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Feb. 26, 2026 Get Citation Alerts Download PDF Add Note

Auto Owners Insurance v. Labor Commission

Utah Supreme Court

• Citations: 2026 UT 3

• Docket Number: Case No. 20241315

• Opinion

• Authorities (6)

• Cited By (0)

• Summaries (0)

• Similar Cases (8.1K)

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Combined Opinion

This opinion is subject to revision before final
publication in the Pacific Reporter

2026 UT 3

IN THE

SUPREME COURT OF THE STATE OF UTAH

HB CONSTRUCTION and/or AUTO OWNERS INSURANCE COMPANY,
Petitioners,
v.
LABOR COMMISSION OF UTAH and EDUARDO NARCISO,
Respondents.

No. 20241315
Heard December 10, 2025
Filed February 26, 2026*

On Certification from the Court of Appeals

Attorneys:
Mark R. Sumsion, Salt Lake City, for petitioners
Christopher C. Hill, Salt Lake City, for respondent
Labor Commission of Utah
Gary E. Atkin, K. Dawn Atkin, Salt Lake City, for respondent
Eduardo Narciso

ASSOCIATE CHIEF JUSTICE POHLMAN authored the opinion of the
Court, in which CHIEF JUSTICE DURRANT, JUSTICE PETERSEN,
JUSTICE HAGEN, and JUSTICE NIELSEN joined.

ASSOCIATE CHIEF JUSTICE POHLMAN, opinion of the Court:
INTRODUCTION
¶1 An injured employee obtained $5 million (recovery) by
settling a tort action that he brought against third parties who were
involved in the workplace accident that left him severely disabled

---

• As of January 31, 2026, “The Supreme Court consists of seven justices.” UTAH CODE § 78A-3-101(1). Pursuant to Utah Supreme Court Standing Order No. 18, this court sat and rendered judgment in this matter as a division of five justices. AUTO OWNERS INSURANCE v. LABOR COMMISSION Opinion of the Court

and incurring ongoing workers’ compensation benefits. The
Workers’ Compensation Act requires the employee to share that
recovery with his employer and its insurance carrier to offset their
compensation obligation to him. But to share in the recovery, the
employer and carrier must contribute to the cost of obtaining it.
Specifically, subsection 34A-2-106(5), which governs the
disbursement of a third-party recovery as between the employee
and the employer and its carrier, requires that the “reasonable
expense” of the third-party action, “including attorney fees,” “be
paid and charged proportionately against the parties as their
interests may appear.” UTAH CODE § 34A-2-106(5)(a)(i).
¶2 Applying this provision, the Labor Commission of Utah
concluded that the employer and its insurance carrier’s interest in
the recovery is more than just the amount necessary to reimburse
them for workers’ compensation benefits already paid. Rather, the
employer and the carrier also have an interest in the amount of the
recovery that they expect to use as an offset against benefits they
will pay in the future. Thus, the totality of their interest must be
considered in calculating their proportional share of the expenses
incurred to obtain the recovery. The Commission further
concluded that the employer and its carrier were responsible for
reimbursing the employee for their unpaid share of the expenses
before they could offset such recovery against the ongoing benefits
they owe.
¶3 The employer and its carrier seek judicial review,
challenging both conclusions. We must decide whether under
subsection 34A-2-106(5), an injured employee’s anticipated future
workers’ compensation benefits are included in determining an
employer’s proportionate share of expenses of the third-party tort
recovery or whether only past paid benefits are to be included in
that proportionate share.
¶4 We hold that when an employer or carrier seeks to offset
future benefits by the third-party recovery, the statute’s reference
to the parties’ interests as they “may appear” requires the
Commission to account for future anticipated benefits when
determining an employer’s proportionate share of expenses of a
third-party action. We also reject the argument that the employer
and carrier in this case were ordered to “advance benefits” to the
injured employee, and we hold that where, as here, an employee
has paid all expenses associated with the third-party recovery, an
employer or insurance carrier must bear its proportionate share of

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Opinion of the Court

those expenses before offsetting future benefits against that
recovery. Accordingly, we do not disturb the Commission’s
decisions.
BACKGROUND 1
¶5 In 2013, Eduardo Narciso was injured in a compensable
industrial accident when he was knocked off a nine-foot concrete
form and landed headfirst onto hard ground, causing him to
become permanently and totally disabled and in need of constant
monitoring. The accident occurred while he was working for HB
Construction on a project with other individuals and companies
separate from HB.
¶6 Narciso brought a tort action against the third parties
involved in the accident. He settled that action for $5 million in July
2018. From that recovery, $2,149,618.89 was paid to Narciso’s
attorneys for the attorney fees and other expenses associated with
the third-party action. A trust was established for the remaining
$2,850,381.11.
¶7 HB and its insurance carrier, Auto Owners (collectively,
Employer), had already paid $1,578,095.60 in medical and
indemnity benefits by July 2018. But when Narciso settled the third-
party action, Employer stopped paying benefits, and Narciso
became responsible for his ongoing needs. The disbursement of the
recovery then became the subject of agency proceedings.
¶8 Narciso’s future medical and care costs will be substantial.
Because the parties provided different estimates, the
administrative law judge (ALJ) referred the issue to an impartial
medical panel. Using a life expectancy of forty years, the panel
estimated that Narciso’s future costs would total over $7 million.
¶9 The crux of the dispute narrowed to the issue of
Employer’s proportionate share of the attorney fees associated with
the third-party action. The resolution of this issue affects the
determination of Employer’s statutory offset against future liability
for compensation benefits. In other words, it affects when the
recovery will be depleted by Narciso’s ongoing needs and thus
when Employer will resume paying benefits out of pocket.

---

1 Like the Commission and the Appeals Board, we recite the

material facts consistent with the parties’ stipulation of facts.

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AUTO OWNERS INSURANCE v. LABOR COMMISSION
Opinion of the Court

¶10 Before the ALJ, both sides recognized that Utah Code
subsection 34A-2-106(5) governs the distribution of any injured
employee’s recovery obtained against a third party. But they
disagreed over whether Employer’s proportionate share of legal
expenses would account for Narciso’s future benefits.
¶11 In Narciso’s view, the statute requires both past paid and
anticipated future medical costs to be used to calculate Employer’s
proportionate share of expenses incurred in securing the third-
party settlement. Citing a case applying subsection 106(5), see
Esquivel v. Lab. Comm’n, 2000 UT 66, 7 P.3d 777, Narciso asserted
that Employer’s proportionate share would be the total amount of
past and future costs ($1,578,095.60 of past paid benefits plus at least
$7 million in anticipated future benefits) divided by the amount of
the gross recovery ($5 million), which equals 171.6%. This math
would result in Employer having “a proportionate share of more
than 100%,” making Employer responsible for the “full amount” of
$2,149,618.89 in legal expenses.
¶12 Employer, in contrast, asserted that future medical costs
are too uncertain to be included in calculating its proportionate
interest in the recovery because future benefits “are not guaranteed
to be incurred.” Under Employer’s math, the amount of past paid
benefits ($1,578,095.60) alone would be divided by the gross
recovery ($5 million), making its proportionate share only 31.6% of
the $2,149,618.89 in legal expenses.
¶13 The ALJ agreed with Employer, reasoning that “because
the statute does not explicitly refer to future unknown benefits in
calculating the employer’s interest, only known benefits shall be
included” in calculating Employer’s proportionate share of
expenses related to the third-party recovery. Calculating 31.6% of
$2,149,618.89, the ALJ determined that Employer’s share of the
legal expenses equaled $679,279.57.
¶14 On Narciso’s motion for review, the Commissioner
disagreed with the ALJ. 2 The Commissioner reasoned that the “tort
recovery aids [Employer] by providing funds to cover its liability
for Mr. Narciso’s substantial workers’ compensation benefits” and
that for Employer “to obtain the benefit of using the tort recovery
. . . , it must pay its share of attorney fees and costs to obtain the tort

---

2A party may request that an appeal be heard by a
Commissioner or by the Commission’s Appeals Board. See UTAH
CODE § 34A-1-303(2)(b)(i), (3); id. § 34A-2-801(4)(b)–(c).

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Opinion of the Court

recovery.” The Commissioner thus concluded that Employer’s
“share necessarily includes consideration of the cost of Mr.
Narciso’s future benefits because [Employer’s] interest in the tort
recovery includes an offset against the cost of paying those future
benefits.”
¶15 The ALJ, on remand, recalculated Employer’s
proportionate share of the legal expenses. Now totaling Employer’s
past payments with Narciso’s anticipated future medical costs and
dividing that sum by the gross recovery, the ALJ determined that
Employer’s proportionate share of the $2,149,618.89 in legal
expenses was “more than 100%.” Thus, the ALJ took the total
amount of legal expenses and gave Employer credit for past paid
benefits ($2,149,618.89 minus $1,578,095.60) to equal $571,523.29 as
Employer’s remaining share. Because all the legal expenses were
paid out of Narciso’s recovery, the ALJ also ordered that Employer
must first pay Narciso $571,523.29 to reimburse him for the share
of Employer’s expenses that Narciso paid and that exceeded
Employer’s credit for past paid benefits. 3
¶16 The ALJ next determined Employer’s subrogation offset.
He found the net recovery ($5 million minus $2,149,618.89 in legal
expenses) to be $2,850,381.11. To that amount, he added $571,523.29
(reflecting the additional amount in recovery Narciso received once
he was compensated for the legal expenses he had paid on
Employer’s behalf), concluding Employer’s total subrogation offset
to be $3,421,904.31. The ALJ then explained that Employer is “not
responsible for additional workers’ compensation benefits until the
$3,421,904.31 amount is exhausted through payment of industrial-
related benefits.”
¶17 Employer challenged the ALJ’s recalculation and
reimbursement order before the Commission’s Appeals Board.
After acknowledging the Commissioner’s conclusion that
consideration of Narciso’s future medical costs was “appropriate
and necessary” in determining Employer’s interest in the recovery,
the Appeals Board upheld the ALJ’s calculation of the amount
Employer “is responsible for reimbursing . . . for the attorney fees

---

3 A discrepancy in this figure’s cents appears between the ALJ’s

conclusions of law and his order. We refer to the number as
reflected in his order.

5
AUTO OWNERS INSURANCE v. LABOR COMMISSION
Opinion of the Court

in the tort action to activate [its] right to offset such recovery against
the benefits owed to” Narciso.
¶18 Employer sought judicial review of the decisions of the
Commission and the Appeals Board. 4 After briefing was complete,
the court of appeals certified this case to this court. See UTAH CODE
§ 78A-4-103(5).
ISSUES AND STANDARD OF REVIEW
¶19 Employer challenges the Commission’s decision to
include future anticipated medical costs in determining Employer’s
proportionate share of legal expenses associated with the third-
party tort action. Employer also challenges the Commission’s
decision upholding the order requiring Employer to reimburse
Narciso for its outstanding portion of those expenses. Both
decisions are based on an interpretation of Utah Code subsection
34A-2-106(5). We review an agency’s interpretation of the law for
correctness. Petersen v. Utah Lab. Comm’n, 2017 UT 87, ¶ 8, 416 P.3d
583.
ANALYSIS
¶20 When an injured employee obtains damages from an
action against a third party for its role in causing an industrial
accident, Utah Code subsection 34A-2-106(5)(a)(i) instructs that the
“reasonable expense of the action, including attorney fees, shall be
paid and charged proportionately against the parties as their
interests may appear.” This case asks whether, under the statute,
the employee’s anticipated future medical costs are considered
when determining the employer’s proportionate share of the
reasonable legal expenses of the third-party action. 5
¶21 On judicial review, Employer contends that the
Commission erred in concluding that Narciso’s anticipated future

---

4 Whether a decision is issued by the Commissioner or the
Appeals Board, that decision is the Commission’s decision. See
UTAH CODE § 34A-1-303(2)(b)(ii), (c)(ii). Accordingly, for the
remainder of the opinion, we will refer to the two decisions
challenged here as the Commission’s decisions.
5 A third party in this context means “a person other than an

employer, officer, agent, or employee of the employer” whose
“wrongful act or neglect” caused the employee’s injury. UTAH
CODE § 34A-2-106(1).

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Opinion of the Court

medical costs are considered when determining Employer’s
proportionate share of legal expenses under subsection 106(5)(a)(i).
Employer posits that its share instead should be “based only on the
amounts paid at the time the Recovery is reached.” Employer also
contends that the Commission committed a second error by
allegedly requiring Employer to “advance benefits” to Narciso in
the amount of $571,523.29.
¶22 Narciso, for his part, defends the Commission’s decisions.
He first asserts that including future benefits in calculating
Employer’s proportionate share is proper because the “statute
mandates a determination of the benefits that would have been
paid by Employer, both past and future,” given that Employer is
“claim[ing] both the right of reimbursement and the right of offset
on future amounts.” Narciso also asserts that the Commission’s
affirmance of the ALJ’s reimbursement order was correct because
rather than requiring an advance of future benefits, the order was,
in fact, requiring a reimbursement to Narciso for “the remaining
balance owed for Employer’s proportionate share of the attorneys’
fees and costs [Narciso] paid to secure the third party settlement.”
¶23 We agree with Narciso on both issues and hold that where,
as here, an employer seeks both reimbursement and offset under
Utah Code subsection 34A-2-106(5), the employer’s proportionate
share of the legal expenses of any third-party action includes
consideration of past and future benefits. We therefore leave the
challenged decisions undisturbed.
¶24 We first set forth the statute and explain our interpretation.
We then address and reject Employer’s contention that the
Commission required Employer to advance benefits.
I. THE COMMISSION DID NOT ERR IN CONSIDERING NARCISO’S
FUTURE BENEFITS BECAUSE EMPLOYER SEEKS TO OFFSET THOSE
FUTURE BENEFITS
¶25 The parties disagree over the proper disbursement of the
third-party recovery. This issue “can be determined from the terms
of the [governing] statute using traditional methods of statutory
construction.” Esquivel v. Lab. Comm’n, 2000 UT 66, ¶ 19, 7 P.3d 777.
When we interpret statutes, “we first look to the words used by the
Legislature.” Dale T. Smith & Sons v. Utah Lab. Comm’n, 2009 UT 19,
¶ 7, 218 P.3d 580. And “we try to read the plain language of a
statute as a whole, with due consideration of [its] other provisions.”
Id.

7
AUTO OWNERS INSURANCE v. LABOR COMMISSION
Opinion of the Court

¶26 We begin by explaining the governing statute’s overall
operation before we address Employer’s arguments. Ultimately,
we reject Employer’s contention and do not disturb the
Commission’s decision.
A. The Workers’ Compensation Act Provides the Method for
Disbursing a Third-Party Recovery
¶27 Utah Code subsection 34A-2-106(5) directs how any
recovery from a third-party tort action will be disbursed between
an employee and an employer or its insurance carrier when the
employee is entitled to workers’ compensation benefits for the
same injury. It states, in relevant part,
(5) If any recovery is obtained against a third
person, it shall be disbursed in accordance with
Subsections (5)(a) through (c).
(a)(i) The reasonable expense of the action,
including attorney fees, shall be paid and charged
proportionately against the parties as their interests
may appear.
(ii) Any fee chargeable to the employer or carrier
is to be a credit upon any fee payable by the injured
employee or, in the case of death, by the dependents,
for any recovery had against the third party.
(b) The person liable for compensation payments
shall be reimbursed, less the proportionate share of
costs and attorney fees provided for in Subsection
(5)(a) . . . .
(c) The balance shall be paid to the injured
employee, or the employee’s heirs in case of death, to
be applied to reduce or satisfy in full any obligation
thereafter accruing against the person liable for
compensation.
UTAH CODE § 34A-2-106(5).
¶28 The plain language of subsection 106(5) requires that if any
third-party recovery is obtained, it will be disbursed according to
subsections (5)(a) through (c). Id. At this stage, “[e]xpenses have not
yet been paid or accounted for” and “no deductions have been

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Opinion of the Court

allowed,” so “it is the gross recovery being disbursed.” Esquivel,
2000 UT 66, ¶ 25. 6
¶29 The first step of the disbursement requires the reasonable
legal expenses to be paid and the responsibility for those expenses
to be apportioned between the parties. Specifically, the statute
requires that the expenses be “charged proportionately against the
parties as their interests may appear.” UTAH CODE § 34A-2-
106(5)(a)(i). This requirement is at the heart of the parties’
disagreement. See infra Section I.B.
¶30 To determine a party’s proportionate share of the
expenses, we start by quantifying the party’s interests in the
recovery and then divide by the amount of the gross recovery. See
Esquivel, 2000 UT 66, ¶ 26. That resulting percentage is then
multiplied by the legal expenses, and that amount will be “charged
proportionately against th[at] part[y].” See UTAH CODE § 34A-2-
106(5)(a)(i); Esquivel, 2000 UT 66, ¶ 27.
¶31 Next, “[a]ny fee chargeable to the employer or carrier is to
be a credit upon any fee payable by the injured employee . . . for
any recovery had against the third party.” UTAH CODE § 34A-2-
106(5)(a)(ii). We have applied this provision and shown that when
the employee has paid all the legal expenses, the employee is
entitled to reimbursement for the employer or insurance carrier’s
proportionate share of reasonable expenses. See Esquivel, 2000 UT
66, ¶¶ 28–29.
¶32 Subsection 106(5)(b) provides the employer or carrier with
the right to reimbursement for payments already made. See id. ¶ 30;
Granite Sch. Dist. v. Young, 2023 UT 21, ¶ 23, 537 P.3d 225. When
this right is claimed, subsection 106(5)(b) requires the person liable
for compensation payments to be “reimbursed, less the
proportionate share of costs and attorney fees provided for in
Subsection (5)(a).” See UTAH CODE § 34A-2-106(5)(b) (emphasis
added). Reimbursement necessarily accounts for past events, and
this language directs that the employer’s or carrier’s past payments
will be deducted by its proportionate share of legal fees before it
will be reimbursed from the recovery. See id.

---

6 The current subsection 106(5) is materially the same as the 1997

version that we discussed in Esquivel. Compare UTAH CODE
§ 34A-2-106(5), with id. (1997); see Esquivel, 2000 UT 66, ¶ 22 & n.4
(citing UTAH CODE § 34A-2-106(5) (1997)).

9
AUTO OWNERS INSURANCE v. LABOR COMMISSION
Opinion of the Court

¶33 Finally, subsection 106(5)(c) provides the employer or
insurance carrier with the right to offset future liability, stating that
“[t]he balance shall be paid to the injured employee . . . to be
applied to reduce or satisfy in full any obligation thereafter accruing
against the person liable for compensation.” Id. § 34A-2-106(5)(c)
(emphasis added). This language, addressing benefits “thereafter
accruing,” is forward-looking and directs that ongoing benefits will
be offset by any third-party recovery. See id.; see also Anderson v.
United Parcel Serv., 2004 UT 57, ¶ 9, 96 P.3d 903 (stating that “the
remaining balance of the third-party recovery is to be paid to the
employee’s heirs ‘to be applied to reduce or satisfy in full’ any
future obligation accruing against the person liable for
compensation payments” (quoting UTAH CODE § 34A-2-106(5)(c)).
And we have indicated that when the remaining total balance of
the third-party recovery “is not greater” than the employer’s or
carrier’s future liability, they “must resume payments once the
amount of the total balance has been offset.” Esquivel, 2000 UT 66,
¶ 32.
¶34 Having explained the statute, we now turn to Employer’s
arguments.
B. An Employer’s Proportionate Share of Legal Expenses
Includes Anticipated Future Benefits When the Employer
Seeks an Offset
¶35 Employer contends that the Commission erred in
considering Narciso’s anticipated future benefits (and its
corresponding future liability) when determining Employer’s
proportionate share of legal expenses under subsection 106(5)(a)(i).
According to Employer, at the time of settlement, the
determination of its “interests” could not include future benefits
because “all benefits and liability are subject to change” depending
on Narciso’s longevity. Employer thus asserts that “[i]nterests that
are prospective and uncertain, such as Narciso’s future medical and
indemnity benefits, cannot be included in the assessment of
proportionate share.” We disagree.
¶36 As stated, the statute instructs that the “reasonable
expense of the action, including attorney fees, shall be paid and
charged proportionately against the parties as their interests may
appear.” UTAH CODE § 34A-2-106(5)(a)(i) (emphasis added). But
neither “may” nor “appear” require the level of certainty that

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Opinion of the Court

Employer reads into the statute.7 Indeed, “may” can mean “[t]o be
a possibility,” May, BLACK’S LAW DICTIONARY (12th ed. 2024) (sense
2), and “appear” can mean “to have an outward aspect” or “seem,”
Appear, MERRIAM-WEBSTER, https://www.merriam-
webster.com/dictionary/appear (last visited Feb. 18, 2026) (sense
3). Used together, we think “may appear” cannot ask for absolute
certainty when assessing the parties’ interests in the third-party
recovery but, rather, the language contemplates and tolerates some
uncertainty in how events unfold after a third-party recovery is
obtained. 8 See UTAH CODE § 34A-2-106(5)(a)(i).
¶37 Additionally, Employer is correct that subsection 106(5)
provides the employer or carrier with reimbursement of past
benefits and offset of future benefits. See id. § 34A-2-106(5)(b)–(c).
We think it thus follows that a carrier’s “interests” includes
consideration of both past paid and future unpaid benefits when
the carrier seeks both reimbursement for benefits previously paid
and an offset against benefits to be paid in the future. See id. § 34A-
2-106(5)(a)(i).
¶38 This conclusion comports with our caselaw. In Esquivel v.
Labor Commission, the minor heirs of a fatally injured employee
were entitled to benefits from the employer’s insurer until the
youngest child turned eighteen. 2000 UT 66, ¶¶ 26 & n.5, 33, 7 P.3d
777. Before those benefits had fully accrued, the heirs won a
wrongful death suit against a third party. Id. ¶¶ 3–4. In addressing
how the tort recovery would be disbursed between the heirs and
the insurer under subsection 106(5), we explained that “a third-
party recovery must reimburse the employer or insurer for
workers’ compensation sums already paid as well as offset for
future liability of sums owed.” Id. ¶ 23. And in determining the

---

7 We observe that the phrase “as their interests may appear” is

“sometimes used in insurance policies to show that the named
insured has an interest, [usually] an unspecified one, in the
property covered by the policy and is entitled to benefits to the
extent of that interest.” ATIMA, BLACK’S LAW DICTIONARY (12th ed.
2024). But here, we are analyzing a statute, not a contract. And
neither party has suggested that, as used in subsection 106(5), the
phrase “as their interests may appear” is a term of art.
8 For the same reason, we reject Employer’s related arguments

that the Commission lacked statutory authority to consider the
value of future benefits.

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AUTO OWNERS INSURANCE v. LABOR COMMISSION
Opinion of the Court

insurer’s interest in the recovery for purposes of calculating its
proportionate share of the associated legal expenses, we accounted
for the insurer’s future liability and declined to include the
insurer’s past payments only because the insurer had waived its
interest in those payments. Id. ¶ 26. Thus, we implied that an
employer’s “total interest” usually will be based on past payments
and future liability. See id. Finally, we also accounted for subsection
106(5)(a)(i), stating that to obtain the recovery, “the employer or
insurer must first bear a proportionate share of the expenses.” See
id. ¶ 23.
¶39 Narciso correctly construes Esquivel as “declar[ing] that
future benefits are part of the computations to be applied under that
statute . . . before the carrier is entitled to any offset.” Stated another
way, Esquivel’s holding on this point is that when an employer
claims reimbursement and/or offset under subsection 106(5), the
employer’s proportionate share of legal expenses includes
consideration of the corresponding past payments and/or future
liability. See id. ¶¶ 26–28.
¶40 Applied here, we conclude that because Employer sought
both reimbursement and offset, the Commission did not err under
subsection 106(5) when it considered both past payments and
future liability in determining Employer’s proportionate share of
legal expenses for the third-party action. The Commission correctly
reasoned that Employer’s “share of the attorney fees and costs to
obtain the tort recovery . . . necessarily includes consideration of
the cost of Mr. Narciso’s future benefits because [Employer’s]
interest in the tort recovery includes an offset against the cost of
paying those future benefits.”
¶41 Employer resists this conclusion, arguing that unlike the
limited benefits in Esquivel, “the precise amount of [Narciso’s]
future benefits” are “uncertain” and our reading imposes an unfair
risk on Employer that future benefits will not be incurred and thus
it will not actually recoup from the recovery. But when an
employer seeks to recoup from a third-party recovery, the
legislature has chosen to hold the employer accountable for its
share of the expenses incurred to secure that recovery. Employer’s
argument contesting this policy choice would be better addressed
to the legislature. Likewise, Employer’s other policy-based
arguments are not properly addressed to this forum.
¶42 In short, because Employer seeks to offset its future
liability, the Commission did not err in including Narciso’s

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Opinion of the Court

anticipated future benefits when determining Employer’s
proportionate share of legal expenses.
II. THE COMMISSION DID NOT ERR IN ORDERING EMPLOYER TO
REIMBURSE NARCISO FOR EMPLOYER’S UNPAID PROPORTIONATE
SHARE OF THE LEGAL EXPENSES
¶43 Employer next contends that the Commission erred by
affirming the ALJ’s order that Employer make what it calls an
“advance of benefits” in the amount of $571,523.29 because these
“benefits” are “not vested” until they have been incurred. Narciso
responds that this order was proper because it required “that
Employer first reimburse [Narciso] for [its] proportionate share of
the costs of the third party settlement before being entitled to offset
those settlement proceeds [and] did not require any ‘advance’ to
[him] of future benefits.” We agree with Narciso, reject Employer’s
arguments, and allow the order to stand.
¶44 This issue arose because all legal expenses of the third-
party action were already paid by Narciso from the recovery. Once
the ALJ determined on remand that Employer’s proportionate
share of the legal costs was “more than 100%,” Employer became
responsible for the entirety of those expenses, creating a credit
owed to Narciso. See UTAH CODE § 34A-2-106(5)(a)(ii); see also
Esquivel v. Lab. Comm’n, 2000 UT 66, ¶¶ 28–29, 7 P.3d 777
(explaining that where the employee’s heirs paid all expenses out
of the recovery, the insurer owed them a “credit” for its share of the
expenses). Applying subsection 34A-2-106(5)(b), the ALJ then took
the total amount of past benefits already paid to Narciso
($1,578,095.60) for which Employer was entitled to reimbursement
and subtracted the total legal expenses for which it was responsible
($2,149,618.89), leaving $571,523.29 as a credit owed to Narciso for
Employer’s unpaid proportionate share of fees. Consistent with our
direction in Esquivel, the ALJ then ordered Employer to pay Narciso
for the credit owed. See Esquivel, 2000 UT 66, ¶ 31.
¶45 Therefore, when Employer was ordered to pay
$571,523.29, Employer was not ordered to advance benefits; it was
ordered to reimburse Narciso for its proportionate share of legal
expenses. And we have explained that while “a third-party
recovery must . . . offset for future liability of sums owed, . . . the
employer or insurer must first bear [its] proportionate share of the
expenses for obtaining the recovery.” Id. ¶ 23. The reimbursement
order required Employer to do just that. We thus reject all of
Employer’s arguments based on the flawed premise that the order

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AUTO OWNERS INSURANCE v. LABOR COMMISSION
Opinion of the Court

required Employer to advance benefits, and we do not disturb the
Commission’s decision. 9
CONCLUSION
¶46 We hold that where, as here, an employer or insurance
carrier seeks both reimbursement and offset under Utah Code
subsection 34A-2-106(5), its proportionate share of the legal
expenses of the injured employee’s third-party action includes
consideration of both past and future benefits. We also hold that
where, as here, an employee has paid all legal expenses, the
employer or insurance carrier must bear its proportionate share of
expenses before offsetting future benefits against the tort recovery.
Accordingly, we allow the Commission’s decisions to stand.

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9 Employer also raises concerns that the reimbursement order,

which was “based on payment of an attorney fee for which [it] had
no contractual privity or involvement[,] can encourage
unwarranted and/or reckless litigation.” But this is another policy
argument. As explained, the legislature has opted to make an
employer liable for its share of reasonable legal expenses despite the
lack of privity because and to the extent the employer seeks to
benefit from that recovery. See UTAH CODE § 34A-2-106(5)(a)(i). In
any event, Employer stipulated to the reasonableness of legal
expenses. Employer’s concerns therefore aren’t properly before us.

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