Minnesota Workers’ Compensation
Subrogation
Twin Cities Claims Association
September 13, 2011
Johnson & Condon, P.A.
Matthew M. Johnson
MMJ@Johnson-Condon.com
Direct Dial: (952) 806-0484
Sarah E. Groskreutz
segroskreutz@Johnson-Condon.com
Direct Dial: (952) 806-0407
OBJECTIVES
• Identifying Workers’ Compensation Benefits
• Identifying Subrogation Opportunities
• Procedures for Seeking Subrogation
• Factors Impacting Your Ability to Recover
from Tortfeasors
WORKERS’ COMPENSATION
BENEFITS
SUMMARY OF BASIC MINNESOTA
WORKERS' COMPENSATION LAW
• Minnesota has a "no-fault" system of
workers’ compensation benefits. Negligence
of an Employee is immaterial.
• The criteria for compensability is that the
injury must “arise out of and in the course of
the Employee’s employment.” The mere fact
an injury occurred at work is not enough to
establish compensability.
SUMMARYOF BASIC MINNESOTA
WORKERS' COMPENSATION LAW
• Injuries can be either:
(1) specific;
(2) repetitive, minute trauma injuries
commonly known as Gillette injuries; or
(3) an occupational disease.
TEMPORARY TOTAL DISABILITY
BENEFITS
• Paid to an Employee if he is entirely off work
due to a work injury which, combined with his
age, education, experience and the job
market, results in the employee not working.
• The compensation rate is ascertained by
taking two-thirds of the Employee’s “weekly
wage.”
TEMPORARY TOTAL DISABILITY
BENEFITS
• If the Employee’s pre-injury wages are
regular, you must ascertain the average
weekly wage over a 26-week period
preceding the injury.
• Vacation and holiday periods and payments
are included in the calculation.
TEMPORARY TOTAL DISABILITY
BENEFITS
• If overtime is "frequent," it must be included
in the calculation.
• The compensation rate must not exceed the
maximum compensation rate.
• There is also a minimum compensation rate
applicable to very low wage earners.
TEMPORARY PARTIAL DISABILITY
BENEFITS
• Temporary partial disability exists when, as a
significant result of the work injury, the
Employee is working at a wage less than his
weekly wage at the time of the injury.
• The initial compensation rate is based on
two-thirds of the difference between the wage
at the time of the injury (AWW) and the
reduced post-injury wage.
PERMANENT TOTAL DISABILITY
BENEFITS
• For injuries prior to 10/1/1995, to qualify for
permanent total disability benefits, an
Employee has the burden of proving that due
in substantial part to a work injury, he is
unable to find employment that is not
sporadic in nature and only provides an
insubstantial income.
PERMANENT TOTAL DISABILITY
BENEFITS
• For injuries subsequent to 10/1/1995, the
Employee must also establish a permanent
partial disability threshold of 17% if under age
50, 15% if between 50 and 55, or 13% if 55
or older at the time of injury.
• Permanency can be cumulated based on
various body parts and need not be only
work-related.
PERMANENT TOTAL DISABILITY
BENEFITS
• There is a rebuttable retirement presumption
at age 67, thus triggering a cut off of benefits.
• An earlier cut off is possible if the Employee
made a pre-injury declaration of a plan to
retire at an earlier date.
PERMANENT PARTIAL DISABILITY
BENEFITS
• Permanency benefits are payable if an
Employee is deemed to have a permanent
work-related injury which fits within a detailed
permanency schedule as set forth by the
Workers’ Compensation Division in Rule
5223.
• A reduction is made for pre-existing
permanent disability.
PERMANENT PARTIAL DISABILITY
BENEFITS
• If an Employee sustains injuries with several
Employers, the Employer on the risk at the
time of the last injury is charged with all
permanency unless disability from the prior
injuries is clearly evidenced by prior medical
records.
PERMANENT PARTIAL DISABILITY
BENEFITS
• When the Employee reaches MMI, the
insurer must request an assessment of
permanency from the treating physician. (A
Health Care Provider Report form may be
used.)
• If you disagree with the rating, schedule an
IME.
PERMANENT PARTIAL DISABILITY
BENEFITS
• For injuries occurring prior to 10/1/1995,
there is a more involved system of
ascertaining permanency involving
impairment or economic compensation.
• For injuries 10/1/1995 – 10/1/2000, for
percentages of permanency up to 25%,
multiply the percent of PPD by $75,000.
PERMANENT PARTIAL DISABILITY
BENEFITS
• For injuries subsequent to 10/1/2000,
ascertain the percentage of PPD to be paid
using the chart in Minn. Stat. §176.101, subd.
2a and multiply said percentage by the gross
category amount shown.
• This permanency is not payable until an
Employee’s receipt of TTD benefits ceases.
VOCATIONAL REHABILITATION
• If an injured worker is off of work, he may
request a rehabilitation consultation with a
rehabilitation counselor (“QRC”) of his
choice.
• While you can object, the Employee has the
right to chose the initial QRC assignment.
VOCATIONAL REHABILITATION
• If the QRC determines the Employee is a
"qualified employee" (ie. not expected to
return to a similar job with the pre-injury
Employer or another Employer), then the
Employee is entitled to rehabilitation
assistance.
• This assistance includes job search, medical
management, etc.
VOCATIONAL RETRAINING
• Occasionally it is felt that an Employee must
be retrained to be restored to a proper
earning capacity.
• The Employee will receive school tuition,
books, supplies, mileage, and weekly
benefits (paid similar to TTD benefits for up
to 156 weeks) while in school.
MEDICAL BENEFITS
• An insurer is obligated to pay reasonable and
necessary medical expenses which are
causally related to the Employee’s injury.
• A set of rules known as Treatment
Parameters act as protocol (guidelines) for
determining what type of treatment is
necessary and the duration.
ATTORNEY FEES
• Contingent fees are determined by a formula
which allows the attorney 25% of the first
$4,000 in benefits received by the Employee
and 20% thereafter, subject to maximum fee
of $13,000.
• If the dispute is primarily about medical or
rehabilitation benefits, hourly fees apply.
WORKERS’ COMPENSATION
SUBROGATION
INTRODUCTION - MINN. STAT.
§176.061
• Separate Independent Statutory Right
• Recovery Right Against Third Party who
Caused Work Injury
• Workers’ Compensation Benefits “Paid
and Payable”
• Employer’s Separate Claim for Increased
Workers’ Compensation Premiums
INTRODUCTION - MINN. STAT.
§176.061 (cont.)
• Allows Separate Action by Employer:
▫ In Name of Employee;
▫ In Name of Employer;
▫ In Name of Workers’ Compensation Insurer
IDENTIFYING SUBROGATION
OPPORTUNITIES
• Injuries to the Employee caused by the
negligence of parties other than the
Employer
• Comparative Fault: Employee’s fault
cannot exceed the fault of the nonemployer tortfeasor
IDENTIFYING SUBROGATION
OPPORTUNITIES
• Employer’s Fault Can Reduce Your
Recovery
• Minn. Stat. §604.02 – 50/50 Comparative
Fault
IDENTIFYING SUBROGATION
OPPORTUNITIES – TORT CLAIMS
• Automobile
• Products Liability
• Construction Cases with Multiple
Contractors
PROCEDURES FOR SEEKING
SUBROGATION – STATUTE OF
LMIMITATIONS
• Generally, Six-Year Statute of Limitations for
Claims Arising in Minnesota
• Different Limitation Periods May Apply
Depending on Cause of Injury
• Notice Does Not Prevent Statute of
Limitations From Running
PROCEDURES FOR SEEKING
SUBROGATION
• Notice Letters to:
▫ Employee;
▫ Employee’s Attorney;
▫ Third Party/Tortfeasor and Liability Insurer
PROCEDURES FOR SEEKING
SUBROGATION
• Options:
1) Intervene in Employee’s Lawsuit Against
Tortfeasor;
2) Do Not Intervene;
3) Initiate Lawsuit Against Tortfeasor if
Employee Does Not Pursue Claim On His/Her
Own
CONSIDERATIONS FOR INTERVENING
OR PURSUING SEPARATE ACTION
• Recognize Workers’ Compensation
Exposure;
• Use Common Sense: Don’t Spend $2,000
to Recover $500
• Consider Comparative Fault of Employee
and Employer
STATUTORY FORMULA
• Minn.Stat. §176.061, Subd. 6
• Legislative Means to Minimize Recovery
• Applies if Employee’s and Employer’s
Claims Settled Globally or Tried Together
• Forces Subrogating Employer/Insurer to
Pay Employee’s Legal Fees
STATUTORY FORMULA (cont.)
• Employee Can’t Settle Your Interest
• Henning Allocation: Employee May Move
the Court to Determine Which Damages
from Settlement or Verdict are
Recoverable by Employer
STATUTORY FORMULA
EXAMPLE 1
Comp Paid
Total Recovery
Costs & Attorneys’ Fees
Balance
Statutory 1/3 to Employee
Balance
30,000
90,000
30,000
60,000
20,000
40,000
Reimbursement to Employer
30000 comp paid minus (costs of
recovery (30000) divided by total
recovery (90000) multiplied by
comp paid (30000)
20,000
Balance to employee/credit employer 20,000
STATUTORY FORMULA
EXAMPLE 2
Comp Paid
Total Recovery
Costs & Attorneys’ Fees
Balance
Statutory 1/3 to Employee
Balance
70,000
90,000
30,000
60,000
20,000
40,000
Reimbursement to Employer
70000 comp paid minus (costs of
recovery (30000) divided by total
recovery (90000) multiplied by
comp paid (70000)
46,666.67
Actual Reimbursement to Employer 40,000
Balance to employee/credit employer 0
NAIG SETTLEMENT
• Employee Settles Common Law Claim Only;
• Pain and Suffering; Uncompensated Wage
Loss; Loss of Consortium; etc.;
• Notice to Employer Required
NAIG SETTLEMENT (cont.)
• Formula Does Not Apply!
• Subrogation Claim is for Total Paid/Payable
• Can Still Bring Lawsuit in the Name of the
Employee
REVERSE-NAIG SETTLEMENT
▫ Promotes Earlier Settlements
▫ Keeps Control in Your Hands
▫ Avoid Paying Employee’s Legal Fees
▫ Future Exposure Considerations
EMPLOYER LIABILITY - LAMBERTSON
• Based on case Lambertson v. Cincinnati
Corporation, 257 N.W.2d 679 (Minn. 1977).
• Third Party’s Right of Contribution Against
Employer
• Fault-Based: Tortfeasor and Employer’s Fault
Compared
EMPLOYER LIABILITY – LAMBERTSON
(cont.)
• Typical Claims:
▫
▫
▫
▫
Negligent Training/Supervision
Unsafe Workplace
OSHA Violations
Product Modification/Misuse
• Part II of Workers’ Compensation Policy
EMPLOYER LIABILITY – LAMBERTSON
(cont.)
• Lambertson Exposure:
▫ Workers’ Compensation Benefits Paid and
Payable
▫ Limited to Amount Employer May Recover By
Way of Subrogation
• Problems Arise When Employer’s Part II
Coverage is Less Than the Potential
Subrogation Recovery
LAMBERTSON EXAMPLE 1
Comp Paid
Total Award
Subro Recovery
60,000
90,000
40,000
Percentage of Fault Amongst Parties:
Plaintiff
Tortfeasor
Employer
0%
75%
25%
Lamberston Exposure
22,500
LAMBERTSON EXAMPLE 2
Comp Paid
Total Award
Subro Recovery
60,000
90,000
40,000
Percentage of Fault Amongst Parties:
Plaintiff
Tortfeasor
Employer
0%
50%
50%
Lamberston Exposure
40,000
LAMBERTSON EXAMPLE 3
Comp Paid
Total Award
Subro Recovery
Lambertson Coverage
300,000
900,000
200,000
100,000
Percentage of Fault Amongst Parties:
Plaintiff
0%
Tortfeasor
80%
Employer
20%
Lamberston Exposure
180,000
Excess Exposure to Employer
80,000
WAIVE AND WALK
• Waive and Walk – Minn.Stat. §176.061, subd. 11
(2000):
▫ Waive Subrogation Claim for Paid and Payable,
and Avoid Lambertson Claim by Tortfeasor
• Assignment of Subrogation Interest
Minnesota Workers’ Compensation
Subrogation
Twin Cities Claims Association
September 13, 2011
Johnson & Condon, P.A.
Matthew M. Johnson
Sarah E. Groskreutz
MMJ@Johnson-Condon.com
segroskreutz@Johnson-Condon.com
Direct Dial: (952) 806-0484
Direct Dial: (952) 806-0407