Background
In August 2018, Donald Moos was injured at work when an aircraft sprayed him with toxic herbicide. WSI accepted his workers’ compensation claim and paid a total of $10,628.18 in benefits, including the cost of an independent medical review. WSI later terminated benefits after the independent review concluded the chemical exposure had only temporarily affected Moos’s eyes and skin and was not the cause of his ongoing neurological symptoms — left-hand tremors and arm paresthesia. Moos did not appeal that termination order.
Moos separately filed a personal injury action against the herbicide applicator. That case settled in February 2024 for $100,000, but Moos’s attorney did not notify WSI of the settlement despite WSI’s years-long efforts to monitor the litigation. WSI discovered the settlement on its own and issued a subrogation lien of $8,551.18 — the benefits paid minus the cost of the independent medical review — under N.D.C.C. § 65-01-09. Moos contested the lien, arguing it was inequitable because WSI had funded the very medical opinions that were later used to devalue his third-party claim.
An administrative law judge (ALJ) upheld the subrogation order, rejecting Moos’s judicial estoppel argument. The district court affirmed and also ordered Moos to pay the costs of preparing and filing the administrative record on appeal. Moos appealed, raising three issues: judicial estoppel, the constitutionality of the record-cost statute as applied to him, and his entitlement to a waiver of those costs as a low-income person.
The Court’s Holding
The North Dakota Supreme Court affirmed on all three issues. On judicial estoppel, the court held the doctrine simply does not apply to WSI’s statutory subrogation interests under N.D.C.C. § 65-01-09. Relying on State ex rel. Workmen’s Compensation Bureau v. Clary, 389 N.W.2d 347 (N.D. 1986), the court explained that although subrogation originated in equity, WSI’s subrogation rights are entirely statutory, and where the law is declared by statute there is no room for equitable concepts to override it.
On the constitutional challenge to N.D.C.C. § 28-32-44 — which requires appellants to pay record preparation and filing costs before an agency must transmit the administrative record — the court found Moos’s arguments unsupported. He offered only conclusory allegations without factual support or on-point constitutional authority. The court also noted the statute itself contains a waiver provision for low-income persons, which negates any “pay-to-play” characterization.
On the waiver claim, the court held the district court did not abuse its discretion in denying relief. Although Moos had argued he was on Social Security and could not afford the costs, he never submitted evidence of his financial status. The permissive statutory waiver standard — the court “may” waive costs upon a showing that the appellant is a low-income person — requires an actual evidentiary showing, which Moos did not make in the ten months the matter was pending.
Key Takeaways
- Equitable doctrines such as judicial estoppel do not override WSI’s statutory subrogation rights under N.D.C.C. § 65-01-09; the legislature’s codification of subrogation displaces common-law equity.
- WSI’s subrogation lien attaches to a third-party settlement even when WSI previously denied some of the injured worker’s claimed conditions — there is no inconsistency that triggers estoppel because the subrogation statute does not depend on which conditions WSI accepted.
- A worker seeking to waive administrative record costs under N.D.C.C. § 28-32-44(3) must submit actual evidence of low-income status; bare assertions or general statements about income are insufficient.
- Constitutional challenges to agency record-cost statutes face a high bar — a challenger must provide on-point authority and a reasoned analysis, not mere assertions of infirmity.
Why It Matters
This decision clarifies an important limit on equitable defenses in North Dakota workers’ compensation subrogation disputes. Injured workers who settle third-party tort claims cannot use judicial estoppel to avoid WSI’s statutory lien simply because WSI denied certain conditions during the compensation proceedings — the agency’s subrogation interest is determined by statute, not equitable balancing. Attorneys representing workers in dual-track workers’ comp and tort cases should advise clients early that a WSI lien will attach to any third-party recovery regardless of the scope of accepted conditions.
The decision also reinforces procedural obligations for workers seeking fee waivers in administrative appeals. The ruling makes clear that invoking the low-income waiver provision requires a formal evidentiary showing; filing a brief opposition with general income statements will not suffice. Practitioners should treat such a waiver application as they would an in forma pauperis petition and submit supporting documentation promptly.