Subrogation in Workers’ Compensation Claims

Bruce Burk

Sarasota, FL (workersCompensation.com) – When a workers’ compensation accident happens, one of the first things which is relevant in the claim is whether or not there is any subrogation potential. It is important to understand the process of investigating subrogation potential and some of the issues involved.

The first step is identifying whether the mechanism of injury gives rise to the potential liability of a third party. For example, if an employee is lifting a heavy box and feels a pop in his lower back, that likely does not give rise to any third party liability.

However, in some accidents, it is easier to identify subrogation potential: a car accident, a slip and fall, the malfunctioning of equipment, etc. In others, it is not so easy. Take, for example, exposure or occupational disease cases where toxic chemicals in the air allegedly cause damage to a claimant’s respiratory system. All the parties who could have been involved in construction or other activities on a piece of property may be more difficult to figure out.

The first step in protecting a client’s subrogation rights is to put the relevant parties on notice that the carrier is asserting a workers’ compensation lien. This can also present issues. All of the relevant third parties involved in the worker’s compensation accident are not typically known in the initial states of the claim. Lien notices should be sent to any known possible third party tortfeasors and their attorneys.

Many personal injury firms also have workers’ compensation departments. In some cases, the same firms who represent the claimant in workers’ compensation are also representing them in the personal injury claim. Even though it is not supposed to happen, sometimes there are attempts to do personal injury discovery in the workers’ compensation case.

The reason subrogation is so important to employers/carriers is that in some states, it allows the employer/carrier to recoup some of the money they have paid towards medical, indemnity, or both. Depending on the state, the subrogation lien applies to both past and future benefits.

Determining the value of the subrogation lien is a much more complicated matter. One thing that complicates this issue is that personal injury claims typically are longer than workers’ compensation cases, especially if they go into litigation. As a result, when the employer/carrier is attending the standard mediation in the workers’ compensation case, they likely will not have a settlement agreement on hand from the personal injury claim. They have only an estimated recovery. Determining the value is important because waiving the lien and allowing the claimant to pursue the third party without the lien can be a valuable tool in settlement negotiations.

Subrogation liens can also carry other important powers as well. For example, once an employer/carrier has filed a notice of lien in a civil case, they may be entitled to participate in discovery such as depositions. They may even be a necessary party to attend mediation in the personal injury claim. More importantly, they may have a say in whether the personal injury claim can settle. In other words, the parties involved cannot short-change the employer/carrier by reaching a settlement that does not value the lien.

Depending on the state, enforcing the lien and determining its value may require filing a motion in circuit court to get an order from a judge regarding the valuation and right to offset medical and indemnity benefits.

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