Subrogation-A Thorny Legal Issue with An Easy Resolution
Aug. 12, 2022
This legal term, subrogation, means that a workers’ compensation insurance company who pays out money benefits to an injured worker may request some of that money from the injured worker if the worker has filed a separate negligence claim against another company/insurance company and collects damages in that separate claim.
Note the word buried in this definition: “May”
Many insurance companies try for subrogation but not many are successful in getting some of their money back that they paid for the worker’s medical care and disability benefits.
The key is that subrogation is a lien that is only recoverable for economic losses. So, the insurance company defendant must show that the worker was FULLY and COMPLETELY COMPENSATED in his workers’ compensation case and claim.
What is economic loss? Weekly disability benefits are the largest category. But as every worker knows, the workers’ compensation law only requires the insurance company to pay the worker each week 2/3 of their average weekly wage as determined for the 13 weeks prior to their injury. If the injured worker receives 2/3 of their pay weekly, they are not FULLY and COMPLETELY COMPENSATED.
The workers’ compensation company seeking reimbursement of a portion of their funds, must demonstrate to the trial court what portion of the workers’ benefits was for economic losses. This is most difficult to do since the settlement language required by the State Board to approve a settlement presented to it does not allow a specific breakdown of the settlement lump sum.
The most recent case addressing subrogation was dealt by the Court of Appeals on June 27, 2022, titled Donegal Mutual Insurance Group v. Jarrett (A22A 0390).
Donegal Insurance was barred from subrogation even though the money recovery received by Jarrett in his 3rd party claim was greater than his lump sum recovery received in settlement of his workers’ compensation claim. Another reason as to why a subrogation recovery was barred was the language in a General Release document executed by Jarrett that stated Jarrett was not fully and completely compensated in his workers’ compensation settlement.
I love this decision because my clients are NEVER FULLY COMPENSATED for their injuries. Half the time the company doctors prematurely release my clients to return to full duty work long before they are truly ready to return to work! The rest of the time the doctors withhold proper testing, injections, diagnostic treatment on the basis that these tests “cost too much money”. That is baloney.
What we have been handed by the Court of Appeals is a rare but sweet decision that lets the worker go after a negligent 3rd party for a large recovery. Let’s not begrudge the worker that once in a lifetime he or she may receive a “gift” which probably will still not restore his herniated spinal disc or the loss of a hand or arm. You see, a 3rd party claim is almost always due to a horrendous injury that can never be totally repaired nor can the worker be made new again.