12/6/2011 PRESENTERS. Tim Pagel Matthiesen, Wickert & Lehrer, S.C. Heath Sherman Leahy, Eisenberg & Fraenkel, Ltd. GOTOWEBINAR ATTENDEE INTERFACE

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1 GOTOWEBINAR ATTENDEE INTERFACE 1. Viewer Window 2. Control Panel 2 PRESENTERS Tim Pagel Matthiesen, Wickert & Lehrer, S.C. Heath Sherman Leahy, Eisenberg & Fraenkel, Ltd. 3 1

INTRODUCTION TO WORKERS COMPENSATION SUBROGATION Subrogation Potential Employee In Scope of Employment Injured By Third Party Generally Governed By Statute Third Party Actions 5 WORKERS COMPENSATION

2 INTRODUCTION TO WORKERS COMPENSATION SUBROGATION Subrogation Potential Employee In Scope of Employment Injured By Third Party Generally Governed By Statute Third Party Actions 5 WORKERS COMPENSATION SUBROGATION Allows the carrier to recoup monies paid to or on behalf of an employee when another is at fault. For Instance: Salesperson on a sales call is rear ended by tortfeasor. Allows the carrier to either: Intervene into an existing lawsuit filed by the employee; or File own suit to protect interest. 6 2

3 PURPOSE OF SUBROGATION Prevents Double Recovery Salesperson already recovered for work related injury, why allow double recovery. Places Burden On Tortfeasor The at fault party, negligent driver, should be responsible. 7 COMMON TERMS AND DEFINITIONS Subrogation is substitution of one person in to the place of another regarding a lawful claim or right. Terms: Subrogor: Party Whose Debt Is Paid (Insured) Subrogee: Party WhoPaid The Debt (Carrier) Lien: Amount Paid To Subrogor By Subrogee Third Party Suit: SuitFiledBy EmployeeAgainst AtFault Party (Tortfeasor) 8 WORKERS COMPENSATION SUBROGATION IN ILLINOIS Governed By Statute 820 I.L.C.S. 305/5 Third Party Actions Who Can File Suit? Who Can Suit Be Filed Against? When Can Suit Be Filed? Necessary Parties Allocation Intervention Petitions When Employer Is Not Brought In As Third Party Defendant 9 3

820 I.L.C.S. 305/5 Carrieror workermay file third party suit. Carrier must wait to file until within three months of the running of the statute of limitations.

4 820 I.L.C.S. 305/5 Carrieror workermay file third party suit. Carrier must wait to file until within three months of the running of the statute of limitations. Carrier may intervene in existing third party suit, even after statute of limitations. 10 UM/UIM COVERAGE Carrier cannot intervene or subrogate against an UM or UIM policy whether purchased by employee or employer. Why? The proceeds are contract payments by the injured person, and donot come from the tortfeasor. tf Insuring against the risk of inadequate compensation from the tortfeasor, not insuring the tortfeasor. Carrier is not a third party beneficiary of the contract between the injured person and insurance company issuing the UM or UIM coverage. 11 CARRIER RECOVERY (SUBROGATION) Carrier Gets First Money Off The Top Lien Must Be Reduced 25% For Attorney s Fees And Pro Rata Share Of Costs And Expenses Maximum Recovery 75% Of The Lien Salesman Example: Lien Is $100,000 Employee Settled For $200,000 Carrier Gets $75,000, Employee Gets $125,

FUTURE CREDIT Carrier entitled to suspend all payments in the underlying workers compensation case until the future obligations equal the third party recovery.

5 FUTURE CREDIT Carrier entitled to suspend all payments in the underlying workers compensation case until the future obligations equal the third party recovery. While the payment of benefits is suspended, the carrier is responsible for payment of 25% attorneys fees and expenses to petitioner s attorney on those suspended benefits. See Zuber v. Illinois Power Co., 135 Ill.2d 407, 553 N.E.2d 385 (1990). 13 EMPLOYER LIABILITY EXPOSURE UNDER ILLINOIS LAW Employee Has No Direct Claim Against Employer Or Co Employee Exceptions: Not Accidental Not Arise From Employment Not Received In Course of Employment Not Compensable Under Act Dual Capacity Doctrine Reasons: Statute Fairness (The Employer Or Its Carrier Already Paid Benefits) 14 THE KOTECKI CASE Employer Exposure To Third Parties Contribution: Illinois Joint Tortfeasor Act Wrongfully Applied Similar to Minnesota Lambertson Kotecki Cap 15 5

6 KOTECKI FACTS Mark A. Kotecki brought an action for personal injury, allegedly caused by defendant Cyclops Welding Corporation s (Cyclops) negligence in the design and construction of an agitator, used on the premises of Carus Chemical Company (Carus), Kotecki s employer. Cyclops then filed a third party complaint against Carus, seeking contribution. 16 KOTECKI HOLDING The language of the Workers Compensation Act clearly shows an intent that the employer only be required to pay an employee the statutory benefits. These limited benefits are paid in exchange for a no fault system of recovery. The Contribution Act, as this court held in Doyle, requires that the employers contribute to tort judgments if they are partially responsible for an employee s injuries. 17 EFFECT OF KOTECKI Employer can be held responsible for contribution. Right to sue the employer accrues to the other defendants in an action. In practice, means that third parties can sue the employer, but the employer is only liable up to the amount of the lien. Does not apply where, for example, in the salesperson case where there is no potential employer contribution. 18 6

7 KOTECKI WAIVER CASES Generally, Damages Are Allocated To Employer Capped At Amount Paid To Employee Can Be Waived By Contract, Making For Unlimited Exposure Discussion Of Indemnification Language Constituting Waiver 19 WAIVE AND WALK Batzell v. R&R Trucking Co., 554 F.3d 1124 (7 th Cir. 2009). Millard Baltzell received $800,000 in benefits after being crushed by a tractor trailer while working. He filed a thirdparty action against the manufacturer, and ultimately received a $13 million dollar verdict. The employer was found 30% at fault, e.g., on the hook for $3.9 million in damages. Held: Employer can avoid contribution liability altogether by waiving its lien, even after judgment It can waive and walk. Good Faith Findings In Illinois 20 BRISENO DECISION NO THIRD PARTY CONTRIBUTION ACTION AGAINST EMPLOYER Scenario: Construction Project, Subcontractor Provides General Additional Insured Coverage, Subcontractor Injured, Sues General Contractor Situation: Adequate Coverage, Provided To General Contractor By Subcontractor Why Would There Need To Be A Third Party Right of Action? Exceptions: (1) Entire loss not covered by the insurance procured by subcontractor under Mondschein v. Power Construction Co., 404 Ill.App.3d 601, 936 N.E.2d 1101 (1 st Dist. 2010); and (2) By operation of law horizontal exhaustion of insurance policies under Kajima Construction Services, Inc. v. St. Paul Fire & Marine Ins. Co., 227 Ill.2d 102 (Ill. 2007). Briseno operates as an affirmative defense as opposed to an outright dismissal at the inception of the case. 21 7

CHALLENGES TO WORKERS COMPENSATION LIEN RECOVERY Plaintiff s Ability To Recover Against

Workers Compensation Action (Dollar Contract Settlement Of Workers Compensation Actions) 22

Person As Quarterback Keep In Mind Statutes Of Limitations And Repose (Illinois Construction

8 CHALLENGES TO WORKERS COMPENSATION LIEN RECOVERY Plaintiff s Ability To Recover Against Tortfeasor Employer s Liability For Contribution Whether There Is Additional Exposure In An Open Workers Compensation Action (Dollar Contract Settlement Of Workers Compensation Actions) 22 SUMMARY AND PRACTICE TIPS Early Involvement And Investigation Subrogation Attorney And Claims Person As Quarterback Keep In Mind Statutes Of Limitations And Repose (Illinois Construction Injuries) Jurisdictional Analysis 23 COMMON SCENARIOS Typical Example: Auto Accident Product Liability Construction 24 8

AUTO ACCIDENT Employee injured while driving from job site to job site. Employee suffers neck and back injuries, carrier pays $100,000 in medical and indemnity benefits. Employee sues at fault party.

Workers Compensation carrier pays $200,000 in medical and indemnity benefits and closes workers compensation case.

9 AUTO ACCIDENT Employee injured while driving from job site to job site. Employee suffers neck and back injuries, carrier pays $100,000 in medical and indemnity benefits. Employee sues at fault party. Workers comp carrier intervenes asserting its lien. 25 PRODUCT LIABILITY Employee injures hand on punch press machine. Workers Compensation carrier pays $200,000 in medical and indemnity benefits and closes workers compensation case. Employee sues manufacturer and distributor of the punch press machine; distributor is dismissed from the case under Distributor Statute. Workers Compensation carrier intervenes asserting its lien. Manufacturer files a third party complaint for contribution against employer alleging failure to train its employee on proper use of the punch press machine. 26 PRODUCT LIABILITY CONTINUED There is no contract between manufacturer and employer (no Kotecki waiver). Employee obtains $2 million verdict. Manufacturer and employer are at fault 85% and 15%, respectively. What is employer s obligation? Should employer waive and walk? 27 9

10 CONSTRUCTION Employee falls from scaffold injuring his head and right shoulder. Workers Compensation carrier pays $400,000 in medical and indemnity benefits and workers compensation case is open. Further exposure in amount of $350,000. Employee sues owner, general contractor, and subcontractor who modifiedportion of scaffold to do its work. Defendants bring third party complaint for contribution against employer (a different subcontractor) for failing to provide its employee with a safe work environment. 28 CONSTRUCTION CONTINUED.. General contractor and employer had a written contract whereby employer would procure insurance for general contractor. Employer fails to obtain such insurance. Contract between general contractor and employer also had language g which would result in Kotecki waiver. There was no contract between the employer and other subcontractor (no Kotecki waiver) Case is scheduled for mediation. How would you analyze employer s options? 29 QUESTIONS AND ANSWERS 30 10

com tpagel@mwl law.com Heath Sherman, Esq.

11 Timothy L. Pagel Timothy Pagel, Esq. Matthiesen, Wickert & Lehrer, S.C. law.com law.com Heath Sherman, Esq. Leahy, Eisenberg & Fraenkel, Ltd. Heath Sherman 11

7/19/2010. GoToWebinar Attendee Interface PRESENTED BY: MATTHIESEN, WICKERT & LEHRER, S.C. PRESENTED BY: MATTHIESEN, WICKERT & LEHRER, S.C.

7/19/2010. GoToWebinar Attendee Interface PRESENTED BY: MATTHIESEN, WICKERT & LEHRER, S.C. PRESENTED BY: MATTHIESEN, WICKERT & LEHRER, S.C. ADVANCED CONCEPTS IN WORKERS COMPENSATION SUBROGATION PRESENTED BY: MATTHIESEN, WICKERT & LEHRER, S.C. GoToWebinar Attendee Interface 1. Viewer Window 2. Control Panel 2 ADVANCED CONCEPTS IN WORKERS COMPENSATION