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Subrogation – Under The Radar in Workers Comp Claim Reviews


Subrogation Not On Radar Screens In Work Comp Files

The topic of subrogation is one of the most misunderstood areas in insurance, and especially Workers Compensation, that we see costing insureds millions of dollars a year.

picture of subrogation coins and money bag

Subrogation: Prevents the insured from collecting loss payments from his or her insurer and additionally from the responsible third party for the same loss. Once the insurer pays a loss caused by a third party, the insurer takes over or is subrogated to the insured’s common-law right of action against the negligent third party.

What does this mean to the employers? If there are any accidents where another party is responsible (critical – or even partially responsible) for an on-the-job injury, your Workers’ Comp carrier should be pursuing funds from the third party’s insurance carrier. This is one area where we see so much of the employer’s money go down the drain.

Unfortunately, with the specialization of the various lines of insurance adjusting, many WC adjusters do not have the specialized liability training to spot and pursue any type of subrogatable funds.

We have always recommended that independent adjusting agencies, TPAs, and insurance carriers train their adjusters in other lines besides WC.   The Associate in Claims (AIC) is perfect for training in other lines of claims.

Two Questions to Ask Your Workers Comp Adjuster

Yellow Emoticons with Question Mark Subrogation Question On Head

There are two questions that you will need to ask the Workers Comp adjuster who is adjusting the file.

They are:

  1. Have you sent a notice letter to the carrier of the negligent third party, and may I have a copy of that letter?
  2. What is the status of the subrogation lien?

There is a much longer list of questions, but these are the two basic ones that a Workers Comp employer should be asking often if there is a possible lien on the file.

Picture Woman Holding Blackboard Subrogation Question Marks

There are time limits for giving a third-party insurance carrier notice. The Workers Comp adjuster may be absorbed into the Workers Compensation file and may have overlooked putting the third-party carrier on notice. Any amounts recovered by your Workers Compensation carrier must be immediately entered into the file. Almost all Workers Comp adjusters do not have a background in Auto, Premises, General, or other types of liability coverages.

There are quite a few tricks and traps in Subrogation. Remember, when the Workers Comp Adjuster’s lien is negotiated down, that is your money that is being lost. Not following the subrogation of your Workers Comp lien can ruin a great avenue to recover funds that will bring down your E-Mod.

Subrogation is one area where I recommend that you use an adjusting expert. Subrogation can be very complicated and confusing even to the adjuster that is on the file. We have had to assist the Workers Comp adjuster on quite a few claims in recovering the funds from a third-party liability carrier. The largest one we have had so far is over $1 million.

Next Up – Another definition from www.cutcompcosts.com/definitions.html A list of free definitions that you can download.

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James J Moore - Workers Comp Expert

Raleigh, NC, United States

About The Author...

James founded a Workers’ Compensation consulting firm, J&L Risk Management Consultants, Inc. in 1996. J&L’s mission is to reduce our clients’ Workers Compensation premiums by using time-tested techniques. J&L’s claims, premium, reserve and Experience Mod reviews have saved employers over $9.8 million in earned premiums over the last three years. J&L has saved numerous companies from bankruptcy proceedings as a result of insurance overpayments.

James has over 27 years of experience in insurance claims, audit, and underwriting, specializing in Workers’ Compensation. He has supervised, and managed the administration of Workers’ Compensation claims, and underwriting in over 45 states. His professional experience includes being the Director of Risk Management for the North Carolina School Boards Association. He created a very successful Workers’ Compensation Injury Rehabilitation Unit for school personnel.

James’s educational background, which centered on computer technology, culminated in earning a Masters of Business Administration (MBA); an Associate in Claims designation (AIC); and an Associate in Risk Management designation (ARM). He is a Chartered Financial Consultant (ChFC) and a licensed financial advisor. The NC Department of Insurance has certified him as an insurance instructor. He also possesses a Bachelors’ Degree in Actuarial Science.

LexisNexis has twice recognized his blog as one of the Top 25 Blogs on Workers’ Compensation. J&L has been listed in AM Best’s Preferred Providers Directory for Insurance Experts – Workers Compensation for over eight years. He recently won the prestigious Baucom Shine Lifetime Achievement Award for his volunteer contributions to the area of risk management and safety. James was recently named as an instructor for the prestigious Insurance Academy.

James is on the Board of Directors and Treasurer of the North Carolina Mid-State Safety Council. He has published two manuals on Workers’ Compensation and three different claims processing manuals. He has also written and has been quoted in numerous articles on reducing Workers’ Compensation costs for public and private employers. James publishes a weekly newsletter with 7,000 readers.

He currently possess press credentials and am invited to various national Workers Compensation conferences as a reporter.

James’s articles or interviews on Workers’ Compensation have appeared in the following publications or websites:

  • Risk and Insurance Management Society (RIMS)
  • Entrepreneur Magazine
  • Bloomberg Business News
  • WorkCompCentral.com
  • Claims Magazine
  • Risk & Insurance Magazine
  • Insurance Journal
  • Workers Compensation.com
  • LinkedIn, Twitter, Facebook and other social media sites
  • Various trade publications


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