HNI Post Loss Administrator
Insurance terminology and processes can be somewhat of a mystery to those outside the industry. A question I often get is “how does subrogation work for workers’ compensation claims?”
When a workers’ compensation injury is caused by a negligent third party other than the employer, the injured worker has the right to sue that third party for damages in a civil action. The employer or insurance carrier also has subrogation interest, or a right to recover the money they spent due to the actions of that negligent party. To protect the employer’s or insurer’s subrogation interest, the insurer will file a lien on the proceeds of any third party recovery.
There are several things that are taken in account for workers’ compensation subrogation: investigating the situation, determining subrogation potential, and protecting the employer’s or insurer’s subrogation interests.
Typically there are three types of claims that could be caused by a third party:
· Slip and fall claims – when the injured employee is injured on property owned by a third party.
· Motor vehicle accident – negligence of a third party
· Claims that involve machinery or equipment that is owned by a third party
Subrogation potential for third party negligence is recognized at the beginning of a claim. The investigation that follows goes beyond determining the compensability of a workers’ compensation claim and looks at who was at fault for the incident.
Subrogation is not a quick process and can take quite some time. The process can’t be fully completed until the injured worker has reached maximum medical improvement.
Recovering claim costs through subrogation can directly impact you and could be a huge savings. Make sure to pay attention when there might be potential for subrogation and follow up with your insurance carrier to ensure they are subrogating to protect your interest.