Nebraska Supreme Court Online Library
www.nebraska.gov/apps-courts-epub/
06/30/2017 09:10 AM CDT




                                                       - 972 -
                                  Nebraska Supreme Court A dvance Sheets
                                          296 Nebraska R eports
                                        KROEMER v. OMAHA TRACK EQUIP.
                                              Cite as 296 Neb. 972




                            Norman K roemer, appellee, v. Omaha Track
                           Equipment, L.L.C., and The Tie Yard of Omaha,
                            now known as Omaha Track, I nc., appellees,
                                 and R ibbon Weld, LLC, appellant.
                                                   ___ N.W.2d ___

                                         Filed June 16, 2017.    No. S-16-856.

                1.	 Statutes: Appeal and Error. Statutory interpretation presents a ques-
                    tion of law, for which an appellate court has an obligation to reach
                    an independent conclusion irrespective of the decision made by the
                    court below.
                2.	 Workers’ Compensation: Judgments: Appeal and Error. Distribution
                    of the proceeds of a judgment or settlement under Neb. Rev. Stat.
                    § 48-118.04 (Reissue 2010) is left to the trial court’s discretion and
                    reviewed for an abuse of that discretion.
                3.	 Judges: Words and Phrases. A judicial abuse of discretion requires
                    that the reasons or rulings of a trial judge be clearly untenable, unfairly
                    depriving a litigant of a substantial right and a just result.
                4.	 Workers’ Compensation: Subrogation. Neb. Rev. Stat. § 48-118
                    (Reissue 2010) grants an employer who has paid workers’ compensation
                    benefits to an employee injured as a result of the actions of a third party
                    a subrogation interest against payments made by the third party.
                5.	 Workers’ Compensation. A settlement of a third-party claim is void
                    under Neb. Rev. Stat. §48-118.04(1) (Reissue 2010) unless the settle-
                    ment is either agreed upon in writing by the employee and employer or
                    its insurer or determined by the court to be fair and reasonable.
                6.	 Workers’ Compensation: Insurance. In determining the fairness and
                    reasonableness of a settlement of a third-party claim under the Nebraska
                    Workers’ Compensation Act, a court considers liability, damages, and
                    the ability of the third person and his or her liability insurance carrier to
                    satisfy any judgment.
                7.	 Workers’ Compensation: Subrogation. The policies behind the
                    Nebraska Workers’ Compensation Act favor a liberal construction in
                                    - 973 -
             Nebraska Supreme Court A dvance Sheets
                     296 Nebraska R eports
                    KROEMER v. OMAHA TRACK EQUIP.
                          Cite as 296 Neb. 972

     favor of an employer’s statutory right to subrogate against culpable
     third parties.
 8.	 Workers’ Compensation: Insurance: Case Disapproved. In re Estate
     of Evertson, 23 Neb. App. 734, 876 N.W.2d 678 (2016), is disapproved
     to the extent that the court considered payment of premiums and com-
     parative risk in allocating none of the proceeds of a workers’ compensa-
     tion settlement to the insurer.
 9.	 Workers’ Compensation: Subrogation: Equity. Although Neb. Rev.
     Stat. § 48-118.04(2) (Reissue 2010) calls for a fair and equitable distri-
     bution, subrogation in workers’ compensation cases is based on statute,
     and not in equity.
10.	 Workers’ Compensation: Insurance: Equity. A distribution of the pro-
     ceeds of a judgment or settlement under Neb. Rev. Stat. § 48-118.04(2)
     (Reissue 2010) must be fair and equitable to both the employee and the
     employer or its insurer.

  Appeal from the District Court for Douglas County: J
Russell Derr, Judge. Affirmed in part, and in part reversed
and remanded with direction.

  Julie A. Jorgensen, of Morrow, Willnauer, Klosterman &
Church, L.L.C., for appellant.

  Ronald L. Brown, of Brown & Theis, L.L.P., for appellee
Norman Kroemer.

  Gregory F. Schreiber and Albert M. Engles, of Engles,
Ketcham, Olson & Keith, P.C., and, on brief, Brock S.J.
Hubert, for appellee Omaha Track Equipment, L.L.C.

  Wright, Miller-Lerman, Cassel, Stacy, K elch, and
Funke, JJ.

   Cassel, J.
                    I. INTRODUCTION
   An injured employee proposed to settle his third-party suit
for $150,000. His employer, which had a subrogation interest
of over $200,000, contested the settlement. The district court
determined that the settlement was fair and reasonable but
                             - 974 -
           Nebraska Supreme Court A dvance Sheets
                   296 Nebraska R eports
                KROEMER v. OMAHA TRACK EQUIP.
                      Cite as 296 Neb. 972

allocated none of it to the employer. Because of the disputed
litigation risk, approval of the settlement was not an abuse of
discretion. But under our statutory scheme, the allocation of
zero to the employer was legally untenable. We affirm in part
and in part reverse, and remand with direction.

                      II. BACKGROUND
   At the relevant time, Ribbon Weld, LLC, and Omaha Track
Equipment, L.L.C. (OTE), were both wholly owned subsid­
iaries of The Tie Yard of Omaha, now known as Omaha Track,
Inc. Ribbon Weld’s employees occasionally used OTE’s shop
to service their equipment and, while doing so, used OTE’s
tools. Norman Kroemer, a Ribbon Weld employee, sustained
an eye injury in connection with the use of OTE’s tools at
OTE’s shop.
   Kroemer and Ribbon Weld entered into a compromise lump-
sum settlement for $80,000, which the Nebraska Workers’
Compensation Court approved. After payment of the lump
sum, Ribbon Weld’s subrogation interest totaled $207,555.01.
   Kroemer then sued OTE, The Tie Yard of Omaha, and
Ribbon Weld. The suit alleged negligence. Kroemer made
Ribbon Weld a party “for the limited purpose provided by
[Neb. Rev. Stat. §] 48-118 [(Reissue 2010)].” OTE asserted
numerous affirmative defenses, including comparative negli-
gence. In Ribbon Weld’s answer, it asked that any recovery by
Kroemer be subject to its subrogation right.
   Kroemer and OTE engaged in mediation to settle the third-
party claim. Ultimately, they negotiated a compromise settle-
ment of claims in the amount of $150,000. Although Ribbon
Weld did not contribute or share in litigation expenses, it con-
tested the proposed settlement.
   The district court held a settlement and allocation hearing
under Neb. Rev. Stat. § 48-118.04 (Reissue 2010). Kroemer
testified about the accident and injury, which occurred as he
and a coworker endeavored to cut through a “spot-weld on
[an] Allen wrench.” Kroemer planned to hold the Allen wrench
                             - 975 -
           Nebraska Supreme Court A dvance Sheets
                   296 Nebraska R eports
                KROEMER v. OMAHA TRACK EQUIP.
                      Cite as 296 Neb. 972

and socket with a pair of pliers as his coworker ­       operated
a “Milwaukee grinder with the wheel.” When Kroemer’s
coworker started the grinder, the wheel exploded, sending
shrapnel into Kroemer’s face and left eye. Kroemer was wear-
ing safety glasses but not a face shield. After undergoing three
surgeries, Kroemer ultimately sustained a 95-percent loss of
vision in his eye. Due to the injury, Kroemer no longer physi-
cally qualified for a commercial driver’s license. He returned
to work with Ribbon Weld, but had restrictions of light-duty
work and no dusty conditions. Ribbon Weld subsequently
sold its business, and Kroemer lost his employment a short
time later.
   The district court received evidence concerning the value
of Kroemer’s case. One expert opined that “there was a very
substantial probability (80%-90%) of a jury verdict for the
defendants were the case to proceed to trial.” He stated that
a jury could have easily determined that Kroemer’s compara-
tive fault was greater than 50 percent. Another expert valued
Kroemer’s claim in the range of $850,000 to $1,250,000,
before consideration of comparative negligence. But he also
opined that the settlement of $150,000 was in Kroemer’s best
interests, due to the high probability of a jury verdict for the
defendants. Ribbon Weld’s expert opined that it was “more
than likely (70-80% chance) that a Plaintiff’s verdict would
be reached,” that a jury would likely assess “contributory neg-
ligence” in the range of 25 to 35 percent, and that Kroemer
would have likely recovered in excess of $500,000 if the case
proceeded to trial. Ribbon Weld’s expert believed that the
settlement was inadequate given the value of the case and that
the settlement appeared to have been accepted with the inten-
tion of no, or very minimal, payback to Ribbon Weld of the
subrogation amount.
   The district court determined that the settlement of $150,000
was reasonable. It made the following allocation: $94,834.27
to Kroemer, $55,165.73 for attorney fees and expenses, and
$0 to Ribbon Weld.
                                     - 976 -
                Nebraska Supreme Court A dvance Sheets
                        296 Nebraska R eports
                      KROEMER v. OMAHA TRACK EQUIP.
                            Cite as 296 Neb. 972

   Ribbon Weld appealed, and we granted its petition to bypass
review by the Nebraska Court of Appeals. We subsequently
ordered supplemental briefing, which we have considered in
resolving this appeal.
               III. ASSIGNMENTS OF ERROR
   Ribbon Weld assigns that the district court erred in (1) find-
ing the settlement to be fair and reasonable and (2) finding that
an allocation of $0 to Ribbon Weld was fair and equitable.
                  IV. STANDARD OF REVIEW
   [1] Statutory interpretation presents a question of law, for
which an appellate court has an obligation to reach an inde-
pendent conclusion irrespective of the decision made by the
court below.1
   [2,3] Distribution of the proceeds of a judgment or settle-
ment under § 48-118.04 is left to the trial court’s discretion
and reviewed for an abuse of that discretion.2 A judicial abuse
of discretion requires that the reasons or rulings of a trial judge
be clearly untenable, unfairly depriving a litigant of a substan-
tial right and a just result.3
                         V. ANALYSIS
                          1. Overview
   [4,5] We first set forth two principles of law under the
Nebraska Workers’ Compensation Act (the Act).4 First,
§ 48-118 grants an employer who has paid workers’ compensa-
tion benefits to an employee injured as a result of the actions
of a third party a subrogation interest against payments made
by the third party.5 Second, a settlement of a third-party claim

 1	
      Estermann v. Bose, ante p. 228, 892 N.W.2d 857 (2017).
 2	
      Burns v. Nielsen, 273 Neb. 724, 732 N.W.2d 640 (2007).
 3	
      Id.
 4	
      Neb. Rev. Stat. §§ 48-101 to 48-1,117 (Reissue 2010 & Cum. Supp. 2016).
 5	
      Burns v. Nielsen, supra note 2.
                                    - 977 -
                Nebraska Supreme Court A dvance Sheets
                        296 Nebraska R eports
                      KROEMER v. OMAHA TRACK EQUIP.
                            Cite as 296 Neb. 972

is void under § 48-118.04(1) unless the settlement is either
agreed upon in writing by the employee and employer (or its
insurer) or determined by the court to be fair and reasonable.
We now turn to the assigned errors.

                     2. Fairness R easonableness
                                   and
                             Settlement
                             of
   [6] Ribbon Weld first challenges the amount of the settle-
ment. In determining the fairness and reasonableness of a set-
tlement of a third-party claim under the Act, the court consid-
ers “liability, damages, and the ability of the third person and
his or her liability insurance carrier to satisfy any judgment.”6
We examine these factors in reverse order.

                  (a) Ability to Satisfy Judgment
   The record does not contain much evidence as to OTE’s
ability to satisfy the judgment. Kroemer testified that the
proposed settlement of $150,000 did not reflect the limits of
OTE’s insurance policy. Accordingly, the ability of OTE and
its liability insurance carrier to pay was not an impediment to
a greater settlement.

                        (b) Damages
   The estimated damages in this case were significant.
Kroemer sustained a 95-percent loss of vision in his left eye.
Kroemer’s expert valued Kroemer’s claim between $850,000
to $1,250,000. Ribbon Weld’s expert agreed with an assess-
ment of damages set forth in a demand letter valuing the case
at $858,989.86.

                        (c) Liability
   Under the facts of this case, the deciding factor on the
reasonableness of the settlement is the issue of liability.
Kroemer’s two experts opined that there was a high probability

 6	
      § 48-118.04(1)(b).
                            - 978 -
          Nebraska Supreme Court A dvance Sheets
                  296 Nebraska R eports
                KROEMER v. OMAHA TRACK EQUIP.
                      Cite as 296 Neb. 972

of a jury verdict in favor of OTE. Ribbon Weld’s expert, on
the other hand, opined that it was “more than likely” a jury
would return a verdict in Kroemer’s favor and that the jury
would assess contributory negligence in the range of 25 to
35 percent.
   Evidence reflected negligence on Kroemer’s part. Kroemer
planned to hold the Allen wrench with pliers because the vice
on the table was in use. He knew that using the vice would
have been safer, and he testified that he would not have been
injured if a vice were used. Kroemer believed Ribbon Weld’s
rules or regulations required use of safety glasses and a face
shield when using a hand grinder. But he was not wearing
a face shield. As the supervisor, it was Kroemer’s responsi-
bility to make sure his crew wore safety glasses and a face
shield. Kroemer testified that when a member of his crew
used a hand grinder, a guard was required to be affixed to
the grinder. He did not recall seeing a Ribbon Weld grinder
without a guard. A guard protects the operator from being
struck by flying debris generated from using the grinder. But
the grinder selected by Kroemer’s coworker did not have
a guard.
   Other evidence lessened the effect of Kroemer’s own neg-
ligence. On an earlier occasion, an OTE shop foreman told
Kroemer that OTE employees used the same grinder without
a guard. That foreman also told Kroemer that they used a
7-inch wheel on a 4-inch grinder. Although a person using a
hand grinder should wear a face shield, Kroemer was not the
person doing the grinding. Further, Kroemer did not select
the grinder. And Ribbon Weld points out that a guard may
not have prevented the injury because Kroemer was injured
as a result of the tool’s exploding—not by any debris result-
ing from grinding. Kroemer testified that it was possible he
would have been injured even if the grinder had a guard, but
that his injury would have been less likely if the grinder had
a guard.
                                     - 979 -
                Nebraska Supreme Court A dvance Sheets
                        296 Nebraska R eports
                      KROEMER v. OMAHA TRACK EQUIP.
                            Cite as 296 Neb. 972

                          (d) Resolution
   After consideration of the relevant factors, we cannot say
that the district court abused its discretion in finding the settle-
ment to be fair and reasonable. Although there was potential
for a large verdict in Kroemer’s favor, he accepted a greatly
reduced settlement due to concerns that he would receive noth-
ing if a jury determined that his comparative negligence was
50 percent or more. We cannot fault him for declining to take
this gamble.

                        3. A llocation of
                      Settlement Proceeds
   Ribbon Weld argues that the district court abused its discre-
tion in allocating none of the proceeds of Kroemer’s $150,000
settlement to Ribbon Weld. We observe at the outset that
Ribbon Weld does not contend the court abused its discre-
tion in awarding $55,165.73 for attorney fees and expenses.
At the hearing, Ribbon Weld’s counsel stated that “whatever
the settlement level is, we do believe that it was obtained by
[Kroemer’s counsel], and attorney fees and costs are simply
not an issue in this case.” Thus, our review in this case focuses
on the allocation of $94,834.27 to Kroemer and of $0 to
Ribbon Weld.

                         (a) Overview
   When an employee injured as a result of a third per-
son’s tortious conduct receives compensation from his or her
employer and from the tort-feasor, an issue arises as to how to
divide any proceeds obtained from the third party. “The obvi-
ous disposition of the matter is to give the employer so much
of the negligence recovery as is necessary to reimburse it for
its compensation outlay, and to give the employee the excess.”7

 7	
      10 Arthur Larson et al., Larson’s Workers’ Compensation Law § 110.02 at
      110-3 (2016).
                                    - 980 -
               Nebraska Supreme Court A dvance Sheets
                       296 Nebraska R eports
                      KROEMER v. OMAHA TRACK EQUIP.
                            Cite as 296 Neb. 972

Doing so prevents a double recovery by the employee. “Under
most subrogation statutes the payor of compensation gets
reimbursement for the amount of its expenditure as a first
claim upon the proceeds of the third-party recovery, and the
employee gets the excess.”8 But since 1994, our Legislature
has rejected that approach. Our statute clearly mandates that
proceeds in excess of the employer’s subrogation interest must
be paid forthwith to the employee.9 But how the remaining
proceeds should be divided does not automatically allocate first
claim to the employer.
   At least two states have statutes that reject the employer-
first approach and yet provide for a fully or partially guar-
anteed allocation to the employee. Wisconsin mandates that
after deducting the reasonable cost of collection, the injured
employee receives, at a minimum, one-third of the amount
recovered.10 In Georgia, a statute provides that an employer or
insurer may recover on its subrogation lien only “if the injured
employee has been fully and completely compensated, taking
into consideration both the benefits received under this chapter
and the amount of the recovery in the third-party claim, for all
economic and noneconomic losses incurred as a result of the
injury.”11 We have described the latter concept as the “made
whole” doctrine.12
   Nebraska’s current statute rejects both the “first claim” and
the “made whole” doctrines. Under § 48-118.04(2), the trial
court is required to “order a fair and equitable distribution of
the proceeds of any judgment or settlement.” The distribution
is left to the court’s discretion and “simply requires the court
to determine a reasonable division of the proceeds among the

 8	
      Id., § 117.01[1] at 117-2.
 9	
      See § 48-118.
10	
      See Wis. Stat. Ann. § 102.29(1)(b) (West Cum. Supp. 2016).
11	
      Ga. Code Ann. § 34-9-11.1(b) (2008).
12	
      See Turco v. Schuning, 271 Neb. 770, 716 N.W.2d 415 (2006).
                                     - 981 -
                Nebraska Supreme Court A dvance Sheets
                        296 Nebraska R eports
                      KROEMER v. OMAHA TRACK EQUIP.
                            Cite as 296 Neb. 972

parties.”13 Prior to a 1994 amendment to § 48-118,14 “employers
and insurers were subrogated ‘dollar for dollar’ in any recovery
against a third-party tort-feasor.”15 But through the amend-
ment, employers and insurers were “subrogated for the amount
judicially determined to be a fair and equitable division of the
settlement under the circumstances.”16 We have determined that
“[t]here is no indication, either in the statutory language or the
legislative history, that § 48-118.04 was intended to infringe
on the right of subrogation guaranteed by § 48-118 beyond the
extent necessary to effectuate a reasonable settlement.”17 We
have also stated that a fair and equitable distribution does not
require that an employee be “made whole” or that tort proceeds
be split proportionately.18

                    (b) Bacon v. DBI/SALA
   [7] We discussed the purposes of the Act vis-a-vis work-
ers’ compensation subrogation in Bacon v. DBI/SALA.19 We
explained that “the beneficent purposes of the Act concern
the employee’s ability to promptly obtain workers’ compensa-
tion benefits—not the employee’s ability to additionally retain
recovery against negligent third parties in tort actions.”20 We
found “no reason to conclude that the beneficent purposes
of the Act require us to narrowly interpret the employer’s
statutory subrogation rights.”21 Rather, we determined that “the

13	
      See Burns v. Nielsen, supra note 2, 273 Neb. at 735, 732 N.W.2d at 650.
14	
      See 1994 Neb. Laws, L.B. 594.
15	
      Turney v. Werner Enters., 260 Neb. 440, 446, 618 N.W.2d 437, 441
      (2000).
16	
      Id. at 446, 618 N.W.2d at 442.
17	
      Burns v. Nielsen, supra note 2, 273 Neb. at 732, 732 N.W.2d at 648.
18	
      See Turco v. Schuning, supra note 12.
19	
      Bacon v. DBI/SALA, 284 Neb. 579, 822 N.W.2d 14 (2012).
20	
      Id. at 588, 822 N.W.2d at 24.
21	
      Id.
                                  - 982 -
               Nebraska Supreme Court A dvance Sheets
                       296 Nebraska R eports
                     KROEMER v. OMAHA TRACK EQUIP.
                           Cite as 296 Neb. 972

policies behind the Act favor a liberal construction in favor of
the employer’s statutory right to subrogate against culpable
third parties.”22 In an effort to balance the rights of injured
employees against the costs to employers, most workers’ com-
pensation acts “liberally allow employers to shift liability onto
third parties whenever possible.”23 We iterated that “§ 48-118
was enacted ‘for the benefit of the employer’”24 and that
where a third party negligently causes the employee’s injury,
“‘employers who are required to compensate employees for
injuries are intentionally granted a measure of relief equivalent
to the compensation paid and the expenses incurred.’”25
                   (c) In re Estate of Evertson
   Recently, the Court of Appeals affirmed an allocation of
zero to a workers’ compensation carrier in In re Estate of
Evertson.26 In that case, the carrier claimed a subrogation inter-
est in the entire $250,000 settlement allocated to the victim’s
surviving spouse. The county court found that a fair and equi-
table distribution was for the spouse to receive $207,416.69,
for the attorneys to receive $42,583.31, and for the carrier to
receive nothing.
   In affirming the county court’s distribution, the Court of
Appeals set out the factors considered by the county court.
The Court of Appeals noted that the county court considered
the victim’s lengthy marriage and “factors such as that [the
workers’ compensation carrier] had charged and received the
necessary premiums to provide workers’ compensation cov-
erage . . . and that under all the circumstances, [the work-
ers’ compensation carrier’s] financial risk was minimal and

22	
      Id.
23	
      Id.
24	
      Id.
25	
      Id.
26	
      In re Estate of Evertson, 23 Neb. App. 734, 876 N.W.2d 678 (2016),
      vacated on other grounds 295 Neb. 301, 889 N.W.2d 73.
                                     - 983 -
                Nebraska Supreme Court A dvance Sheets
                        296 Nebraska R eports
                      KROEMER v. OMAHA TRACK EQUIP.
                            Cite as 296 Neb. 972

insurance companies are in the business of assuming risk.”27
The Court of Appeals disagreed with the carrier’s “assessment
that the county court was considering an equitable assessment
in considering there was no evidence that [the workers’ com-
pensation carrier] helped finance the settlement.”28 Instead,
the Court of Appeals stated that “the county court’s language
indicates that the court was considering that [the workers’
compensation carrier] did not expend any funds in securing the
settlement.”29 Ultimately, the Court of Appeals could not say
that the county court abused its discretion in distributing the
settlement proceeds.
   We granted further review in In re Estate of Evertson. But
because we determined that the county court lacked subject
matter jurisdiction to hear and decide the subrogation matter,
we did not reach the merits of the appeal—which included the
carrier’s assignment that the Court of Appeals erred in affirm-
ing a distribution that was not fair and equitable.30
   In the instant case, the district court clearly relied on the
Court of Appeals’ decision in In re Estate of Evertson in mak-
ing its distribution. After reciting the above-quoted language
from In re Estate of Evertson, the court stated that it considered
the nature of Kroemer’s loss, the substantial damages he suf-
fered, the insurer’s charging and receiving a premium of nearly
$175,000 for the insurance coverage, and the “comparative
risk to the insurance carrier versus Kroemer.” But neither the
district court in the instant case nor the Court of Appeals in
In re Estate of Evertson considered the effect of our decision
in Bacon.
   The reasoning in In re Estate of Evertson is flawed for
several reasons. First, the payment of premiums for workers’

27	
      Id. at 741, 876 N.W.2d at 684.
28	
      Id.
29	
      Id.
30	
      See In re Estate of Evertson, 295 Neb. 301, 889 N.W.2d 73 (2016).
                                      - 984 -
                Nebraska Supreme Court A dvance Sheets
                        296 Nebraska R eports
                       KROEMER v. OMAHA TRACK EQUIP.
                             Cite as 296 Neb. 972

compensation coverage is not an appropriate factor to con-
sider in distributing proceeds recovered from a third party.
“The . . . Act requires, with few exceptions, that every
employer carry workers’ compensation insurance.”31 Thus, an
employer (or its insurer) should not be stripped of its statu-
tory subrogation right for obtaining such insurance.
   Second, the comparative risk between an insurance com-
pany and employee is likewise an inappropriate factor. Every
insurance company is in the business of assuming risk.
Consideration of this factor would nearly always elevate the
employee’s right to the proceeds over that of the employer or
its insurer.
   Third, in making a distribution of the recovery, consider-
ation of an employer’s or its insurer’s participation in obtain-
ing the settlement is suspect. The statutes give the employer
or its insurer the option to actively prosecute its subrogation
claim or to allow the employee to prosecute the claim and then
obtain a portion of the recovery and share in the expenses.32
An employer’s (or its insurer’s) right to reimbursement is pre-
served even if it selects the latter option.
   Fourth, the county court and Court of Appeals gave short
shrift to the right of the employer or its insurer to recover
on its subrogation interest. We have stated that § 48-118
“encourag[es] prompt payment of benefits, even when a
third party is liable for the injury, by providing an employer
or insurer with the means to recover at least a portion of
its payout.”33 The lower courts in In re Estate of Evertson
did not allow the insurer to recover any of its payout.
Frankly, it is difficult to imagine a situation in which an
allocation of $0 to an employer or insurer with a sizable

31	
      Travelers Indemnity Co. v. International Nutrition, 273 Neb. 943, 945, 734
      N.W.2d 719, 722 (2007).
32	
      See, generally, §§ 48-118 to 48-118.03 (Reissue 2010).
33	
      Burns v. Nielsen, supra note 2, 273 Neb. at 733, 732 N.W.2d at 649.
                                      - 985 -
                Nebraska Supreme Court A dvance Sheets
                        296 Nebraska R eports
                      KROEMER v. OMAHA TRACK EQUIP.
                            Cite as 296 Neb. 972

subrogation interest would be a fair and equitable distribution
of proceeds.
   [8] We disapprove the Court of Appeals’ decision in In re
Estate of Evertson34 to the extent that the court considered
payment of premiums and comparative risk in allocating none
of the proceeds of the settlement to the insurer.

                 (d) Distribution in Instant Case
   [9] The district court’s distribution in this case ignored
Ribbon Weld’s statutory right to subrogation. Under § 48-118,
Ribbon Weld is entitled to “reimbursement, under the right
of subrogation, of any compensation paid.” Instead, the court
allocated nothing to Ribbon Weld. Although the court did not
explicitly use “made whole” language, it essentially applied a
“made whole” formulation when it denied Ribbon Weld any
recovery. We have found error when a trial court concluded
that the worker had to be “made whole” before the subrogated
compensation carrier was entitled to any portion of the settle-
ment.35 And although the statute calls for a “fair and equitable
distribution,”36 subrogation in workers’ compensation cases is
based on statute, and not in equity.37
   [10] The district court appeared to focus on a distribution
that would be equitable only to Kroemer. But the distribu-
tion must be “fair and equitable”38 to both the employee and
the employer or its insurer. Although Kroemer’s damages
may have been worth over $800,000, Ribbon Weld paid over
$200,000 in workers’ compensation benefits to Kroemer for
an accident for which OTE was liable. Ribbon Weld was

34	
      In re Estate of Evertson, supra note 26.
35	
      See Turco v. Schuning, supra note 12. See, also, Sterner v. American Fam.
      Ins. Co., 19 Neb. App. 339, 805 N.W.2d 696 (2011).
36	
      § 48-118.04(2).
37	
      See Burns v. Nielsen, supra note 2.
38	
      § 48-118.04(2).
                            - 986 -
          Nebraska Supreme Court A dvance Sheets
                  296 Nebraska R eports
                KROEMER v. OMAHA TRACK EQUIP.
                      Cite as 296 Neb. 972

entitled to some portion of Kroemer’s settlement with OTE.
The court’s denial of the same was untenable and must be
reversed. But we review a district court’s allocation for abuse
of discretion, and thus, it is not for us to dictate a fair and
equitable distribution in the first instance.

                      VI. CONCLUSION
   Under the circumstances, the district court did not abuse
its discretion in determining that the amount of Kroemer’s
settlement with OTE was fair and reasonable. We affirm that
part of the court’s order. But we conclude that the district
court did abuse its discretion in not allocating any of the
settlement proceeds to Ribbon Weld. Accordingly, we reverse
that portion of the court’s order and remand the cause to the
district court with direction to make a fair and equitable dis-
tribution between Kroemer and Ribbon Weld of the remaining
$94,834.27 of the settlement proceeds.
	A ffirmed in part, and in part reversed
	                      and remanded with direction.
   Heavican, C.J., not participating.
