Employers are required to pay Workers’ Compensation claims regardless of who caused the accident. But when a third party is responsible, you can sue them, too, potentially leading to double recovery.
Subrogation rights allow an employer (or their insurance carrier) to demand reimbursement from you after you sue a third party for your work injury. This means that they have to pay your benefits at first, but if you succeed in a lawsuit, then some of those damages have to go toward paying them back.
For help with your claim, call Cardamone Law’s Certified Pennsylvania Workers’ Compensation Lawyers at (267) 651-7945
What is Subrogation in a Workers’ Comp Claim?
There are many types of insurance where damages are paid regardless of who caused the accident. Once the victim gets the benefits they need, they might also be able to sue the party who was actually at fault and get paid again.
In work injury lawsuits against third parties, the at-fault party actually pays up, and the victim doesn’t need to be paid twice. The employer is then allowed to claim back the money they already paid.
No-Fault Workers’ Comp
Workers’ Comp requires employers to pay for work-related injuries regardless of who caused the injuries. Even if an outside third party caused the accident, the employer has to pay first.
Third-Party Liability
You cannot sue your employer and instead have to rely on Workers’ Comp when they injure you. However, if a third party caused your injuries, you can sue them. This is when subrogation can occur.
What Amount is Subrogated?
The employer/their insurance carrier typically has to pay these damages for Workers’ Comp claims:
- Medical bills to cover your treatment
- Wage-loss benefits to cover lost earning capacity (typically 2/3 of lost wages, with exceptions, caps, and floors)
- Additional “specific loss” benefits for permanent amputation, lost function, lost hearing, lost vision, or facial scarring.
In a lawsuit, you can recover all of these:
- Medical bills
- All lost wages (100%)
- Any other economic damages
- Pain and suffering to cover mental anguish, emotional distress, etc.
- Loss of consortium for your spouse’s harm suffered from your injury.
Employers can only subrogate the parts they already paid for; you get to keep everything else (subject to whatever payment agreements you have with your lawyer).
When Do Employers Subrogate Claims?
Employers can only subrogate claims when third parties are liable, but the timing can vary.
Third-Party Liability
Subrogation only happens when you obtain a judgment against a third party. When they pay you back a second time, the insurance carrier can get reimbursed from your payments.
Before or After Payment is Issued
The employer can ask for reimbursement through subrogation after you get paid in your third-party lawsuit. However, they can also set up a lien for subrogation ahead of time, something you should always review with your Philadelphia Workers’ Comp lawyers.
This says that they know you will get paid back when you win your case, and when you do, you have to automatically turn over that money. This is usually put in as part of a settlement agreement to save everyone time and prevent the employer from having to actually sue you to get the money back.
They cannot put liens on future medical expenses, just lost wages and other payments.
Why is Subrogation Important?
Pennsylvania courts usually point to three reasons subrogation is important:
1. No Double Recovery
If you get paid by the employer/insurance carrier for some of your benefits, then get paid again by the defendant in a lawsuit, you would have been paid twice. Subrogation allows the employer to claw back some of that money so that you don’t get paid double.
2. Employer Doesn’t Have to Pay for Third Party’s Fault
Your employer is required to pay for your injuries regardless of who caused them. However, once the actual at-fault third party pays, the employer can be relieved of the burden of paying for something someone else caused.
3. Prevents Escaping Liability
Allowing lawsuits against the party who was actually at fault – and allowing subrogation in the process – prevents the third-party defendant from getting away with what they did.
FAQs for Subrogation in Workers’ Comp Claims
Who Has Subrogation Rights?
Technically, the Workers’ Comp Act gives the subrogation rights to your employer. Although their insurance carrier is likely to be the one actually paying you, your employer has the right to subrogation and may pay back the insurance carrier according to their policy agreement.
How Much Can My Employer Subrogate?
When your employer pays your benefits, they only cover part of your damages, but your lawsuit can cover your total damages. Some lawsuits are not 100% successful because of the defendant’s insurance policy limits or inability to pay high damages.
Courts have held that employers can subrogate up to the total amount they paid you, even if the lawsuit paid you less than that. This means that if your lawsuit’s damages were lower, your employer can actually subrogate all of it (minus your litigation costs).
Always talk to a lawyer when signing settlement agreements or seeking damages from a third party.
What is a Subrogation Lien?
Subrogation liens are awarded to the employer ahead of time so that they can more easily claim money from your lawsuit without having to sue you for it. It essentially works as an “I Owe You” saying that if you do get paid later, you owe the employer X amount.
Is it Worth Suing if I’m Just Going to Face Subrogation?
If the defendant who caused your injuries has the money to pay for your injuries, then the damages you get from the lawsuit should be higher than your Workers’ Comp claim’s total payout. Especially once pain and suffering is taken into account, you often get additional money from the lawsuit, even after taking subrogation into account.
How Do I Know if My Employer Has a Subrogation Claim?
Your employer’s subrogation rights are usually discussed as part of a settlement agreement when third-party liability is involved in your case.
Call Our Pennsylvania Workers’ Comp Lawyers Today
Call Cardamone Law’s Altoona, PA Workers’ Comp attorneys at (267) 651-7945 for help with your case.
