Source: https://www.myerslegal.com/brief-overview-of-the-interplay-of-workers-compensation-claims-and-third-party-claims
Timestamp: 2019-12-07 16:21:43
Document Index: 774247048

Matched Legal Cases: ['§ 97', '§ 97', '§ 97', '§ 97', '§ 97', '§ 97', '§ 97', '§ 97']

Brief Overview of the Interplay of Workers' Compensation Claims and Third-Party Claims - Myers Law Firm
If the injured employee makes a recovery against the third party by either a settlement or going to court, the rights of the employee and employer with regards to such a recovery are governed by the provisions of N.C.G.S. § 97-10.2. Subsection (h) of N.C.G.S. § 97-10.2 provides that the employer has a lien against the recovery for all benefits paid by the employer’s insurance carrier. This includes the medical benefits and the indemnity benefits, which are 2/3 of the worker’s average weekly wage and which are subject to a cap. If the case goes to trial, the amount of the employer’s lien is admissible into evidence and there is a specific jury instruction that is given to the jury which explains that the lien must be paid back to the workers’ compensation carrier.
North Carolina General Statute § 97-10.2(b) and (c) control which party, as between the employee or the employer, may pursue a third-party claim. Pursuant to § 97-10.2(b), the employee has the exclusive right to pursue the claim in the first 12 months after the injury. The provisions of § 97-10.2(c) state that after the first 12 months following an injury, either party may pursue the claim. Subsection (c) also states that for 60 days prior to the expiration of the statute of limitations, the exclusive right to settle or institute proceedings reverts solely to the employee. The ability of the applicable party under subsection (c) to settle with the third party is limited by N.C.G.S. § 97-10.2(h). This subsection states in pertinent part:
Neither the employee or his personal representative nor the employer shall make any settlement with or accept any payment from the third party without the written consent of the other and no release to or agreement with the third party shall be valid or enforceable for any purpose unless both employer and employee or his personal representative join therein; provided, that this sentence shall not apply:
In addition to outlining the relative rights of the employee and employer to effectuate a settlement with the third party, N.C.G.S. § 97-10.2(f) outlines the priority of payments of the funds received from the third-party settlement. This provision states:
a. First to the payment of actual court costs taxed by judgment and/or reasonable expenses incurred by the employee in the litigation of the third party claim.
b. Second to the payment of the fee of the attorney representing the person making settlement or obtaining judgment, and except for the fee on the subrogation interest of the employer such fee shall not be subject to the provisions of G.S. 97 90 but shall not exceed one third of the amount obtained or recovered of the third party.
As stated above, there are three ways that a third-party claim can be resolved. One way is that the employer and employee must agree on the settlement amount. The second way is that the employee can settle with the third-party so long as the workers’ compensation carrier receives the full lien amount minus the carrier’s share of attorney fees paid to the employee’s attorney in the third-party case. The third way is for the employee to file a petition for the lien to be reduced or extinguished. North Carolina General Statute § 97-10.2(j) provides in pertinent part:
Notwithstanding any other subsection in this section, in the event that a judgment is obtained by the employee in an action against a third party, or in the event that a settlement has been agreed upon by the employee and the third party, either party may apply to the resident superior court judge of the county in which the cause of action arose or where the injured employee resides, or to a presiding judge of either district, to determine the subrogation amount. After notice to the employer and the insurance carrier, after an opportunity to be heard by all interested parties, and with or without the consent of the employer, the judge shall determine, in his discretion, the amount, if any, of the employer’s lien, whether based on accrued or prospective workers’ compensation benefits, and the amount of cost of the third party litigation to be shared between the employee and employer.
Under this provision, the superior court judge can decide how the costs will be shared between the parties and the amount of the insurance carrier’s lien. In deciding the amount, if any, of the employer’s lien and the amount of costs to be shared, subsection (j) outlines five factors that the trial judge shall consider:
(1) the anticipated amount of prospective compensation the employer or workers’ compensation carrier is likely to pay to the employee in the future;
(2) the net recovery to plaintiff;
(3) the likelihood of the plaintiff prevailing at trial or on appeal;
(4) the need for finality in the litigation; and
(5) any other factors the court deems just and reasonable.
When the judge is deciding the petition and whether to reduce or extinguish the lien, the judge must consider the five factors and make findings of fact and conclusions of law on the five factors. Once the judge makes the decision, the judge’s order must be submitted to the North Carolina Industrial Commission for approval, since the Industrial Commission has final approval authority.