Worker’s Comp. And Subrogation

The 14th Court of Appeals issued an opinion recently dealing with Texas Workers Compensation law and subrogation. The opinion is styled, Liberty Mutual Insurance Company v. Buddy J. Trahan.

When as in this case, a person suffers an injury due to the actions of a third party and the injured person is on a job that is covered by Texas Workers Compensation benefits and those benefits as paid, as a general rule the workers compensation carrier has subrogation interests in any recovery made by the injured employee against the responsible third party.

It is important that these subrogation interests are handled properly to keep the injured employee and others from being sued by the workers compensation carrier for monies recovered from the third party.

In this case, Liberty paid benefits and later, Trahan made a recovery from the third party who was responsible for his injuries. Trahan did not pay any of the subrogation interest being asserted by Liberty.

Trahan’s argument was that the subrogation interest was waived by Liberty. The workers compensation policy at issue in this case contained a waiver entitled “Waiver of our Right to Recover From Others Endorsement,” which provided in relevant part as follows:

We have the right to recover our payments from anyone liable for an injury covered by this policy. We will not enforce our right against the person or organization named in the Schedule. (This agreement applies only to the extent that you perform work under a written contract that requires you to obtain this agreement from us.)

This agreement shall not operate directly or indirectly to benefit anyone not named in the Schedule.

Schedule

All persons or organizations that are parties to a written contract that requires you to obtain this agreement, provided you executed the contract before the loss.

Trahan’s employer had paid an additional premium as consideration for the waiver.

The opinion then wrote an opinion discussing the law related to subrogation and these waivers and how to interpret them. In the opinion Texas Labor Code, Sections 417.001 and 417.002 are discussed along with relevant case law. The trial court had ruled in favor of Trahan, ruling that he did not have to pay the subrogation interest of Liberty and this appeals court sustained that decision.

The relevance here is knowing and understanding these workers compensation subrogation interests and the contracts associated with them. Otherwise, it could get expensive for someone.