In Workers' Compensation cases subrogation may be a solution

When an employee is injured, there are situations where neither the employer nor the worker is responsible for the mishap.  A recent example occurred in Connecticut when a scaffolding contractor erected scaffolding for a construction project. When employees of the general contractor climbed on the scaffolding, it immediately collapsed beneath them due to a fault in the way the scaffolding was set up.

The general contractor’s Workers' Compensation paid both medical and lost wage costs for the injured employees. Then, the insurance carrier filed a suit against the scaffolding contractor in an effort to recoup the money it had paid the general contractor for the claim. It maintained the sub-contractor should be at least partially responsible.

This process, commonly known as subrogation, is the right to recover Workers’ Compensation benefits paid to the employee because of the negligence of another person or entity. While subrogation laws vary by state, there are common occurrences that should be on the radar screen for potential third party liability. These include: automobile accidents, slips and falls due to defective premises, employee hit by flying object or struck by piece of equipment, defects in machinery or other products, or involvement of dangerous chemicals or other substances.

Employers should always determine if there is a third party in the mix when a job-related injury occurs. If there is, not only is there the possibility of recouping money but also there exists the potential to reduce the current Experience Mod, as well as the four years prior.

While the process can be complicated and expensive and often the decision to subrogate is in the hands of the insurance company, it behooves employers to immediately notify agents and insurance carriers of the involvement of a negligent third party.

Some examples of possible third party negligence are obvious such as a motor vehicle accident, particularly where the other driver is cited. The employee could be a delivery person on the way to drop off a package and is waiting at a red light, when somebody rear-ends them.

Yet, not every potential subrogation is cut and dry. Product liability cases can be trickier. For instance, if an employer buys a new ladder and the ladder breaks when an employee is climbing it, causing an injury, very often the claim is paid and nothing further happens. Then, by the time someone realizes maybe there is a case to be made against the ladder’s manufacturer, the “evidence” is either firewood or buried in a landfill somewhere.

Employers can strengthen the case for subrogation by:

• Understanding contracts and not forfeiting the rights to recover from other parties by entering into contracts with hold harmless or waiver of subrogation provisions.
• Obtaining photographs or videotape (without comments) of accident scene under similar conditions as existed at time of accident.
• Obtaining all reports such as Traffic Collision Reports and reports of governmental agencies.
• Determining identity of potential parties and witnesses.
• Identifying the vehicles, machinery or substances involved.
• Preserving the physical evidence.
• Notifying agent and insurance company immediately.