Workers' Compensation Subrogation

Additionally, Law Offices of Christian L. Woods, APC also practices in California in the area of Workers' Compensation Subrogation.

Workers' compensation subrogation in California refers to the right of an insurance carrier or employer to recover workers' compensation benefits paid to an injured employee from a third party who may be responsible for the injury. This process is a key element in California workers' compensation law, allowing insurers or employers to recoup the cost of the benefits they paid out if a third party's negligence or wrongful act caused the injury.

At Law Offices of Christian L. Woods, APC, we look to maximize the return on the lien by providing innovative services at extremely competitive prices to protect employers, third-parties, insurance carriers, self-insured employers, uninsured employers, and other applicable parties.

As a general rule, workers' compensation insurance allows immediate benefits to be paid to the claimant. Through subrogation, some of those costs may be recouped. Simply defined, subrogation is the legal right to pursue legal action against a third party for reimbursement of insurance loss. In California, Sections 3850 through 3865 of the Labor Code govern workers' compensation related subrogation claims.

The key thing to know about state law is that insurance carriers/employers are only permitted to bring a subrogation claim for a share of benefits out for a reason other than the employer's negligence. In other words, there must be a responsible third party to bring a subrogation claim against.

Here is a breakdown of key concepts related to workers' compensation subrogation law in California:

1. Subrogation Rights

What is Subrogation? Subrogation allows the insurer (or in some cases, the employer) to step into the injured worker's shoes and pursue a claim against a third party (e.g., another driver, product manufacturer, property owner) who may be liable for the injury.
Statutory Basis: The right of subrogation is codified under California Labor Code section 3852. It allows the employer or workers' compensation insurer to recover the amounts paid in benefits if the injury was caused by the actions of a third party.

2. Third-Party Liability

In subrogation, a third party is someone other than the employer or coworker whose actions or negligence may have contributed to the worker's injury. Examples of third parties include:
- Drivers in a car accident.
- Property owners in cases of slip-and-fall injuries.
- Manufacturers or distributors of defective products.

3. Employee's Role in Subrogation

Employee's Duty to Cooperate: The injured employee is required to cooperate with the employer or insurer in the subrogation process. If the employee pursues their own lawsuit against the third party, they must notify the insurer and may be required to share any settlement or judgment with the workers' compensation carrier.
Recovery of Benefits: While the injured employee may recover damages from the third party, the employer or insurer is entitled to recover the amount of workers' compensation benefits they have paid out for medical treatment, lost wages, and other related expenses.

4. Pro Rata Share of Recovery

Lien or Interest: If the injured worker obtains a settlement or judgment from the third party, the employer or insurer is entitled to reimbursement. However, California law provides for the "pro rata" distribution of the recovery, meaning that the employer/insurer may only recover an amount proportional to the benefits they paid out, factoring in the employee's legal fees and costs incurred in pursuing the third-party action.
Employee's Share: If the employee recovers damages from the third party, they may be entitled to keep some portion of the recovery to cover pain and suffering or other damages not addressed by the workers' compensation system. The insurer's reimbursement is typically limited to what was actually paid in workers' compensation benefits.

5. Settlement and Disputes

Settlements with Third Parties: If the employee settles with the third party, the insurer may seek a portion of the settlement to recover the benefits it has paid. If the case proceeds to trial, the employer/insurer may also seek reimbursement from any verdict or award obtained.
Dispute Resolution: If there is a dispute regarding the amount of subrogation or whether the third party is liable, the matter may be resolved through negotiation, mediation, or court intervention. California workers' compensation law allows for the creation of liens to ensure the insurer's or employer's interest in recovering workers' compensation benefits.

6. Statute of Limitations

In California, workers' compensation claims involving subrogation generally follow a two-year statute of limitations from the date of injury for filing a civil lawsuit against a third party. However, the employer or insurer has a different statute of limitations for subrogation claims, which is typically one year from the date of the payment of benefits.

7. Waiver of Subrogation

Waiver by Agreement: In some cases, the employer may waive its right of subrogation, typically by contractual agreement, for example in construction contracts where a contractor or subcontractor might agree to waive the right to recover workers' compensation benefits from a third party. However, such waivers are subject to certain limitations, particularly in cases where workers' compensation laws would be violated.

Conclusion:

Workers' compensation subrogation in California ensures that employers and insurers can recover costs from responsible third parties, reducing the financial burden on the workers' compensation system. While the injured worker has the right to seek damages from the third party, the employer or insurer has a corresponding right to recoup the benefits it has paid, subject to certain rules regarding fairness and the allocation of proceeds.

IMMEDIATE INVESTIGATIONS ARE NECESSARY

At Law Offices of Christian L. Woods, APC, our role is to protect the employer and determine if there are third-party entities who may be at fault. Some of the claims that require investigation for subrogation purposes include: (1) Motor vehicle accidents; (2) Accidents that occur on another company's premises; (3) injuries that occur because of defective parts; and (4) issues caused by repair or maintenance companies.