Imagine this. You finally obtain a worker’s compensation award or are negotiating a settlement and you learn that someone else has a claim to your funds or that someone else must be paid from them. What? It’s a nasty little creature called subrogation. And there’s no avoiding it. But those who aren’t aware of it (and don’t plan for it), can be in for a nasty and disheartening surprise.
Subrogation is a long-established legal principle that pre-dates the founding of our country. It was a part of the English common law and thus became a part of American jurisprudence at its inception. It has also become part of many agreements (like insurance policies) and is codified in our legal statutes.
Subrogation simply means that when someone pays a debt of someone else, they step into the shoes of the person to whom the debt was owed and paid. Therefore, they have a right to pursue and collect on that debt against the person who ultimately owes it.
For example, say Adam owes Bill fifty dollars. Charlie pays Bill the fifty dollars that Adam owes Bill. Charlie then has the right to collect the fifty dollars from Adam. Adam’s debt isn’t erased by Charlie’s payment. It simply becomes due to Charlie. And Bill doesn’t get to collect from Adam anymore. If he does, it’s owed to Charlie.
Today, subrogation arises in many different contexts. For example, most casualty insurance policies (which are agreements) contain a subrogation clause. If you are in a wreck that is someone else’s fault, your insurance company may pay your damages. If they do, then they can pursue collection of what they paid from whoever caused the wreck.
Alabama’s workers’ compensation law also contains a subrogation provision. It says that if an employer or their insurance company pays workers compensation benefits, then they are subrogated to the employee’s rights against any third party – anyone else – who may be responsible for the worker’s injuries and damages.
For example, if an employee is injured on the job by a defective product, the worker is entitled to worker’s compensation. He may also have a claim against the manufacturer, designer, or distributor of the defective product. But the employer (or its insurer) is entitled to be reimbursed whatever it paid on the worker’s compensation claim from whatever the employee may recover on his defective product claim. The same would be true for any other claim the employee may have for injuries received, such as in a slip-and-fall accident, car accident (while working), etc.
But subrogation can also arise in a worker’s compensation case in other circumstances. For example, if an injured worker receives medical care from a hospital that is not paid or which is paid for by his health insurer, then the hospital or that insurance company may have a subrogation right (to seek reimbursement) to his worker’s compensation claim.
Subrogation interests are unavoidable, but they are also negotiable. There are many nuances in the subrogation context with which a skilled worker’s compensation lawyer must be familiar. We handle these issues routinely to maximize our clients’ recovery. Contact us. We can help.