Imagine subrogating for damages an insurance carrier didn't pay for. What's more, imagine subrogating for and actually recovering more than the amount of the claim you paid. Amazingly, both scenarios are now possible for subrogating worker's compensation carriers in Wisconsin.
The Wisconsin Supreme Court recently held in Threshermens Mutual Inusrance Company v. Page, 217 Wis. 2d 451 (1998) that a worker's compensation insurer may seek recovery of an injured employee's claims even if the employee declines to participate in a third-party action. In Threshermens, the Court held that the Wisconsin Worker's Compensation Act allows an insurer who filed an action against a third-party defendant to assert the same claims against the third-party as those that would be available to the injured employee, including claims of pain and suffering and future medical expenses. This article will summarize the effects of this holding on an insurer's subrogation rights as well as discuss the increased chances that a worker's compensation carrier may now recover damages in excess of benefits paid.
Background
Threshermens arises out of an accident whereby an employee was injured when she fell in a parking lot owned by her employer while in the course of her employment. Threshermens Mutual Insurance Company was the employer's worker's compensation carrier and, pursuant to the Worker's Compensation Act, made certain payments to the employee to compensate her for the injuries she sustained in the fall. Subsequently, Threshermens filed a subrogation action, pursuant to Sec. 102.29(1), Wis. Stats., against the parties responsible for maintaining the parking lot alleging that their negligence caused the employee's injuries resulting in worker's compensation benefits being paid. Pursuant to Wisconsin Statute, Threshermens notified the employee of the pending lawsuit and allowed her the opportunity to join in the prosecution of the claim. The employee, however, declined to actively participate in the lawsuit and was subsequently joined as an involuntary plaintiff in Threshermen's action.
During the course of litigation, a dispute arose regarding which damages Threshermens would be entitled to recover at the time of trial. Specifically, Threshermens intended to present evidence and request recovery of damages representing the employee's pain and suffering claim as well as future medical expenses claim. The defendants, on the other hand, attempted to limit the action to only those payments Threshermens had previously made to the employee. The defendants argued that Threshermens was not entitled to assert a claim for pain and suffering:
- because it was not obligated to pay pain and suffering as worker's compensation benefits to the employee; and
- because the employee did not file her own independent action. In addition, the defendants argued that Threshermens could not assert a claim for future medical expenses because such a claim would be "too speculative".
On appeal, the court addressed the issue as to whether a worker's compensation carrier is entitled to recover damages representing an injured worker's claim of pain and suffering as well as a claim for future medical expenses under the Worker's Compensation Act. In determining whether an insurer may properly recover for such claims, the court first looked to the clear and unambiguous language of Sec. 102.29(1), Wis. Stats., which provides in pertinent part as follows:
The employer or compensation insurer who shall have paid or is obligated to pay a lawful claim under this chapter shall have the same right [as the employee] to make claim or maintain an action in tort against any other party for such injury or death. However, [the employer or compensation insurer, or the employee make a claim] shall give to the other reasonable notice and opportunity to join in the making of such claim or the instituting of an action and to be represented by counsel . . . If notice is given as provided in this subsection, the liability of the tortfeasor shall be determined as to all parties having a right to make claim, and irrespective of whether or not all parties join in prosecuting such claim.
After reviewing the above language, the court noted that Sec. 102.29(1), Wis. Stats., allows either the injured employee or the insurer to commence an action against a third-party tortfeasor and further grants each the "same rights" to make a claim or maintain an action. The court further noted that the statute specifically provides that as long as proper notice is given, "the liability of the tortfeasor shall be determined as to all parties having a right to make a claim, and irrespective of whether or not all parties join in prosecuting such claim". Since it was undisputed that pain and suffering damages fell within the category of claims to which Sec. 102.29(1) applies, Threshermens was entitled to present the employee's claim for pain and suffering to the jury even though Threshermens was never required to pay benefits for pain and suffering.
In regards to Threshermen's claim for future medical expenses, the court noted that the third-party liability statute specifically allows a worker's compensation carrier to recover "all payments made by it, or which it may be obligated to make in the future." Although the court acknowledged that there may be some inexactitude in awarding damages for future medical expenses, if competent medical evidence is presented to demonstrate that the employee will incur future medical expenses, Threshermens must be allowed to recover these damages. As such, the court held that denying Threshermens the opportunity to present the claim for future medical expenses violated the clear language of the statute.
Conclusion
The holding of the court in the Threshermens case greatly enhance an insurer's subrogation rights to recover against a third-party tortfeasor. If an injured employee declines to actively participate in a third-party action filed under Wisconsin Statute Sec. 102.29(1), an insurer is now entitled to recover as damages monies above and beyond those actually paid to the injured employee. Specifically, the Wisconsin Supreme Court has held that damages such as an employee's pain and suffering and future medical expenses may be included in those an insurer is entitled to recover against a third-party defendant, even if the insurer did not pay those damages to the employee. Based upon this ruling, the chances that a worker's compensation insurer will recover not only the total dollar amount paid in benefits to an injured employee, but an amount greater than that actually paid are greatly increased. These are exciting, new reasons to act promptly and aggressively when subrogating, and place Wisconsin on a growing list of states which zealously protect and enforce subrogation rights.