5/3/2013 SUBROGATING WORKERS COMPENSATION ACROSS STATE LINES SUBROGATING WORKERS COMPENSATION ACROSS STATE LINES. GoToWebinar Attendee Interface

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1 SUBROGATING WORKERS COMPENSATION ACROSS STATE LINES Presented By: Matthiesen, Wickert & Lehrer, S.C. GoToWebinar Attendee Interface 1. Viewer Window 2. Control Panel 2 SUBROGATING WORKERS COMPENSATION ACROSS STATE LINES Presented By: Matthiesen, Wickert & Lehrer, S.C. 1

2 EXTRATERRITORIAL SUBROGATION Definition: Any Effort To Subrogate Outside The Boundaries Of The State Where Benefits Are Being Paid ( Enabling State ) More Common Than20 Years Ago National/ Global Economy Federalism State Sovereignty Is Primarily Concerned With Which State s Subrogation Laws Apply (Enabling State s Or Forum State s) 4 WORKERS COMPENSATION CLAIMS INVOLVING MULTIPLE STATES Issues/Variables To Be Considered: Where Was Claimant Hired? Where Will Claimant File Claim? Where Was Claimant Injured? Where Is Employer Principally Located? Where Is Third-party Lawsuit Filed? Where Is Tortfeasor Located? 5 WORKER CHOOSES WHERE TO FILE CLAIM Choose State With Most Generous Benefits Some States Have Statutes To Guide Us Texas Labor Code BringClaim InTX: Injury Compensable If It Occurred In TX; And Claimant Has Significant Contacts With TX; Or Employment Is Principally Located In TX Reciprocal Agreements Definitions Significant Contacts Principally Located 6 2

3 TEXAS DEFINITIONS Significant Contact Employee Hired Or Recruited In TX Employee Wasn t Injured Later Than 1 Year After Hire Date; Or Employee Worked In TX For 10 Days During 12 Months Preceding Injury Principal Location Is State Where: Employer Has A Place Of Business Where Employee Works; Or Employee Resides And Spends A Substantial Portion Of Working Time 7 GENERAL WORKERS COMPENSATION JURISDICTION RULES 1. All states allow claim if injury happened within their state s boundaries states allow claim if employee is hired in that state states allow claim if employment is principally located within its borders and the employee is injured in another state. 8 THIRD PARTY CONSIDERATIONS Worker Usually Won t Consider Subrogation Rights Unless A Lawyer Is Looking Ahead To Third-Party Action May Choose State Which Limits Subrogation Example: TXWorker InjuredInGA.You re TheLawyer: Should Worker Choose GA Or TX Benefits? GA Benefits - Claimant Has Right To File Suit For 1 Year GA Benefits Made Whole Rule Codified TX Benefits - First Money Right Of Recovery GA Benefits Plaintiff s Attorney Can Recover Costs TX Benefits - No Subro Rights If Third-Party Suit In GA! 9 3

4 MORE THIRD-PARTY CONSIDERATIONS Recovery From Uninsured Motorist? Recovery From Medical Malpractice? Dual Capacity Doctrine? Construction Litigation? Statutory Credit? Does The Lien Trump Attorney s Fees? Attorney s Fees On Futures? Can Co-employee Be Third Party? 10 WHICH STATE S SUBROGATION LAWS APPLY? 1. LEX LOCI DELECTI (The Law Of The Wrong) Applies Law Of Forum State (Accident Occurred) Is The Minority Rule Only 12 States 2. LARSON RULE (Restatement 185) Applies Law Of Enabling State (Benefits Paid) 3. Most Significant Contacts Applies Law Of State With Most Significant Relationship To The Incident Is Majority Rule Replacing Lex Loci 4. LEX FORI (Law Of Forum If Different From No. 1) 11 THE LARSON RULE As to third-party actions, if compensation has been paid in a foreign state and suit is brought against a third-party in the state of injury, the substantive rights of the employee, subrogated insurance carrier and the employer are ordinarily held governed by the laws of the foreign state. 12 4

5 RESTATEMENT 185 The local law of the state under whose workmen s compensation statute an employee has received an award for an injury determines what interest the person who paid the award has in any recovery for tort or wrongful death that the employee may obtain against a third person on account of the same injury. 13 CONFLICTS PROCEDURE 1. Determine All The Variables/Factors 2. Determine Subrogation Laws Of Both States 3. Is There A Conflict? Conflict = Difference In Laws Results In Two Different Outcomes 4. If There Is A Conflict, Apply The Conflict Rule Of The Forum State (Where Suit Filed) 14 EXAMPLE #1 1. DETERMINE THE VARIABLES/FACTS Employee Injured In Car Accident In GA With Third Party Who Has Minimum Limits Employer Is Based In Wisconsin Employee Resides In Wisconsin Benefits Paid Under Wisconsin Act Suit Filed In Georgia EmployeeSettles Case ButIs Not Made Whole 15 5

6 EXAMPLE #1 2. DETERMINE SUBROGATION LAWS OF BOTH STATES Both States Allow For Subrogation WI Subro Law Allows RecoveryIf Not Made Whole GA Subro Law Requires Claimant Be Made Whole GA Law RequiresCarrier To Prove Made Whole 16 EXAMPLE #1 3. IS THERE A CONFLICT? Under WI Law = Carrier Makes Partial Recovery Under GA Law = Carrier Recovers Nothing Conclusion: Different Outcomes THERE IS A CONFLICT! 17 EXAMPLE #1 4. APPLY CONFLICT RULE OF FORUM STATE (State Where Suit Is Filed) Georgia Conflict Rule = Lex Loci Delecti (Law Of State Where Loss Occurred = GA) Outcome = No Recovery For Carrier 18 6

7 EXAMPLE #2 1. DETERMINE THE VARIABLES/FACTS EmployeeDies In Plane Crash In Oregon Employer Is Based In Connecticut Employee Resides In Connecticut Benefits Paid Under Connecticut Act Suit Filed In Oregon 19 EXAMPLE #2 2. DETERMINE SUBROGATION LAWS OF BOTH STATES CT And OR Allow W/C SubroAnd Intervention OR Allows Subrogation In Products Case CT Doesn t Allow Subrogation In Products Case (As Of The Injury Date) 20 EXAMPLE #2 3. IS THERE A CONFLICT? Under CT Law = No Recovery For Carrier Under OR Law = Carrier Makes Full Recovery Conclusion: Different Outcomes THERE IS A CONFLICT! 21 7

8 EXAMPLE #2 4. APPLY CONFLICT RULE OF FORUM STATE (State Where Suit Is Filed) OR Conflict Rule = Most Significant Contact OR Court Probably Will Apply OR Subrogation Law (Not Very Clear Cut) 22 EXAMPLE #3 1. DETERMINE THE VARIABLES/FACTS EmployeeSlips And Falls At WorkIn Illinois Employee s Work-Related Injury Is Worsened Due To Medical Malpractice In Illinois EmployerIs Based In Iowa Employee Resides In Iowa Benefits Paid Under IowaLaw Suit Filed In Illinois 23 EXAMPLE #3 2. DETERMINE SUBROGATION LAWS OF BOTH STATES IL Law Allows For Subrogation Recovery In Medical Malpractice Cases IA Law Does Not Allow For Such Subrogation 24 8

9 EXAMPLE #3 3. IS THERE A CONFLICT? Under IA Law = Carrier Cannot Recover Under IL Law = Carrier Can Recover Conclusion: Different Outcomes THERE IS A CONFLICT! 25 EXAMPLE #3 4. APPLY CONFLICT RULE OF FORUM STATE (State Where Suit Is Filed) IL Conflict Rule = Larson Rule (Apply Subrogation Law Of State Paying Benefits) Result: Carrier Cannot Subrogate Against Medical Malpractice Recovery 26 U.S. CONSTITUTIONAL ISSUES Full Faith And Credit (Art. 4 1 of Constitution) Full faith and credit shall be given in each state to the public acts, records, and judicial proceedings of every other state. And the Congress may by general laws prescribe the manner in which such acts, records, and proceedings shall be proved, and the effect thereof. 27 9

10 DEFINITION OF FULL FAITH AND CREDIT A state s choice of law decision is unconstitutional if it does not have a significant contact or significant aggregation of contacts, creating state interests, such that its choice of law is neither arbitrary nor fundamentally unfair. 28 HELPFUL TIPS FOR SUBROGATING ACROSS STATE LINES Familiarize Yourself With Both State s Subrogation Laws Understand The Commission And Its Process For Approval Of Third-party Settlements Know The Procedure For Properly Claiming Your Credit Document Everything With The Trial Court And The Commission Borrowing Statutes 29 SUBROGATING WORKERS COMPENSATION SUBROGATION ACROSS STATE LINES Gary L. Wickert Matthiesen, Wickert & Lehrer, S.C. (262)