§386-8  Liability of third person.  When
a work injury for which compensation is payable under this chapter has been
sustained under circumstances creating in some person other than the employer
or another employee of the employer acting in the course of his employment a
legal liability to pay damages on account thereof, the injured employee or his
dependents (hereinafter referred to collectively as the employee) may claim
compensation under this chapter and recover damages from such third person.



If the employee commences an action against
such third person he shall without delay give the employer written notice of
the action and the name and location of the court in which the action is
brought by personal service or registered mail.  The employer may, at any time
before trial on the facts, join as party plaintiff.



If within nine months after the date of the
personal injury the employee has not commenced an action against such third
person, the employer, having paid or being liable for compensation under this
chapter, shall be subrogated to the rights of the injured employee.  Except as
limited by chapter 657, the employee may at any time commence an action or join
in any action commenced by the employer against such third person.



No release or settlement of any claim or action
under this section is valid without the written consent of both employer and
employee.  The entire amount of the settlement after deductions for attorney's
fees and costs as hereinafter provided, is subject to the employer's right of
reimbursement for his compensation payments under this chapter and his expenses
and costs of action.



If the action is prosecuted by the employer
alone, the employer shall be entitled to be paid from the proceeds received as
a result of any judgment for damages, or settlement in case the action is
compromised before judgment, the reasonable litigation expenses incurred in
preparation and prosecution of such action, together with a reasonable attorney's
fee which shall be based solely upon the services rendered by the employer's
attorney in effecting recovery both for the benefit of the employer and the
employee.  After the payment of such expenses and attorney's fee, the employer
shall apply out of the amount of the judgment or settlement proceeds an amount
sufficient to reimburse the employer for the amount of his expenditure for
compensation and shall pay any excess to the injured employee or other person
entitled thereto.



If the action is prosecuted by the employee
alone, the employee shall be entitled to apply out of the amount of the
judgment for damages, or settlement in case the action is compromised before
judgment, the reasonable litigation expenses incurred in preparation and
prosecution of such action, together with a reasonable attorney's fee which
shall be based solely upon the services rendered by the employee's attorney in
effecting recovery both for the benefit of the employee and the employer. 
After the payment of such expenses and attorney's fee there shall be applied
out of the amount of the judgment or settlement proceeds, the amount of the
employer's expenditure for compensation, less his share of such expenses and
attorney's fee.  On application of the employer, the court shall allow as a
first lien against the amount of the judgment for damages or settlement
proceeds, the amount of the employer's expenditure for compensation, less his
share of such expenses and attorney's fee.



If the action is prosecuted both by the
employee and the employer, in a single action or in consolidated actions, and
they are represented by the same agreed attorney or by separate attorneys,
there shall first be paid from any judgment for damages recovered, or
settlement proceeds in case the action or actions be settled before judgment,
the reasonable litigation expenses incurred in preparation and prosecution of
such action or actions, together with reasonable attorney's fees based solely
on the services rendered for the benefit of both parties where they are
represented by the same attorney, and where they are represented by separate
attorneys, based solely upon the service rendered in each instance by the
attorney in effecting recovery for the benefit of the party represented.  After
the payment of such expenses and attorneys' fees there shall be applied out of
the amount of the judgment for damages, or settlement proceeds an amount
sufficient to reimburse the employer for the amount of his expenditure for
compensation and any excess shall be paid to the injured employee or other
person entitled thereto.



In the event that the parties are unable to
agree upon the amount of reasonable litigation expenses and the amount of
attorneys' fees under this section then the same shall be fixed by the court.



After reimbursement for his compensation
payments the employer shall be relieved from the obligation to make further
compensation payments to the employee under this chapter up to the entire
amount of the balance of the settlement or the judgment, if satisfied, as the
case may be, after deducting the cost and expenses, including attorneys' fees.



The amount of compensation paid by the employer
or the amount of compensation to which the injured employee is entitled shall
not be admissible in evidence in any action brought to recover damages.



Another employee of the same employer shall not
be relieved of his liability as a third party, if the personal injury is caused
by his wilful and wanton misconduct.



If the special compensation fund has paid or is
liable for any compensation under this chapter, the fund shall be entitled to
all the rights and remedies granted an employer under this section; provided
that the employer's right to reimbursement for compensation payments and
expenses under this chapter shall have priority. [L 1963, c 116, pt of §1;
Supp, §97-8; am L 1967, c 53, §1; HRS §386-8; am L 1969, c 13, §1; am L 1970, c
58, §1; am L 1973, c 144, §1]



 



Cross References



 



  Mailing of notice, see §1-28.



 



Rules of Court



 



  Consolidation of actions, see HRCP rule 42.



  Intervention, see HRCP rule 24.



 



Law Journals and Reviews



 



  Makaneole v. Gampon:  Site Owners Vicariously Liable for
Negligence of Contractors and Their Employees.  12 UH L. Rev. 481.



 



Case Notes



 



  Employer or insurance carrier may be required to pay share of
attorney's fees proportionate to total amount of compensation benefits it would
have had to pay but for settlement of third party action.  625 F.2d 314.



  Did not allow claim against defendant individually for
negligent infliction of emotional distress; section may allow claim for
intentional infliction of emotional distress.  938 F. Supp. 1503.



  Damages awarded against third party.  23 H. 524.  Election,
employer or third party.  32 H. 446.  Suit by next friend appointed solely for
that purpose, not an election.  32 H. 928.



  Section not applicable when person for whose compensation the
carrier is liable is the widow of the decedent whose death was caused by the
wrongful act or neglect of a third person.  32 H. 153.



  Negligence suit may be filed by an employee of a
subcontractor against the general contractor and general contractor's
employees.  50 H. 293, 439 P.2d 669.



  Employer entitled to attorney's fees out of judgment
recovered from third party tortfeasor but not out of settlement claim.  51 H.
437, 462 P.2d 196.



  Section preserves employee's right of action in common law or
under a statute against a third party; it does not establish an independent
claim.  63 H. 273, 626 P.2d 182.



  Co-employee liable to injured employee or nonemployee
third-party plaintiff for injury caused by co-employee's wilful and wanton
misconduct.  68 H. 22, 702 P.2d 772.



  Notwithstanding the language of this statute, disclosure of
workers' compensation evidence, including the amount, may be appropriate where
some relevant purpose for allowing its admission develops in trial.  79 H. 14,
897 P.2d 941.



  Employer's reliance on the provisions of this section was
reasonable; employer had no duty to intervene until it knew or reasonably
should have known that plaintiff would dismiss plaintiff's claims against
defendant without consent.  79 H. 352, 903 P.2d 48.



  Where plaintiff stipulated to dismiss plaintiff's claims
against defendant without the written consent of plaintiff's employer, the
stipulation dismissing all claims with prejudice was invalid.  79 H. 352, 903
P.2d 48.



  Co-employee liability claims based on "wilful and wanton
misconduct" must be proven by clear and convincing evidence.  82 H. 1, 919
P.2d 263.



  "Wilful and wanton misconduct" exception to
co-employee immunity under this section includes reckless conduct, where
specific intent by co-employee to cause injury is not required.  82 H. 1, 919
P.2d 263.



  Under §386-73, this section, and Hawaii administrative rule
§12-10-31, a settlement or compromise of future workers' compensation benefits
cannot be valid or binding without the consent or approval of the director of
labor and industrial relations.  90 H. 152, 977 P.2d 160.



  Under this section, the employer must bear a proportionate
share of the employee's attorney's fees and costs incurred while pursuing
recovery from a third party tortfeasor; the employer, and/or its workers'
compensation insurance carrier, must bear its share of the employee's attorney's
fees and costs in proportion to the present and future benefits derived from a
third party settlement or judgment.  92 H. 515, 993 P.2d 549.



  Assuming defendants' claims for "unreasonable failure to
consent" and "negligent claims handling" fell within the
interference with contract rights exception of §662-15(4), it could not be said
that the State improperly interfered with the alleged settlement agreement
because, pursuant to this section, the State was a necessary party to such
agreement.  114 H. 202, 159 P.3d 814.



  There is nothing in the case law or in the legislative
history of this section to support the imposition of a duty on employers in
favor of tortfeasors regarding consent to a third-party settlement; thus, trial
court did not err in ruling that the State did not owe defendants an actionable
duty and thus, did not err in dismissing defendants' cross-claim against the
State.  114 H. 202, 159 P.3d 814.



  Trial court did not abuse its discretion in setting aside the
stipulation to dismiss the case with prejudice where, pursuant to this section,
neither the settlement nor the stipulation was valid without the State's
written consent; this section's plain and unambiguous language required the
State to consent in writing to validate the settlement between the parties, and
the State's letter did not constitute written consent to the settlement as
required, but had instead proposed an alternative settlement.  114 H. 202, 159
P.3d 814.



  Where an employee pursues a third-party action "alone",
this section requires that an employer is only entitled to a first lien in the
amount of its workers' compensation expended, less the employer's "share"
of attorneys' fees and expenses.  92 H. 524 (App.), 993 P.2d 558.



  Where employer intervened before any trial on the facts,
trial court did not abuse discretion by allowing employer to intervene.  92 H.
524 (App.), 993 P.2d 558.



  No abuse of discretion in requiring insurance company to pay
one-half of the employee's court expenses.  2 H. App. 344, 631 P.2d 1209.



  Plaintiff permitted to amend pleading to allege cause of
action for wilful and wanton misconduct against defendant employees of same
employer.  9 H. App. 21, 821 P.2d 937.