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Subgrogation Handbook

WORKERS' COMPENSATION SUBROGATION - A Handbook for 50 States, has been developed specifically for workers' compensation carriers

Insurance and Workers Compensation Carriers

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TO THE READER

This Handbook summarizes laws across the nation that control the ability of a workers' compensation insurer to recover benefits paid to an injured worker through the doctrine of subrogation. All information was verified from published official sources before publication. However, space limitations make it impossible to list all the exceptions and conditions that may govern a particular case. In addition, statutes and court interpretations may change at any time. As tort reform has become a national issue, the need for current information is more critical than ever. Therefore, decisions on individual cases should be based on current information and advice of counsel. In short, this Handbook should be the starting point for guidance, not a basis for final decisions.

The attorneys at Cohen, Placitella & Roth welcome your inquiries. Cohen, Placitella & Roth has more than thirty-five years of experience, working with our clients and successfully litigating major subrogation cases in property loss and workers' compensation. Our staff is made up of seasoned professionals whose objective is to provide our clients with the best possible results and to help them reduce their costs.

This Handbook is supplied as a service to the profession and will be updated periodically. We will be pleased to supply additional copies upon request. All rights reserved. The entire contents of this Handbook may not be copied or reproduced in any form, for any purpose, whether for profit or not, without written permission from Cohen, Placitella & Roth, P.C.

Understanding This Handbook

This Handbook is a compilation of the varying laws across the nation that govern the ability of a self-insured employer or workers' compensation insurance carrier to recover compensation benefits paid to an employee. This is done through the process of subrogation.

When a third party is responsible for an employee's injuries, the vast majority of jurisdictions in the United States provide for the recovery of some, if not all, of the benefits paid by an employer or carrier. This Handbook summarizes those rights and their limitations in each jurisdiction.

While this handbook details the way subrogation works in different jurisdictions across the nation, there are basic principles that apply in most states. An employee's exclusive remedy against an employer and fellow employees is compensation benefits, even if the employer was negligent. An employee receiving compensation benefits can also sue a third party (other than the employer or co-employees) under tort law to recover full damages. This claim is not limited to economic losses like wages and medical expenses, but also includes pain and suffering and other general damages. The employee's right to bring such a claim depends on the particular jurisdiction's laws and procedural rules.

While every effort has been made to verify the accuracy of this information, this Handbook consists of brief summaries and legal principles, and is no substitute for thorough legal research and analysis. Similarly, due to space limitations and constantly changing statutes and court interpretations, it is impossible to include all the exceptions and conditions that may govern a particular case. As such, this Handbook should be the starting point for guidance and research, and not a basis for final decisions.

For the purposes of this Handbook, "employer" is used interchangeably with the "workers' compensation insurance carrier." Similarly, "employee" includes both an employee and any personal representatives thereof.

Which State's Laws Should You Consult?

There may be a question as to which state's laws govern the recovery rights of the employer. Often this occurs when several jurisdictions are involved. The following are examples: the state where the accident occurs; the state where the employee resides; the state where the employer is located; the state pursuant to which benefits are paid; the state where the third party suit is filed. When multiple jurisdictions are involved, a detailed legal analysis must be done to determine which law applies.

Primary Topics Covered

Employer's Right to Subrogation

This section covers general statutory authority for the employer or insurance carrier's right to subrogation. Wherever possible, it also addresses whether the employer may proceed on its own against the third party, or whether it is relegated to having a lien on the proceeds of a third party action instituted by the employee. This varies by jurisdiction. In some states, the employer has no right to proceed on its own; in other states, the employer does have such a right but only after the employee is given a specific period of time in which to file suit. In many other states, the employer and employee have equal and concurrent rights to bring an action.

Also covered includes whether or not the employer's right to reimbursement through subrogation extends to the proceeds of an uninsured or underinsured motorist coverage policy, which party is responsible for attorneys' fees, and a variety of other issues that may be particular to one or multiple other jurisdictions.
UM/UIM

Whether or not the employer's or insurer's subrogation lien extends to the benefits of an uninsured or underinsured motorist coverage policy. This can differ depending on whether the policy was purchased by the employer or employee.
Statute of Limitations

In general, a statute of limitations defines the maximum time period by which a legal action may be brought. The time period typically begins to run when the cause of action accrues. The time of accrual is dependant on the facts and the law of the jurisdiction. There may be multiple statutes of limitation depending on the type of action.

In cases where the injured party does not immediately recognize that damage has occurred (e.g. hidden illnesses caused by chemical contamination), many jurisdictions apply the "discovery rule," which prevents the statute of limitations from beginning to run until the damage is first discovered, or reasonably should have been discovered.
Statute of Repose

Statutes of repose generally bar a cause of action after a specified period of time has expired. They typically begin to run from the date of the event giving rise to liability (i.e. completion of a construction project or when a product is manufactured), rather than the date the damage is sustained. A statute of repose differs from a statute of limitations in that if the period of time specified in a statute of repose has expired, the action is completely barred from being brought, regardless of whether the statute of limitations has expired.
Contributory Negligence

Where plaintiffs, through their own negligence, contribute to the damages they incur overall as a result of the defendant's negligence. In most cases, so long as the plaintiff's negligence does not exceed that of the defendant, recovery is not barred. Most often it is simply reduced in proportion to the plaintiff's negligence. However, this varies by jurisdiction.
Recent Case Law

The most recent decisions affecting or defining workers' compensation subrogation in various jurisdictions.