Learn how waivers of subrogation affect your benefits and legal options in third-party lawsuits after a work injury in Montana
If you’re a Montana worker who’s been injured on the job and you’re exploring your options for compensation, you may have come across the terms subrogation and waiver of subrogation.
These legal terms can have a significant impact on how much compensation you ultimately receive if a third party was responsible for your injury. Understanding how subrogation could affect your workers’ comp benefits and your potential recovery in a third-party lawsuit is crucial to ensuring you receive the full compensation you’re entitled to.
In this article, we’ll explore how subrogation works under Montana law and how a waiver of subrogation could actually benefit injured workers looking to recover additional compensation beyond workers’ comp.
What is subrogation?
Under Montana workers’ compensation law Section 39-71-414, subrogation allows a workers’ compensation insurer to recover compensation it’s paid to an injured worker if a third party is responsible for the injury.
Here’s how it works:
- Subrogation rights. If a third-party lawsuit is filed, the insurer is entitled to a first lien on any judgment or recovery. This means the insurer has the right to be reimbursed for the workers’ compensation benefits it has paid out.
- Employee’s action. If the injured employee plans to sue a third party, they must notify the insurer. The employee can also request that the insurer share in the legal costs. If the insurer refuses to help cover these costs, they waive 50% of their subrogation claim.
- Employee’s recovery. Even if the third-party recovery is insufficient, the employee is guaranteed at least one-third of the amount recovered after reasonable legal costs are accounted for.
- Insurer’s right to sue. If the employee doesn’t file a lawsuit within 1 year of the injury, the insurer can file a lawsuit on the employee’s behalf. If successful, the insurer must reimburse the employee for any amount recovered beyond what the insurer paid for workers’ compensation benefits and legal costs.
- Settlement. The insurer and the claimant can settle the subrogation issue through an agreement, subject to the approval of the Department of Labor.
- Full subrogation. The insurer is entitled to full subrogation rights unless the employee proves damages exceed the combined value of workers’ compensation benefits and the third-party recovery. The insurer may subrogate against the entire settlement or award.
- Mediation. If there is a dispute over subrogation, it can be mediated under Montana’s workers’ compensation mediation requirements.
This provision ensures that the insurer can recover some of the compensation it paid when a third party is at fault while still protecting the injured employee’s right to recover a portion of the damages.
Personal Injury vs. Workers’ Compensation in Montana
Learn the key differences between workers’ compensation and personal injury claims so you can maximize your compensation after an accident.
What is the waiver of subrogation requirement?
A waiver of subrogation is a contractual agreement where one party (typically the injured party’s insurer) agrees to waive its right to pursue recovery from a third party for damages, even if that third party is responsible for the injury.
This waiver is often included in contracts between businesses and contractors or in commercial insurance policies to prevent insurers from seeking reimbursement from another party.
How does a waiver of subrogation impact an injured worker?
A waiver of subrogation typically does not directly apply to a worker but rather to the insurance companies involved.
Here’s an example: Let’s say a construction worker is hurt on the job when a third-party delivery truck driver backs into them on the job site. Normally, the workers’ compensation insurer has the right to seek subrogation. This means the insurer can attempt to recover the compensation it paid to the worker by suing the third party responsible for the injury.
If a waiver of subrogation clause exists in a contract between the worker’s employer and the third party, the workers’ compensation insurer waives its right to sue the third party for reimbursement. In such a case, the injured worker would still receive their workers’ compensation benefits, but the insurer would not be able to seek reimbursement from the responsible third party.
However, the waiver of subrogation does not reduce or affect the worker’s benefits under workers’ comp, which the worker is entitled to receive regardless of whether subrogation is pursued.
A waiver of subrogation also does not prevent the worker from suing the third-party, meaning they could potentially file a personal injury lawsuit against the third party and recover additional compensation for damages like pain and suffering that are not covered under workers’ comp.
Who benefits from a waiver of subrogation?
The biggest beneficiary of a waiver of subrogation is typically the third party (such as a subcontractor or equipment manufacturer). By having the waiver in place, they’re shielded from having to repay the insurance company for any compensation paid out to the injured party. This helps protect them from additional financial liability, even if they were responsible for the accident or injury.
A waiver of subrogation can also benefit the injured worker because it allows them to keep the full amount of any compensation they recover from a third-party lawsuit without having to repay the workers’ compensation insurer for benefits already received.
Normally, when an injured worker receives compensation through workers’ compensation and later wins or settles a lawsuit against a third party responsible for the injury, the insurance company has the right to recover some or all of the benefits it paid.
However, with a waiver of subrogation in place, the insurer waives this right, allowing the worker to maximize their total recovery from both workers’ compensation and the lawsuit.
Need help with a Montana work injury claim that involves a third party?
Navigating the complexities of workers’ compensation and personal injury claims can be challenging, especially when third-party liability is involved. The experienced Great Falls workers’ compensation attorneys at Murphy Law Firm are here to help.
With over 75 years of combined experience, our attorneys specialize in both workers’ comp and personal injury cases, ensuring you have the legal support to explore every available option and secure the compensation you deserve.
