Subrogation (Money you need to repay)
St. Louis Workers' Compensation Lawyers
What Is Subrogation?
Black’s Law Dictionary defines subrogation as, “The lawful
substitution of a third party in place of a party having a claim against
another third party. Insurance companies, guarantors and bonding companies
generally have the right to step into the shoes of the party whom they
compensate and sue any party whom the compensated party could have sued.”
In plain language, if you are injured in an accident and recover money
from another party, sometimes you need to pay back some of your winnings.
Common examples of this include repayment to an ERISA health insurer (a
qualifying plan that paid your medical bills may have a right to get back
money from your verdict or settlement), or your workers' compensation
insurer. Your Workers' compensation insurance plan has a right to
recover money if they pay your medical bills, lost wages, and a lump sum
of money and then you sue and successfully recover from another party.
The most common example is a car accident while working. You do not get
to fully collect money twice, and if you win your workers' compensation
case and then secure a payment from another party, the right of the workers'
compensation carrier to recover money is called subrogation.
Mark Cantor published an article on subrogation that was printed in the
Missouri Bar Journal. A brief summary of his article is below.
Workers’ Compensation Subrogation is set out in section 287.150 RsMo
1. Where a third person is liable to the employee or to the dependents,
for the injury or death, the employer shall be subrogated to the right
of the employee or to the dependents against such third person, and the
recovery by such employer shall not be limited to the amount payable as
compensation to such employee or dependents, but such employer may recover
any amount which such employee or his dependents would have been entitled
to recover. Any recovery by the employer against such third person shall
be apportioned between the employer and employee or his dependents using
the provisions of subsections 2 and 3 of this section.
2. When a third person is liable for the death of an employee and compensation
is paid or payable under this chapter, and recovery is had by a dependent
under this chapter either by judgment or settlement for the wrongful death
of the employee, the employer shall have a subrogation lien on any recovery
and shall receive or have credit for sums paid or payable under this chapter
to any of the dependents of the deceased employee to the extent of the
settlement or recovery by such dependents for the wrongful death. Recovery
by the employer and credit for future installments shall be computed using
the provisions of subsection 3 of this section relating to comparative
fault of the employee.
3. Whenever recovery against the third person is effected by the employee
or his dependents, the employer shall pay from his share of the recovery
a proportionate share of the expenses of the recovery, including a reasonable
attorney fee. After the expenses and attorney fee have been paid, the
balance of the recovery shall be apportioned between the employer and
the employee or his dependents in the same ratio that the amount due the
employer bears to the total amount recovered if there is no finding of
comparative fault on the part of the employee, or the total damages determined
by the trier of fact if there is a finding of comparative fault on the
part of the employee. Notwithstanding the foregoing provision, the balance
of the recovery may be divided between the employer and the employee or
his dependents as they may otherwise agree. Any part of the recovery found
to be due to the employer, the employee or his dependents shall be paid
forthwith and any part of the recovery paid to the employee or his dependents
under this section shall be treated by them as an advance payment by the
employer on account of any future installments of compensation in the
(1) The total amount paid to the employee or his dependents shall be treated
as an advance payment if there is no finding of comparative fault on the
part of the employee; or
(2) A percentage of the amount paid to the employee or his dependents equal
to the percentage of fault assessed to the third person from whom recovery
is made shall be treated as an advance payment if there is a finding of
comparative fault on the part of the employee.
4. In any case in which an injured employee has been paid benefits from
the second injury fund as provided in subsection 3 of section 287.141,
and recovery is had against the third party liable to the employee for
the injury, the second injury fund shall be subrogated to the rights of
the employee against said third party to the extent of the payments made
to him from such fund, subject to provisions of subsections 2 and 3 of
5. No construction design professional who is retained to perform professional
services on a construction project or any employee of a construction design
professional who is assisting or representing the construction design
professional in the performance of professional services on the site of
the construction project shall be liable for any injury resulting from
the employer's failure to comply with safety standards on a construction
project for which compensation is recoverable under the workers' compensation
law, unless responsibility for safety practices is specifically assumed
by contract. The immunity provided by this subsection to any construction
design professional shall not apply to the negligent preparation of design
plans or specifications.
6. Any provision in any contract or subcontract, where one party is an
employer in the construction group of code classifications, which purports
to waive subrogation rights provided under this section in anticipation
of a future injury or death is hereby declared against public policy and
void. Each contract of insurance for workers' compensation shall require
the insurer to diligently pursue all subrogation rights of the employer
and shall require the employer to fully cooperate with the insurer in
pursuing such recoveries, except that the employer may enter into compromise
agreements with an insurer in lieu of the insurer pursuing subrogation
against another party. The amount of any subrogation recovery by an insurer
shall be credited against the amount of the actual paid losses in the
determination of such employer's experience modification factor within
forty-five days of the collection of such amount.
WORKERS’ COMPENSATION SUBROGATION MADE EASY
- Take the total amount paid in Worker’s Compensation ________________________
- Total amount paid in civil claim ________________________
- Divide line 1 by line 2 to get a number and write that ________________________
- Take line 2 and subtract attorney’s fees and also subtract ________________________
Costs; write here
- Multiply the number on line 3 by the number on line 4;
This is the amount of subrogation owed. ________________________
Please note that this is an oversimplification of the basic rule of subrogation.
For specific details, please reference the Missouri Workers’ Compensation
Handbook, First Edition, published in 2003 by the Bar Association of Metropolitan
St. Louis, page 60, entitled
An Overview of Missouri Workers’ Compensation Subrogation, by Mark Cantor and Christopher Archer.
The most salient of those points are:
- Comparative Fault is not considered by this formula.
- The Workers’ Compensation claim should be settled first, as it mathematically
works better for your client.
- I recommend that all expenses be taken from the civil case, as it reduces
the Workers’ Compensation subrogation.
- Be aware of loss of consortation claims and ERISA issues.
Keep in mind that in MIGA (Missouri Property & Casualty Insurance Guarantee
Association) that no one may recover the subrogation amount from an insolvent
insurer, pursuant to MIGA
1.) When a third party case is identified in addition to a workers’
compensation, the workers’ compensation claim must be settled first.
2.) The formula for calculating an employer’s subrogation interested
shields the Claimant’s attorney fees and expenses. Therefore, the
employer’s subrogation interest is reduced if your contract provides
that all expenses which are applicable to both the workers’ compensation
claim and the civil claim are to be paid from the civil claim. Additionally,
depending on the complexity of the civil case, it may be fair to charge
one third of the amount recovered if by settlement but forty percent if
suit is filed. This may act as an incentive for the Employer/Insurer to
voluntarily reduce their subrogation interest and it will reward your
additional efforts if they choose not to.
3.) The Employer/Insurer’s subrogation interest includes the amount
paid in medical. If the Claimant prefers to choose their own health provider
and has private health insurance that will pay for that care without seeking
reimbursement, the overall subrogation interest of the Employer/Insurer
is decreased. This should be done cautiously because if the health insurer
is an ERISA plan they will have their own subrogation interest as a matter
of law. Many other health insurance plans have subrogation language which
should be explored prior to electing to use private health insurance instead
of workers’ compensation for medical care.
4.) A spouse’s loss of consortium settlement arising out of the third
party claim can be protected from subrogation. The Court of Appeals approved
a third party wrongful death settlement where $2,000.00 was for the Claimant’s
death count and $166,000.00 was for the pre-death loss of consortium claim
of Claimant’s widow. See
Bridges v. Van Enterprises, 992 S.W.2d 322 (Mo.App. S.D. 1999). Be certain that any independent settlement is proportionate and reasonable
or you may run the risk of subrogation applying to the proceeds of that
settlement. In the Bridges case, the settlement was equitable because
the Claimant died after 2 ½ years in a coma and left a spouse and
nine year old child.
5.) When calculating subrogation, comparative fault must be determined
by the trier of fact and a settlement for an amount less than a verdict
annuls the entire verdict including findings of comparative fault.
Kerperien v. Lumberman’s Mutual Casualty Co., Missouri Court of Appeals,
ED. 79296, June 2002. The Employer’s subrogation interest is determined by the amount
actually received in the third party action, not the amount of the judgment.
6.) Practitioners should be aware of the Missouri Property and Casualty
Insurance Guaranty Association set out in section 375.776.2 RSMo as it
relates to subrogation. In a nutshell, when a tortfeasor’s insurer
is insolvent, any insurer who has paid a claim that would ordinarily entitle
it to subrogation will not be reimbursed by MIGA and …no one may
recover the subrogation amount from the tortfeasor of the insolvent insurer.
You need aggressive representation to recover the money you deserve for
any workers compensation claim. Our calls are professionally answered
by a live person 24/7. Please call Cantor Injury Law at (314) 485-4005 or
send us an email and our attorneys will personally contact you immediately.