Midwest PMS.
CONCLUSION
The Workers’ Compensation Court had jurisdiction to con-
sider the merits of Federated’s claim against Nationwide,
despite the fact that Olsen had settled his claim with his
employer. The judgment of the Workers’ Compensation Court
is reversed, and the cause is remanded for further proceedings
to consider Federated’s claim on its merits.
reversed and reManded For
FurtHer ProceedinGs.
wriGHt, J., not participating in the decision.
MIDWEST PMS v. OLSEN 	499
Cite as 279 Neb. 492