American Home Assurance Co. v. Eighth Judicial District Court of the State of Nevada ex rel. County of Clark

OPINION

By the Court,

In Nevada, when a third party is at fault for an industrial accident, the workers’ compensation insurer that paid benefits to the injured worker has a lien upon any proceeds that the worker recovers from the tortfeasor, so that the insurer’s payments are reimbursed, ultimately, by the tortfeasor. During the proceedings underlying this writ petition, to protect its lien on any proceeds recovered by the injured worker to whom it provided benefits, a workers’ compensation insurer asked the district court to allow it to intervene in the injured worker’s tort litigation. Although the insurer contended that it had an absolute right to intervene in the litigation under our 1995 decision in State Industrial Insurance System v. District Court,2 the district court denied the insurer’s application. Accordingly, the insurer has brought this original petition for a writ of mandamus, requesting us to direct the district court to allow it to intervene in the injured worker’s case.

Because our 1995 decision is unsupportable under the law, however, we overrule it. We conclude that a workers’ compensation insurer may intervene in an injured worker’s litigation to protect its right to reimbursement only if it meets certain requirements, which include showing that the injured worker cannot adequately represent the insurer’s interest in the subject matter of the litigation. *1233Because the insurer here failed to show that its interest was inadequately represented by the injured worker, we deny the insurer’s request for extraordinary relief.

FACTS

Real party in interest Titanium Metal Corporation (Timet) hired real party in interest Guardsmark, Inc., to provide onsite security services. Guardsmark employed real party in interest David Carlton Madison, Jr., as a security guard. While on duty, Madison fell into an abandoned furnace pit on Timet’s property. As a result of the fall, Madison suffered severe, debilitating injuries, for which he received workers’ compensation benefits from Guardsmark’s insurer.

Madison then filed a personal injury action against Timet in December 2003, alleging several negligence theories as bases to recover damages. Timet filed a third-party complaint against Guardsmark for express and implied indemnity, and contribution.

In April 2006, over three years after the accident and approximately two-and-one-half years after Madison filed suit, Guards-mark’s workers’ compensation insurer, petitioner American Home Assurance Company (AHAC), moved to intervene in Madison’s personal injury action for purposes of recovering the workers’ compensation benefits that it had paid (and will pay) to Madison. Attached to its motion was a “complaint-in-intervention for reimbursement of workers’ compensation benefits,” alleging the same negligence claims against Timet as were alleged in Madison’s complaint and requesting both damages and a lien against any judgment in favor of Madison, in the amount of the benefits that it paid to Madison. At the time AHAC sought to intervene, a June 2, 2006 discovery cut-off date was in place, and trial was scheduled to begin on September 5, 2006.

Both Madison and Timet opposed the motion to intervene, arguing that AHAC’s complaint in intervention constituted an attempt to assert an independent cause of action against Timet and was thus subject to dismissal under the statute of limitations.3 Further, they argued, given that the intervention complaint did not even contain the word “subrogation,” it could not be construed as an effort to enforce a subrogation lien. All parties acknowledged that AHAC retained subrogation lien rights over any recovery Madison obtained and that AHAC could enforce those rights after any settlement was reached or any judgment was entered. Madison pointed out, however, that if AHAC did not intervene in the action, it would be responsible for contributing its share of the litigation expenses when collecting on its lien, as set forth in Breen v. Caesars Palace 4 Madison asserted that AHAC should not be permitted to *1234intervene at such a late date, as it attempted to do so merely to avoid paying its proportionate share of the litigation costs.

The district court denied AHAC’s motion to intervene, determining that AHAC was attempting to assert an independent cause of action against Timet, which was time-barred. The court further found that AHAC’s lien rights were adequately protected, as the parties were on notice that the lien would apply, subject to an offset for AHAC’s portion of the litigation expenses, as required under Breen.

AHAC consequently filed the instant writ petition, challenging the district court’s order denying it leave to intervene. As directed, Madison timely filed an answer, arguing that AHAC’s intervention was not appropriate under these circumstances and, therefore, writ relief was not warranted. We stayed the underlying action pending our resolution of AHAC’s petition for extraordinary writ relief.

DISCUSSION

A writ of mandamus is available to compel the performance of an act that the law requires as a duty resulting from an office, trust or station,5 or to remedy a manifest abuse of discretion.6 Mandamus is available only when petitioner has no plain, speedy, and adequate legal remedy,7 and whether we will consider a petition for the extraordinary remedy of mandamus is entirely within our discretion.8 The petitioner bears the burden of demonstrating that mandamus relief is warranted.9

We have determined that our discretionary consideration of this petition is appropriate because AHAC has no other adequate means by which to challenge the district court’s refusal to allow it to intervene in the underlying suit.10 After considering the petition and answer thereto, however, we conclude that extraordinary writ relief is not warranted. Specifically, even though AHAC has an interest in Madison’s litigation of his personal injury claims, the district court has discretion in deciding whether AHAC has shown that intervention is appropriate so that it may promote or protect that interest. We conclude that the district court did not manifestly abuse its discretion when it denied AHAC leave to intervene, given Madison’s ability to adequately represent AHAC’s interest.

*1235 Intervention is within the district court’s discretion

AHAC argues that, in accordance with this court’s decision in State Industrial Insurance System v. District Court (SIIS),11 it may automatically intervene in Madison’s suit against Timet as a matter of right. Accordingly, AHAC argues, the district court was obligated to allow it to intervene. Because we determine that our conclusion in SIIS, that an insurer has an absolute right to intervene in an injured worker’s lawsuit, is not supportable under Nevada law, and because the district court did not abuse its discretion in disallowing AHAC’s intervention, we disagree.

Nevada law

NRS 12.130 allows, before the trial commences, “any person . . . who has an interest in the matter in litigation, in the success of either of the parties, or an interest against both” to intervene in an action under the Nevada Rules of Civil Procedure (NRCP).12 NRCP 24 governs intervention, providing for both intervention of right and permissive intervention. At issue here, NRCP 24(a) directs the district court to approve a timely application to intervene of right when either (1) a statute grants an unconditional right to intervene, or (2) “the applicant claims an interest relating to the [subject] property . . . and the applicant is so situated that the disposition of the action may as a practical matter impair or impede the applicant’s ability to protect that interest, unless the applicant’s interest is adequately protected by existing parties.”13 An application to intervene must be “accompanied by a pleading setting forth the claim ... for which intervention is sought.”14

In SIIS, we ultimately concluded that the industrial insurer had a right to intervene under both subsections (1) and (2) of NRCP *123624(a).15 First, a majority of the SIIS court concluded that, under NRAP 24(a)(1), statutory intervention rights existed. The majority noted that NRS 616C.215 (formerly NRS 616.560) provides that when a workers’ compensation insurer pays benefits to an injured worker, it becomes subrogated to the injured workers’ right to recover damages from a third-party tortfeasor. Then the majority pointed out that, by asserting its subrogation rights, an insurer could obtain reimbursement in one of two different ways: the insurer could either enforce a lien statutorily imposed on any proceeds recovered by the injured worker or assert an independent action against the negligent third party.16 The majority determined that ‘ ‘this latter form of reimbursement, when literally applied, is a statutory right of intervention.”17 Thus, even though neither NRS 616C.215 nor any other statute expressly grants an industrial insurer the unconditional right to intervene in an injured worker’s lawsuit, the majority concluded that such a right nonetheless exists.

The majority went on to explain that, since the industrial insurer had a right to sue the third-party tortfeasor independently, in which case all the same parties would necessarily be joined, the same amalgamation would occur if the insurer were simply allowed to intervene in the worker’s suit, especially as the two separate actions would be providently consolidated.18 Therefore, the majority concluded, although not an express statutory right, the unconditional right to intervene under NRCP 24(a)(1) “exists by practical application.”19

The majority also concluded that intervention was also appropriate under NRCP 24(a)(2) because the injured worker’s representation was inadequate to “preservfe] the integrity of [the insurer’s] statutory lien.”20 In so concluding, the majority noted that, under Breen v. Caesars Palace,21 an employer (or an employer’s insurer) that is reimbursed by way of its lien is required to “reduce the amount of its lien recovery by a proportionate share of the litigation expenses,” so that the employer or its insurer does not receive a windfall.22 Thus, in SIIS, the majority deemed intervention appropriate to allow the insurer to expend its own monies and *1237efforts to obtain reimbursement, and thereby avoid the reduction of any lien recovery under the Breen formula.23

But our review of this petition leads us to conclude that the SIIS majority’s analysis is flawed, in respect to both subsections (1) and (2) of NRCP 24(a). First, NRCP 24(a)(1) does not apply, as no statutory right to intervene exists. Second, intervention under NRCP 24(a)(2) is only appropriate when that subsection’s requirements have been met.

Intervention under NRCP 24(a)(1) is inapplicable

As even the SIIS majority acknowledged, NRCP 24(a)(1) requires that a statute “confer[ ] an unconditional right to intervene,” and no such statute has been enacted. Thus, an unconditional right of intervention, as necessary to intervene under NRCP 24(a)(1), does not exist in Nevada. The majority’s “practical” result, which creates an absolute statutory right of intervention when the Legislature has not done so, may operate unfairly to any injured worker who does not desire the insurer’s intervention, in any case in which the insurer’s intervention is unwarranted or inappropriate.

The two concurring justices in SIIS apparently recognized the injustice that could result from such an inflexible rule allowing an insurer to intervene in every injured worker’s case. The SIIS concurrence provided that, in the absence of direct legislative direction, the court should not alter the district courts’ prior practice to exercise discretion when determining whether intervention was appropriate.24 Further, the concurrence pointed out, the Legislature has protected an insurer’s right to recoup its costs by not only imposing a statutory lien on any proceeds an injured worker may obtain, but also by permitting it to bring an independent action, based on its subrogation rights, if necessary.25 Accordingly, the concurring justices suggested, the insurer has no need to intervene in every injured worker’s lawsuit, and the district court should be able to deny intervention when an insurer’s “involvement in the case is unwarranted and would unduly complicate the issues and mislead the jury.”26

We agree with the concurring justices that intervention of right should be available only after the district court, exercising its *1238discretion, determines that the applicant has met the NRCP 24(a)(2) requirements and the applicant’s intervention is otherwise appropriate.27 Accordingly, in the action underlying this petition, AHAC had no absolute right to intervene under NRCP 24(a)(1), and we proceed to its assertion that intervention should have been allowed under NRCP 24(a)(2).

Intervention is appropriate under NRCP 24(a)(2) only when all the requirements of that subsection have been met

As noted, to intervene under NRCP 24(a)(2), an applicant must meet four requirements: (1) that it has a sufficient interest in the litigation’s subject matter, (2) that it could suffer an impairment of its ability to protect that interest if it does not intervene, (3) that its interest is not adequately represented by existing parties, and (4) that its application is timely. Determining whether an applicant has met these four requirements is within the district court’s discretion.28

Normally, a workers’ compensation insurer will be able to meet the first two requirements. With respect to the third factor, AHAC has not shown that Madison cannot adequately represent its interests. Accordingly, we do not determine the timeliness of AHAC’s application.

Generally, a workers’ compensation insurer has an interest in the injured worker’s litigation against an alleged tortfeasor

With regard to the first NRCP 24(a)(2) requirement, that the applicant show a sufficient interest in the litigation’s subject matter, we note that, as federal courts have recognized in interpreting the equivalent federal rule, no “bright-line” test to determine an alleged interest’s sufficiency exists.29 A general, indirect, contin*1239gent, or insubstantial interest is insufficient, however.30 Instead, an applicant must show a “significantly protectable interest.”31 A “significantly protectable interest” has been described, by the Ninth Circuit Court of Appeals, as one that is protected under the law and bears a relationship to the plaintiff’s claims.32

With respect to these two components of “significantly pro-tectable interest,” a workers’ compensation insurer’s interest in obtaining reimbursement through its subrogation right is protected under law and arises out of the same events as do an injured worker’s claims. Thus, the insurer generally has an interest sufficient to intervene under NRCP 24(a)(2). As noted, under NRS 616C.215, a workers’ compensation insurer is subrogated to the injured workers’ right to recover against a tortfeasor.33 Through its subrogation right, the insurer “bec[omes] at least a partial owner of [the] cause of action.”34 Indeed, under Nevada law, the insurer obtains such a significant interest in the injured workers’ claims as the result of its subrogation right, that it may itself sue the alleged tortfeasor, even if the injured worker does not.35 Consequently, as the provider of Madison’s workers’ compensation benefits, AHAC shares, by subrogation, a legally protectable interest in Madison’s claims against Timet.36

Although AHAC’s subrogation rights create a sufficient interest to intervene under NRCP 24(a)(2), its lien rights do not. The subject matter of Madison’s litigation — whether Timet was negligent— *1240is significantly different than the question of whether AHAC may recover on its statutory lien. AHAC’s lien recovery is contingent upon Madison successfully resolving his claims, and the lien’s existence does not give AHAC the right to maintain a claim for negligence against Timet.37 Accordingly, simply because AHAC has a lien on any proceeds recovered in Madison’s litigation does not give it an interest in participating in Madison’s attempt to prove that Timet’s negligence resulted in a certain amount of damage to Madison. Thus, AHAC’s interest in Madison’s suit arises solely in connection with its subrogation to Madison’s right to recover.38

Generally, a workers’ compensation insurer’s ability to protect its interest could be impaired by the disposition of the injured worker’s action

NRCP 24(a)(2)’s second requirement is met if the district court determines that the insurer’s ability to protect its interest in the litigation’s subject matter might be impaired by the disposition of the injured worker’s action. Because the injured worker and the insurer share “but one cause of action,”39 the disposition of the injured worker’s action necessarily impacts the insurer’s subrogation interest. And as, generally, only one final outcome of the claims against the alleged tortfeasor on account of the industrial injury may exist, once the injured worker’s case is resolved, whether by *1241judgment, dismissal with prejudice, or settlement, the insurer no longer has any right to proceed with a separate action against the alleged tortfeasor, even if any recovery the injured worker obtains is insufficient to fully reimburse the insurer’s expenses.40 Thus, in the proceedings below, “as a practical matter,” AHAC’s ability to protect its interest may be impacted by the resolution of Madison’s action.41

Whether existing parties adequately represent the workers’ compensation insurer’s interest is determined by the particular facts of each case

But, under NRCP 24(a)(2)’s third requirement, the insurer has no right to intervene if its interest is adequately represented by the injured worker. Although the applicant insurer’s burden to prove this requirement has been described as “minimal,” when the insurer’s interest or ultimate objective in the litigation is the same as the injured worker’s interest or subsumed within the worker’s objective, the injured worker’s representation should generally be adequate, unless the insurer demonstrates otherwise.42

To explain, most injured workers undoubtedly will strive to obtain the greatest amount in damages warranted under the circumstances. Consequently, the insurer’s objective in obtaining from the tortfeasor an amount sufficient to fully reimburse its costs is com*1242pletely subsumed within the injured worker’s objective.43 Thus, unless the insurer can show that the injured worker has a different objective, adverse to its interest, or that the worker otherwise may not adequately represent their shared interest, the worker’s representation is assumed to be adequate.44 And the longer an insurer waits after the litigation commences before applying to intervene,45 the more the insurer’s acceptance of the injured worker’s representation as adequate can be implied, and the stronger the showing to the contrary must be to overcome that inference.

Here, AHAC has not shown that Madison may not adequately protect its interest in recovering damages from Timet. As mentioned, AHAC did not try to intervene in Madison’s litigation until approximately two-and-one-half years after it was instituted, shortly before the discovery cut-off date, and only a few months before trial was scheduled to commence. Thus, although AHAC might have more easily met this requirement’s “minimal” standard if it had applied to intervene early on, its failure to do so until after Madison had completed much of the pretrial litigation makes AHAC’s burden more difficult because it suggests that it is comfortable with how Madison has proceeded with the case.

Even so, AHAC has not even suggested, much less demonstrated, that Madison is not fully and competently prosecuting his case.46 And AHAC has pointed to no recently discovered information indicating that Madison’s interest is somehow adverse to its interest. Further, the district court, which has had ample opportunity to assess Madison’s representation, has found that his representation adequately protects AHAC’s interest. As the court pointed out, *1243all parties are aware of AHAC’s interest in any recovery, and Madison has expressly recognized AHAC’s right to be reimbursed from any proceeds.

Nevertheless, AHAC argues that, because Madison’s interest lies in maximizing his recovery, Madison cannot adequately represent its contrasting interest in avoiding the lien amount’s reduction (by its proportionate share of the litigation expenses) under Breen,47 As noted above, however, AHAC’s right to intervene in Madison’s litigation is based on its direct interest, arising from subrogation, in the litigation’s subject matter, not in its interest in asserting and protecting the size of its anticipated lien on any recovery. Although the SIIS majority indicated that intervention is appropriate because an injured worker cannot adequately represent an insurer’s interest in avoiding payment of its proportionate share of the litigation costs under Breen, that reasoning is based on the insurer’s ability to protect an interest for which no right to inter*1244vene exists. Accordingly, we disprove of the SIIS majority’s reasoning.48

Determining whether an application is timely requires balancing any prejudice to the parties

NRS 12.130(1) provides that an applicant may intervene “[bjefore the trial.” As we have previously recognized, however, even when made before trial, an application must be “timely” in the sense afforded the term under NRCP 24. Determining whether an application is timely under NRCP 24 involves examining “ ‘the extent of prejudice to the rights of existing parties resulting from the delay’ ”49 and then weighing that prejudice against any prejudice resulting to the applicant if intervention is denied. Further, the timeliness of an application may depend on when the applicant learned of its need to intervene to protect its interests.50 Thus, in deciding whether an application is timely, the district court must consider the length of delay and the reasons therefore, in light of the applicant’s obligation under Breen to share in the litigation expenses.

As AHAC’s application to intervene was properly denied based on its failure to meet the NRCP 24(a)(2) requirements, however, we do not further discuss the timeliness of its application, other than as it relates to the third NRCP 24(a)(2) requirement.51

CONCLUSION

As our prior opinion in SIIS included a flawed analysis, we overrule that decision. Thus, AHAC has no absolute right to intervene *1245in Madison’s third-party tort action under NRCP 24(a)(1) and could have intervened under NRCP 24(a)(2) only if it was able to show that Madison might not adequately represent its interest. Since AHAC waited until shortly before the trial to seek intervention and failed to show that Madison’s representation was inadequate, the district court did not abuse its discretion in denying AHAC’s intervention application. Consequently, we conclude that extraordinary writ relief is not warranted. Accordingly, we deny this writ petition and vacate our stay of the underlying proceedings.