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Minnesota Workers’ Compensation Subrogation Twin Cities Claims Association September 13, 2011 Johnson & Condon, P.A. Matthew M. Johnson Sarah E. Groskreutz.

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Presentation on theme: "Minnesota Workers’ Compensation Subrogation Twin Cities Claims Association September 13, 2011 Johnson & Condon, P.A. Matthew M. Johnson Sarah E. Groskreutz."— Presentation transcript:

1 Minnesota Workers’ Compensation Subrogation Twin Cities Claims Association September 13, 2011 Johnson & Condon, P.A. Matthew M. Johnson Sarah E. Groskreutz Direct Dial: (952) Direct Dial: (952)

2 OBJECTIVES Identifying Workers’ Compensation Benefits Identifying Subrogation Opportunities Procedures for Seeking Subrogation Factors Impacting Your Ability to Recover from Tortfeasors

3 WORKERS’ COMPENSATION BENEFITS

4 SUMMARY OF BASIC MINNESOTA WORKERS' COMPENSATION LAW Minnesota has a "no-fault" system of workers’ compensation benefits. Negligence of an Employee is immaterial. The criteria for compensability is that the injury must “arise out of and in the course of the Employee’s employment.” The mere fact an injury occurred at work is not enough to establish compensability.

5 SUMMARYOF BASIC MINNESOTA WORKERS' COMPENSATION LAW Injuries can be either: (1) specific; (2) repetitive, minute trauma injuries commonly known as Gillette injuries; or (3) an occupational disease.

6 TEMPORARY TOTAL DISABILITY BENEFITS Paid to an Employee if he is entirely off work due to a work injury which, combined with his age, education, experience and the job market, results in the employee not working. The compensation rate is ascertained by taking two-thirds of the Employee’s “weekly wage.”

7 TEMPORARY TOTAL DISABILITY BENEFITS If the Employee’s pre-injury wages are regular, you must ascertain the average weekly wage over a 26-week period preceding the injury. Vacation and holiday periods and payments are included in the calculation.

8 TEMPORARY TOTAL DISABILITY BENEFITS If overtime is "frequent," it must be included in the calculation. The compensation rate must not exceed the maximum compensation rate. There is also a minimum compensation rate applicable to very low wage earners.

9 TEMPORARY PARTIAL DISABILITY BENEFITS Temporary partial disability exists when, as a significant result of the work injury, the Employee is working at a wage less than his weekly wage at the time of the injury. The initial compensation rate is based on two ‑ thirds of the difference between the wage at the time of the injury (AWW) and the reduced post ‑ injury wage.

10 PERMANENT TOTAL DISABILITY BENEFITS For injuries prior to 10/1/1995, to qualify for permanent total disability benefits, an Employee has the burden of proving that due in substantial part to a work injury, he is unable to find employment that is not sporadic in nature and only provides an insubstantial income.

11 PERMANENT TOTAL DISABILITY BENEFITS For injuries subsequent to 10/1/1995, the Employee must also establish a permanent partial disability threshold of 17% if under age 50, 15% if between 50 and 55, or 13% if 55 or older at the time of injury. Permanency can be cumulated based on various body parts and need not be only work-related.

12 PERMANENT TOTAL DISABILITY BENEFITS There is a rebuttable retirement presumption at age 67, thus triggering a cut off of benefits. An earlier cut off is possible if the Employee made a pre-injury declaration of a plan to retire at an earlier date.

13 PERMANENT PARTIAL DISABILITY BENEFITS Permanency benefits are payable if an Employee is deemed to have a permanent work-related injury which fits within a detailed permanency schedule as set forth by the Workers’ Compensation Division in Rule A reduction is made for pre-existing permanent disability.

14 PERMANENT PARTIAL DISABILITY BENEFITS If an Employee sustains injuries with several Employers, the Employer on the risk at the time of the last injury is charged with all permanency unless disability from the prior injuries is clearly evidenced by prior medical records.

15 PERMANENT PARTIAL DISABILITY BENEFITS When the Employee reaches MMI, the insurer must request an assessment of permanency from the treating physician. (A Health Care Provider Report form may be used.) If you disagree with the rating, schedule an IME.

16 PERMANENT PARTIAL DISABILITY BENEFITS For injuries occurring prior to 10/1/1995, there is a more involved system of ascertaining permanency involving impairment or economic compensation. For injuries 10/1/1995 – 10/1/2000, for percentages of permanency up to 25%, multiply the percent of PPD by $75,000.

17 PERMANENT PARTIAL DISABILITY BENEFITS For injuries subsequent to 10/1/2000, ascertain the percentage of PPD to be paid using the chart in Minn. Stat. § , subd. 2a and multiply said percentage by the gross category amount shown. This permanency is not payable until an Employee’s receipt of TTD benefits ceases.

18 VOCATIONAL REHABILITATION If an injured worker is off of work, he may request a rehabilitation consultation with a rehabilitation counselor (“QRC”) of his choice. While you can object, the Employee has the right to chose the initial QRC assignment.

19 VOCATIONAL REHABILITATION If the QRC determines the Employee is a "qualified employee" (ie. not expected to return to a similar job with the pre-injury Employer or another Employer), then the Employee is entitled to rehabilitation assistance. This assistance includes job search, medical management, etc.

20 VOCATIONAL RETRAINING Occasionally it is felt that an Employee must be retrained to be restored to a proper earning capacity. The Employee will receive school tuition, books, supplies, mileage, and weekly benefits (paid similar to TTD benefits for up to 156 weeks) while in school.

21 MEDICAL BENEFITS An insurer is obligated to pay reasonable and necessary medical expenses which are causally related to the Employee’s injury. A set of rules known as Treatment Parameters act as protocol (guidelines) for determining what type of treatment is necessary and the duration.

22 ATTORNEY FEES Contingent fees are determined by a formula which allows the attorney 25% of the first $4,000 in benefits received by the Employee and 20% thereafter, subject to maximum fee of $13,000. If the dispute is primarily about medical or rehabilitation benefits, hourly fees apply.

23 WORKERS’ COMPENSATION SUBROGATION

24 INTRODUCTION - MINN. STAT. § Separate Independent Statutory Right Recovery Right Against Third Party who Caused Work Injury Workers’ Compensation Benefits “Paid and Payable” Employer’s Separate Claim for Increased Workers’ Compensation Premiums

25 INTRODUCTION - MINN. STAT. § (cont.) Allows Separate Action by Employer: ▫ In Name of Employee; ▫ In Name of Employer; ▫ In Name of Workers’ Compensation Insurer

26 IDENTIFYING SUBROGATION OPPORTUNITIES Injuries to the Employee caused by the negligence of parties other than the Employer Comparative Fault: Employee’s fault cannot exceed the fault of the non-employer tortfeasor

27 IDENTIFYING SUBROGATION OPPORTUNITIES Employer’s Fault Can Reduce Your Recovery Minn. Stat. § – 50/50 Comparative Fault

28 IDENTIFYING SUBROGATION OPPORTUNITIES – TORT CLAIMS Automobile Products Liability Construction Cases with Multiple Contractors

29 PROCEDURES FOR SEEKING SUBROGATION – STATUTE OF LMIMITATIONS Generally, Six-Year Statute of Limitations for Claims Arising in Minnesota Different Limitation Periods May Apply Depending on Cause of Injury Notice Does Not Prevent Statute of Limitations From Running

30 PROCEDURES FOR SEEKING SUBROGATION Notice Letters to: ▫ Employee; ▫ Employee’s Attorney; ▫ Third Party/Tortfeasor and Liability Insurer

31 PROCEDURES FOR SEEKING SUBROGATION Options: 1)Intervene in Employee’s Lawsuit Against Tortfeasor; 2) Do Not Intervene; 3) Initiate Lawsuit Against Tortfeasor if Employee Does Not Pursue Claim On His/Her Own

32 CONSIDERATIONS FOR INTERVENING OR PURSUING SEPARATE ACTION Recognize Workers’ Compensation Exposure; Use Common Sense: Don’t Spend $2,000 to Recover $500 Consider Comparative Fault of Employee and Employer

33 STATUTORY FORMULA Minn.Stat. § , Subd. 6 Legislative Means to Minimize Recovery Applies if Employee’s and Employer’s Claims Settled Globally or Tried Together Forces Subrogating Employer/Insurer to Pay Employee’s Legal Fees

34 STATUTORY FORMULA (cont.) Employee Can’t Settle Your Interest Henning Allocation: Employee May Move the Court to Determine Which Damages from Settlement or Verdict are Recoverable by Employer

35 STATUTORY FORMULA EXAMPLE 1 Comp Paid 30,000 Total Recovery90,000 Costs & Attorneys’ Fees30,000 Balance 60,000 Statutory 1/3 to Employee20,000 Balance 40,000 Reimbursement to Employer comp paid minus (costs of recovery (30000) divided by total recovery (90000) multiplied by comp paid (30000)20,000 Balance to employee/credit employer20,000

36 STATUTORY FORMULA EXAMPLE 2 Comp Paid 70,000 Total Recovery90,000 Costs & Attorneys’ Fees 30,000 Balance 60,000 Statutory 1/3 to Employee20,000 Balance 40,000 Reimbursement to Employer comp paid minus (costs of recovery (30000) divided by total recovery (90000) multiplied by comp paid (70000)46, Actual Reimbursement to Employer40,000 Balance to employee/credit employer0

37 NAIG SETTLEMENT Employee Settles Common Law Claim Only; Pain and Suffering; Uncompensated Wage Loss; Loss of Consortium; etc.; Notice to Employer Required

38 NAIG SETTLEMENT (cont.) Formula Does Not Apply! Subrogation Claim is for Total Paid/Payable Can Still Bring Lawsuit in the Name of the Employee

39 REVERSE-NAIG SETTLEMENT ▫ Promotes Earlier Settlements ▫ Keeps Control in Your Hands ▫ Avoid Paying Employee’s Legal Fees ▫ Future Exposure Considerations

40 EMPLOYER LIABILITY - LAMBERTSON Based on case Lambertson v. Cincinnati Corporation, 257 N.W.2d 679 (Minn. 1977). Third Party’s Right of Contribution Against Employer Fault-Based: Tortfeasor and Employer’s Fault Compared

41 EMPLOYER LIABILITY – LAMBERTSON (cont.) Typical Claims: ▫ Negligent Training/Supervision ▫ Unsafe Workplace ▫ OSHA Violations ▫ Product Modification/Misuse Part II of Workers’ Compensation Policy

42 EMPLOYER LIABILITY – LAMBERTSON (cont.) Lambertson Exposure: ▫ Workers’ Compensation Benefits Paid and Payable ▫ Limited to Amount Employer May Recover By Way of Subrogation Problems Arise When Employer’s Part II Coverage is Less Than the Potential Subrogation Recovery

43 LAMBERTSON EXAMPLE 1 Comp Paid60,000 Total Award90,000 Subro Recovery40,000 Percentage of Fault Amongst Parties: Plaintiff0% Tortfeasor75% Employer25% Lamberston Exposure22,500

44 LAMBERTSON EXAMPLE 2 Comp Paid60,000 Total Award90,000 Subro Recovery40,000 Percentage of Fault Amongst Parties: Plaintiff0% Tortfeasor50% Employer50% Lamberston Exposure40,000

45 LAMBERTSON EXAMPLE 3 Comp Paid300,000 Total Award900,000 Subro Recovery200,000 Lambertson Coverage100,000 Percentage of Fault Amongst Parties: Plaintiff0% Tortfeasor80% Employer20% Lamberston Exposure180,000 Excess Exposure to Employer 80,000

46 WAIVE AND WALK Waive and Walk – Minn.Stat. § , subd. 11 (2000): ▫ Waive Subrogation Claim for Paid and Payable, and Avoid Lambertson Claim by Tortfeasor Assignment of Subrogation Interest

47 Minnesota Workers’ Compensation Subrogation Twin Cities Claims Association September 13, 2011 Johnson & Condon, P.A. Matthew M. Johnson Sarah E. Groskreutz Direct Dial: (952) Direct Dial: (952)


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