Delfino R. Olivas, Aetna Life and Casualty Company, Plaintiff-Intervenor v. United States

The government has appealed from a judgment under the Federal Tort Claims Act [ 28 U.S.C. §§ 1346 (b), 2671-2680] in favor of the plaintiff-appellee Olivas, because of injuries sustained on a construction project at an Air Force base in Arizona.

It is assigned as error that the district court found that the negligence of a government agent was the proximate cause of Olivas’ injury. The government appeals also from the trial court’s refusal to allow it to set off amounts paid Olivas by Aetna Life & Casualty Co. (hereinafter “Aetna”) under a workmen’s compensation policy. The district court also concluded that Aetna had not waived its right under Arizona law to a lien on the proceeds of plaintiff's judgment and this is assigned as error on the government’s appeal.

We affirm on the liability issue and reverse on the second and third issues. We conclude that there is a right to the offset and that Aetna, under its agreement with the prime contractor, had waived its right to a lien on the judgment against the government.

I.

THE LIABILITY ISSUE

Olivas, a laborer employed by Peter Kiewit Sons' Company (Kiewit), the prime government contractor, was ordered to enter a blast…