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| Wednesday, May 16, 2012 |
Third-Party Liability
When an employee sustains a work-related injury, recovery of workers’ compensation
benefits is the employee’s exclusive remedy against the employer. However,
when an employee is injured in the course and scope of employment as a result
of a negligent third party, the employee has the right to pursue a claim
against the third party in addition to pursuing a workers’ compensation
claim.
When an employee covered by workers’ compensation insurance is injured as
the result of a negligent third party, SORM is subrogated to the rights
of the injured employee or legal beneficiary and may pursue recovery of
medical and compensatory benefits paid to or on behalf of the injured employee.
In a third-party liability, at the time an injured employee files a claim
for workers’ compensation benefits, the right to subrogation is established.
However, recovery does not mature until the first dollar of benefits has
been paid to or on behalf of the injured employee.
Texas law entitles SORM to first and full dollars reimbursement from any
third-party settlement, up to the amount of the lien. This means that if
either the injured employee or SORM pursues the claim and recovers money
from the negligent third party, either by a settlement agreement or through
the courts, the first money must be applied to reimburse SORM for the workers’
compensation benefits that have been paid to or on behalf of the injured
employee. Moreover, SORM is entitled to treat the injured employee’s net
recovery as an advance against any future workers’ compensation benefits
that the injured employee may be entitled to under the Workers’ Compensation
Act.
An employee who is injured as the result of a negligent third party cannot
conspire by settlement, release, or apportionment of damages to deprive
SORM of its right to reimbursement for benefits paid. When an injured employee
and a negligent third party enter into settlement, “both” are liable to
SORM for benefits paid. Further, the Texas Supreme Court has held that an
injured employee has no cause of action against a third party except to
the degree his or her damages exceed the workers’ compensation recovery.
The rationale for subrogation in workers’ compensation is to prevent double
recoveries by an injured employee, to keep rates lower, and to permit SORM
to recover some of the taxpayers’ money. As such, SORM has established a
Subrogation Unit, within the Office of the General Counsel, to actively
pursue these claims. The Subrogation Unit reviews every DWC-1S filed with
SORM for potential subrogation activity.
Adjusters and claim coordinators can play a significant role in the identification
process by collecting as many facts as possible about the way the accident
or injury occurred. These facts should then be sent to the Subrogation Unit
in a timely manner. Consultation with the Subrogation Unit should be utilized
whenever a claims coordinator has doubts about a third-party liability.
The rule is to never assume where liability is at issue.
Among the most important things to do in a third-party liability is to ensure
that the evidence from the accident is preserved. Claims coordinators should
work with safety officers to secure defective or malfunctioning equipment
for investigation by SORM. Photographs of the accident scene should be taken
immediately following the incident to preserve “first impression” and permanent
evidence. A severe injury where court action is involved may take years
to settle and, during that time, injuries heal and memories will fade.
Claims coordinators should provide a very thorough written description of
the incident. They should also obtain witness statements and interview all
witnesses as soon as possible while the details of the accident are still
fresh on their mind. Claims coordinators should provide information about
outside contractors or companies where there may be a direct connection
to the incident. For instance, janitorial services, construction crews,
and delivery people may be responsible for a slip and fall, premise liability,
or product liability injury. A complete and thorough investigation will
save time and money in a subrogation action. |
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