Whether you are an employee or an employer, one of the most confusing aspects of the workers' compensation laws is the concept of subrogation. Literally, subrogation means one person or party stepping into or standing in the place of another. Subrogation issues arise in workers' compensation when someone from outside the employment relationship causes all or part of an employee's work-related accident or injury.
If you are receiving or paying workers' compensation benefits, subrogation can affect settlement, an employee's receipt of benefits and an employer's obligations to pay ongoing benefits. For those reasons, it is important to work with an attorney who has experience dealing with workers' compensation and the complications subrogation can present.
By choosing such an attorney, you ensure that, either as an employee or an employer, you are protected from making a costly mistake because of subrogation.
Third Party Responsible for Work Accident
Often when an employee is injured at work there is some person or party, other than the employer or co-employee, who bears some responsibility for causing the employee's injury. For workers' compensation purposes, that individual or entity is known as a third party. The presence of a third party does not excuse the employer from its obligation to pay workers' compensation benefits if the injury occurred in the course and scope of the employee's work related duties.
The presence of a third party does, however, change who bears ultimate responsibility for compensating the employee for his or her injury-related losses. Nothing in the workers' compensation law prevents an employee receiving workers' compensation benefits from bringing a lawsuit for negligence or improper conduct against a third party. Subrogation allows an employer paying workers' compensation benefits to either step into the employee's place or participate with the employee in any such lawsuit that the employee might have against the third party.
The employer is allowed to participate in an attempt to get back from the third party the workers' compensation benefits it paid to the employee. Such repayment is allowed because it is the third party who really caused the employee to suffer the loss.
Understanding Subrogation in Workers' Compensation
An employer who is paying workers' compensation benefits to an employee can use subrogation to join any lawsuit the employee has against the third party who caused the injury. The employer's recovery will be limited to the benefits it has already paid and, in some instances, to benefits it might have to pay.
An employer may also be able to use subrogation to bring a lawsuit against a third party, on the employee's behalf, if the employee does not want to bring a suit.
The effect of subrogation is that the employee is only paid once for those amounts associated with medical expenses and wage loss that the employer has paid under workers' compensation. Any portion of an award in a lawsuit that includes amounts for losses paid by workers' compensation is refunded to the employer asserting the subrogation claim.
Employees Required to Cooperate with Investigation
Usually, employers purchase workers' compensation insurance to cover their obligations under the workers' compensation laws. Accordingly, the employer's workers' compensation insurer, who actually pays the employee benefits, generally asserts the subrogation claim on the employer's behalf. Employers will almost always co-operate with their insurer's efforts to bring a subrogation claim.
An employee's obligation to co-operate is determined by the law of the state in which the employee lives. Further, an employee's ability to receive ongoing benefits may depend upon co-operation. Both employer and employees benefit from good legal advice in the extent of co-operation to lend a workers' compensation insurer that is bringing a subrogation claim.
Settlement May Cut-Off Benefits
Issues associated with subrogation can cause great difficulties when there is a settlement of a lawsuit against a third party. Both employers and employees may be allowed to settle portions of their claims with the third party.
However, such settlements may affect an employee's right to receive ongoing workers' compensation benefits or an employer's responsibility to pay them. Frequently, the right to receive ongoing benefits and the obligation to pay benefits depends upon providing adequate notice to the non-settling party of the intended settlement.
Each state differs in exactly how and when employers are allowed to assert their subrogation interests and how the existence of a subrogation interest affects settlement of third party lawsuits. Whether you are an employee or an employer, an attorney who understands the workers' compensation laws in your state can best advise how subrogation will affect your workers' compensation claim, an employee's third party lawsuit and any settlements you may wish to make.
Conclusion
Understanding workers' compensation issues can be difficult. Both employers and employees, however, need to know their rights and obligations when someone outside of the employment situation is responsible for causing an employee to become injured under circumstances entitling them to receive workers' compensation benefits.
Failing to obtain such an understanding can cause costly results for both employees and employers. Hiring an attorney who knows the workers' compensation laws in your state protects employers and employees from the unintended outcomes that can otherwise happen when a subrogation claim exists because of an employee's third party lawsuit and an employer's payment of workers' compensation benefits.