by Karl Voigt
Workers’ Compensation cases sometimes involve other insurers other than the Workers’ Compensation insurance company. As an example, a motor vehicle accident that injured a worker would bring in a second potentially responsible insurer: the auto insurer. Such cases are introduced to the concept of subrogation.
Subrogation is a legal doctrine that allows one insurer to seek reimbursement from the other. More specifically, where one insurer makes a payment on an obligation which, by law, is the primary responsibility of another insurer, the first insurer is then subrogated to the claims of the second.
Using our example, let’s assume a car owner is injured at work in a collision using his car and the collision insurer pays his medical bills. He then opens a Workers’ Compensation claim. In essence, the Workers’ Compensation insurer – the party more responsible for medical treatment for a work injury – would have to reimburse the collision insurer for the bills it paid.
Subrogation not only protects the rights of the insurance companies, but also ensures that a medical care provider is not paid twice for the same service. This would be considered an unjust enrichment under the law.
This concept can also apply to wage loss benefits. Assuming our injured worker is first paid for his wage loss by the collision insurer. Then, if he opens a Workers’ Compensation claim he would be eligible for payment for wage loss from the Workers’ Compensation insurer. To prevent “double dipping”, the collision insurer would have the right to reimbursement.
In the Workers’ Compensation specialty practice, we most often see an injured worker who also filed suit against a third-party who caused the motor vehicle accident. This litigation may take years and the injured worker might receive wage loss benefits from the Workers’ Compensation insurer during this period. If the motor vehicle case is settled, the Workers’ Compensation carrier might actually have the right to reimbursement from the civil award.
These cases can become extraordinarily complex, particularly if it is not a matter of simple reimbursement for monies paid. Namely, The injured worker may still be disabled from the accident and is therefore receiving Workers’ Compensation wage loss benefits. If this is the case, and the amount of the civil award exceeds the wage loss benefits paid to date, the Workers’ Compensation carrier may actually receive a credit for future benefits payable. The Workers’ Compensation carrier may actually have the right to file a special petition for the amount of future offset from Workers’ Compensation wage loss to be determined by the Workers’ Compensation judge.
The concept of subrogation is an equitable principle designed to be fair to all parties involved. Unfortunately, one side effect is often very complex litigation. Naturally, when discussing your Workers’ Compensation case with your lawyer, it is critical to let her know if you have or are considering a civil case.