Idaho's workers' compensation board, the Idaho Industrial Commission, noticed something some time ago that it felt warranted further attention: one of the workers who had settled a case that had come before the commission directed that some of the settlement proceeds be sent to a company involved in the litigation funding business.
Then the Industrial Commission discovered another worker whose situation seemed similar.? And then another.
So the Commission asked the company to send representatives to testify before the Commissioners, at a hearing that the Commissioners called to decide, among other things, whether - in the case of the first worker - the payment to Oasis was illegal, under Idaho law.
Earlier this year, the Commissioner issued its findings and fact and conclusions of law in the consolidated matters, captioned: Industrial Commission v. Oasis Legal Finance, L.L.C., et al., IC: 2007-028248, 1998-038640, 2005-206894, 2007-024933, 2008-017154, 2009-017004 (Idaho Indus. Comm'n Jan. 13, 2012).
One key question that the Commission sought to address was whether the Oasis purchase agreements violated Idaho Code Section 72-802 and therefore were each a "prohibited assignment of a workers' compensation claim . . . ."
The Commission concluded that the agreements did violate that Idaho statutory provision, which is a section of the Idaho workers' compensation act that provides in part as follows:
Compensation not assignable - Exempt from execution.? No claims for compensation under this law, including compensation payable to a resident of this state under the worker's compensation laws of any other state, shall be assignable, and all compensation and claims therefor shall be exempt from all claims of creditors . . . .
Before reaching that issue, the Commission took note of the fact that none of the workers were contesting whether Oasis was entitled to the monies that were putatively due to be paid under the "purchase agreements."? The Commission took further note of the fact that the state's workers' compensation laws vested the commissioners with the responsibility to ascertain whether the settlements for each of the three workers were in their best interests, and the disposition of the settlement proceeds - and the question of whether those proceeds should be paid to Oasis, or not - was part of the best interest determination.? Additionally, the Commission said it has the authority to determine workers' rights under the workers' compensation laws, and therefore the matter came within its jurisdiction.
In addressing the issue of the assignment of workers' compensation, the Commission said that a 2009 amendment to the statute made it clear that the statutory prohibition against assignment encompassed?settlement proceeds:
[T]he amendment makes it clear that 'claims,' which term includes compensation payable to an Idaho claimant under the workers' compensation laws of some other state, are not assignable.? This structure strongly suggests that the legislature's use of the term 'claim' was intended to include not only a prohibition against the assignment of the cause of action, but also a prohibition against the assignment of the proceeds payable to an injured worker as the result of his or her workers' compensation claim.
Industrial Commission v. Oasis Legal Finance, L.L.C., et al., IC: 2007-028248, 1998-038640, 2005-206894, 2007-024933, 2008-017154, 2009-017004
The Commission also pointed out that one of the?purposes of Idaho?Code Section 72-802 was to "ensure that injured workers with valid, yet unrecognized, claims, will not sell their rights at 'fire sale prices' in order to keep body and soul together during the pendency of their claim."
The Commission, however, did not let the workers' keep the payments that had been made to Oasis.? "Although we have found that the Oasis agreements rely upon a prohibited assignment, we also recognize that our ruling has the potential to create a windfall to [the workers]," and so, to "prevent unjust enrichment?. . .?the equitable solution is to require the injured worker to reimburse Oasis in the amount of the purchase price originally paid by Oasis . . . ."
This is in contrast to other court cases involving illegal contracts, where the general rule has been that courts will leave the parties where they find them.
The Industrial Commission's opinion is here.
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