Source: http://www.stacyivey.com/workers-comp/workers-compensation-subrogation-can-injured-workers-be-made-whole/
Timestamp: 2019-04-22 07:06:30+00:00

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Workers’ Compensation Subrogation: Can Injured Workers Be Made Whole?
A workers’ compensation claim coupled with third-party negligence brings to light the tension in the law between the “made whole” doctrine and the statutory prohibition against double recovery. Whether you represent the client on the workers’ compensation claim, the negligence claim, or both, you must understand the implications of subrogation to maximize recovery for your client.
Workers’ compensation benefits are limited to income and medical benefits. Other types of special damages, such as loss of consortium or pain and suffering, are not compensable under workers’ compensation.
Many of us became lawyers because we hate math. I recall that during law school, you could palpably feel the anxiety level rise in the room each time our tax professor wrote numbers on the board, even if the figures involved were simple. Although the professor often assured us it was third-grade math, the mere thought of adding and subtracting sent many students into a dither. Even if you are mathematically inclined, trying to make heads or tails of workers’ compensation subrogation law can make you reach for antacid tablets and aspirin. For instance, pursuant to Hillman v. American Mutual Liability Ins. Co., 631 S.W.2d 848 (Ky. 1982), if a judgment cannot be satisfied out of the insurance funds, you may be forced to use a formula whereby the injured worker and the workers’ compensation carrier each recover a pro rata share of the available funds in an amount directly proportionate to the relationship between the portion of the judgment subject to subrogation and the portion that is not. This situation is more easily understood by hypothetical.
made whole and take the entire policy to compensate him for his pain and suffering?
its reasoning should be used in highly disputed subrogation issues or to effectuate change in the law.
Apportionment becomes especially complex if the tortfeasor files a third-party complaint against the employer for contribution. For instance, an injured worker files a product liability suit against the maker of a press that caused his injury. The employer intervenes for subrogation against what it paid out in workers’ compensation benefits. The maker of the press then files a third-party complaint again the employer, alleging fault on the part of the employer for failure to install guards on the machine.
Using the numbers from the previous hypothetical, the jury awards $100,000 in damages to the injured worker, with $25,000 allocated for pain and suffering, and $75,000 for medicals and lost income. The jury further finds the maker of the press 75 percent at fault and the employer 25 percent at fault. The employer is allowed to recoup the percentage of benefits it paid under workers’ compensation that was caused by the negligent third party’s fault. Thus, if the employer paid $75,000 medical and income benefits, the employer can recoup 75 percent of that amount, or $56,250.
The analysis is not over, however. The injured employee can only collect 75 percent of his damages because the exclusive remedy provision bars direct recovery from the employer, even though the employer was found to be at fault.12 Now, the total judgment recoverable by the injured employee is $75,000.
What if the tortfeasor only has $25,000 in assets to cover the judgment? The answer seems to require reconciliation of Hillman and Bush—not a simple task. Hillman requires us to distribute the judgment pro rata, so we must compare the portion of the judgment subject to subrogation, and the portion that is not.
suffering caused by the employer? While the Bush decision rejected the “made whole” doctrine, it did not provide instruction on how to reconcile its reasoning with Hillman. Toss Minton into the equation and the subrogation issues become even more complex.
Placing allocation and offsets exclusively into a judge’s hands is a dangerous endeavor in light of the complexities of subrogation law. Being proactive is a better strategy. If you include both the tortfeasor and employer in settlement negotiations, it is possible to engineer a “global settlement” which removes the risk of the trial judge getting it wrong.
by the terms of the agreement.16 Depending on the circumstances, a wiser choice might be to structure the terms of the settlement to include some compensation for lost wages but not impairment of the ability to earn income into the future. While the workers’ compensation carrier would still be entitled to subrogation as to lost wages, the carrier may lose the right to recoup future income benefits paid.
Finally, it is possible to settle the injured workers claim against the tortfeasor and include terms in the settlement agreement that specifically exclude the subrogation claim of the workers’ comp carrier.17 As a practical matter, it may be difficult to get the tortfeasor to agree to such an arrangement since the workers’ comp carrier can pursue the claim against the tortfeasor on its own if it so desires.
3 AIK Selective Self-Insurance Fund v.
Bush, 74 S.W.3d 251, 257 (Ky. 2002).
7 Whittaker v. Hardin, 32 S.W.3d 497 (Ky. 2000).
14 G&J Pepsi-Cola Bottlers, Inc. v. Fletcher, 229 S.W.3d 915 (Ky. App. 2007).
Aluminum Corp., 183 S.W.3d 154 (Ky. 2005).
16 See Whittaker v. Hardin, 32 S.W.3d 497 (Ky. 2000).
17 See AIK v. May, 957 S.W.2d 257 (Ky. App. 1997).

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