State Specific Subrogation – Coast-to-Coast Joseph Nemo Michael Nemo Courtney Stabnick Michael Carr Tom Steichen

General Features of Workers’ Compensation Subrogation Throughout the United States

General Features of Workers’ Compensation Statutes in All 50 States Generally involves a situation in which some third party, not a part of the employee / employer relationship, causes an employee’s injury through its own negligence or fault

General Features of Workers’ Compensation Statutes in All 50 States Subrogation Reimbursement to the self-insured employer/workers’ compensation carrier for workers’ compensation benefits paid or payable as a result of a work injury caused by the negligence of a third party

Workers’ Compensation Subrogation Cases Generally Arise Out Of: Motor Vehicle Accidents Product Liability/Product Failures Slips/Falls Construction Accidents Medical Malpractice

General Features of Workers’ Compensation Statutes in All 50 States Common Elements Recovery is governed by individual state statutes and, often, an extensive interpretive body of case law Individual state’s laws governing workers’ compensation subrogation recovery are often complex, confusing and vary considerably from one another

General Features of Workers’ Compensation Statutes in All 50 States Common Elements Individual state statutes “generally” function as safety mechanisms that allow a self-insured employer or workers’ compensation carrier to be reimbursed where the employer’s employee is injured through the fault of a third party who is not a part of the employer/employee relationship  Caveats  Reimbursement is not always “full reimbursement”  Offending/negligent party need not always be a “stranger” to the employer/employee relationship  Recovery need not always be from an “at-fault” party

General Features of Workers’ Compensation Statutes in All 50 States The “Players” Employee v. Third-party Tortfeasor:  Employee can generally recover non-workers’ compensation damages (e.g., pain and suffering, emotional distress, loss of consortium, etc.) Employer/Insurer v. Third-Party Tortfeasor:  Can recover workers’ compensation benefits “paid” or “paid and payable” Third-Party Tortfeasor v. Employer: (16 States) (Coverage B Liability – employer’s liability policy)

General Features of Workers’ Compensation Statutes in All 50 States Individual state laws vary considerably regarding: When a subrogation claim can be asserted How a subrogation claim can be asserted How recovery is calculated Whether employer’s alleged negligence can negatively impact subrogation recovery

Breaking Down the Complexities and Sorting out the Confusion 22 states in which self-insured employer/workers’ compensation carrier can sue third-party tortfeasor directly “anytime”

States in Which Carrier can “Generally” Sue Third-party Tortfeasor Directly Anytime ArkansasLouisianaOhioVirginiaCaliforniaMinnesota OklahomaWashingtonColoradoMississippi Pennsylvani a Wisconsin ConnecticutMissouri South Dakota West Virginia (undecided) IdahoNebraska TexasKentuckyNevadaUtah

Breaking Down the Complexities and Sorting Out the Confusion 28 states in which self-insured employer/workers’ compensation carrier can sue third-party tortfeasor directly, only after a “waiting period”  Any earlier resolution generally requires intervention, assertion of lien in employee’s action, or other state-specified involvement in employee’s action

States in which carrier can sue third-party tortfeasor directly only after a waiting period. Any earlier resolution generally requires intervention, assertion of lien in employee’s action, or other state-specified involvement in employee’s action. Alabama – 6 months after SOL run on EE’s claim w/o EE pursuing, otherwise must intervene Hawaii – 9 months after DOL *Massachusetts – 7 months after DOL North Carolina – 1 year after DOL Alaska – 1 year after award on WC if EE does not file suit Illinois – 3 months before SOL run on EE’s claim Michigan – 1 year after DOL North Dakota – 60 days after DOL Arizona – 1 year after DOL Indiana – 1 year after SOL run on EE’s claim Montana – 1 year after DOL Oregon – 90 days after “election” Delaware – After 260 days Iowa – On 90-days notice to EE New Hampshire – 9 months after DOL South Carolina – 1 year after DOL District of Columbia – 6 months of Award Kansas – 18 months after DOL *New Jersey – 1 year after DOL Tennessee – 1 year after DOL *Florida - 1 year after DOL Maine – After 30-days demand New Mexico – 32 months after DOL & 26- weeks notice to EE Vermont – 1 year after DOL Georgia – 1 year after DOL Maryland – 2 months after DOL *New York – After 30-days notice to EE Wyoming – After 15-days notice to EE

Breaking Down the Complexities and Sorting Out the Confusion Two states in which self-insured employer/workers’ compensation carrier “generally” cannot sue third- party tortfeasor directly  New Mexico  West Virginia (Direct action to recover lien allowed if Employee fails to honor carriers lien)

Breaking Down the Complexities and Sorting Out the Confusion 16 states in which self-insured employer/workers’ compensation carrier’s subrogation recovery can be negatively impacted by employer’s negligence in causing/contributing to employee’s injury

Employer Liability States Alaska Employer’s Reimbursement entitlement from third-party tortfeasor is reduced by its percentage of fault Illinois Kotecki Contribution New York - “Grave injury contribution” List of specific scheduled permanent injuries as defined by statute and case law - Independent duty owed by Employer to third party tortfeasor - Written contract between employer and third-party tortfeasor preserving third-party’s contribution or indemnity right Arizona Proportionate reduction if jury verdict Kansas Brabander Formula North Carolina Reduction/elimination of lien commensurate with employers’ negligence California Proportionate reduction if jury verdict Louisiana Employer is immune from direct suit, but carrier’s subrogation recovery is reduced by any fault assessed against the employer Texas Proportionate reduction Idaho Bars Lien recovery Minnesota Lambertson contribution Utah Reimbursement to carrier is reduced by fault attributed to employer/co- employee/other immune parties, provided their combined fault > 40% New Mexico Lien reduction Kentucky Lien reduction

Cash Contribution States MinnesotaIllinoisNew York

Lien Reduction States New MexicoKentuckyAlaskaArizona CaliforniaIdahoLouisianaNorth Carolina TexasUtahKansas

Breaking Down the Complexities and Sorting Out the Confusion Statutes of Limitation How long can you wait before initiating an action?

Michigan

Workers’ Compensation Subrogation in Michigan Potential “3rd Parties” Traditional “Third-Party Tortfeasors” who are strangers to the employer/employee relationship Co-employee if “intentional tort” or “dual capacity” Employer if “intentional tort” or “dual persona” however, no traditional “1B liability”

Workers’ Compensation Subrogation in Michigan Parties subject to the workers’ compensation subrogation lien claim Traditional “Third-Party Tortfeasors” who are strangers to the employer/employee relationship Uninsured motorist coverage – maybe

Workers’ Compensation Subrogation in Michigan Asserting the “3rd Party” Claim Waiting period – Injured worker has sole right to commence suit against third-party tortfeasor for up to one year after injury Workers’ compensation carrier has right to intervene 30-day notice period by initiating party

Workers’ Compensation Subrogation in Michigan Asserting the “3rd Party” Claim Statutes of Limitation

Workers’ Compensation Subrogation in Michigan Allocation of Third-Party Recovery M.C.L.A. § (5) In an action to enforce the liability of a third party, the plaintiff may recover any amount which the employee or his or her dependents or personal representative would be entitled to recover in an action in tort. Any recovery against the third party for damages resulting from personal injuries or death only, after deducting expenses of recovery, shall first reimburse the employer or carrier for any amounts paid or payable under this act to the date of recovery and the balance shall immediately be paid to the employee or his or her dependents or personal representative and shall be treated as an advance payment by the employer on account of any future payments of compensation benefits.

Workers’ Compensation Subrogation in Michigan Allocation of Third-Party Recovery “Expenses of Recovery” under M.C.L.A. § (5)(6) Reasonable expenditures, including attorneys fees incurred in effecting recovery Attorneys fees – divided among attorneys for plaintiff as directed by the court Expenses – apportioned by court between the parties as their interests appear at the time of recovery

Workers’ Compensation Subrogation in Michigan Allocation of third-party Recovery Franges v. General Motors, 274 N.W.2d 392 (Mich. 1972) Franges calculator:

Workers’ Compensation Subrogation in Michigan Allocation of third-party Recovery Franges Uses:  Global recovery or award  Parties cannot agree on distribution of third-party recovery  Credits

Workers’ Compensation Subrogation in Michigan Non-Global Resolutions Injured worker or workers’ compensation carrier can theoretically settle their separate respective claims against third-party tortfeasor (M.C.L.A. § (2)(3))

Workers’ Compensation Subrogation in Michigan Conversion actions — Ohio Farms Ins. Co. v. Meff, 315 N.W.2d 553 (Mich. App. 1981)

Special Problems with Subrogation in Michigan: Michigan No-Fault Law Pays medical expenses related to the MVA forever Pays economic loss damages to victim for first three years after MVA Pays survivor’s loss benefits

Injured Worker can Bring Claims Against Third-Party Torfeasor For: Non-economic losses (pain, suffering, emotional distress, etc.) Economic losses in excess of those incurred within three years of motor vehicle accident

No-Fault Carriers Generally Cannot Seek Reimbursement from Third-Party Tortfeasors For Medical benefits Economic losses

Workers’ Compensation Benefits Operate as a Substitute For No-Fault Benefits in a Work-Related Motor Vehicle Accident No subrogation for medical benefits paid – Ever No subrogation for economic loss benefits paid within the first three years of motor vehicle accident No subrogation recovery against non-economic loss benefits recovery by employee against third-party tortfeasor M.C.L.A. § (4). Great American Insurance Co., v. Queen, 300 N.W.2d 895 (Michigan 1980)

Possible Solutions to Facilitate Recovery Establish that employer’s proposed third-party settlement includes compensation for future economic loss damages “Bad faith”/future claims arguments Argue for credits