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North Carolina Work Comp Subrogation Takes Weird Turn

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North Carolina Work Comp Subrogation Re-re-reverses Course

The subject of North Carolina Work Comp subrogation has frustrated carrier and Third Party Administrator claims staffs over the years.   This case could be a model for changing subrogation laws in other states – possibly.

Stamp Of North Carolina Work Comp Subrogation Badge
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One of my concerns is that Workers Comp adjusters have not been trained that well in liability claims.  This is understandable but sometimes funds can be left on the table, so to speak.   Subrogation is one of the areas of concerns that pops up in our claims reviews.

This case has virtually nothing to do with an adjuster mistake of any kind.   I try to inform the WC community on a case that may make a difference or be used in future ligation.

97-10.2 is the North Carolina Statute for subrogation.

The case  is Dion v. Batten, No. COA16-63.  The North Carolina Court of Appeals published the case on 08/02/2016.  The case can be found at this link.  It is a PDF file 2016-16-63

Law Scale On Hand North Carolina Work Comp Subrogation Clock And Dollar Sign on weighing on scale
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As I am not an attorney, I do not ever try to comment on legal matters.  Below are a few excerpts from the NC Appeals Court decision.   It may be a great idea to download the case from the link above and read the complete decision.

The file was an accepted file involving a traffic accident with heavy subrogation potential.

“Plaintiff was employed by Neuwirth as a servicing agent.  In the course and scope of his employment with Neuwirth, Plaintiff was driving on Oriole Drive in Wilmington, North Carolina on 20 March 2008, when the vehicle he was driving was struck by a vehicle driven by Defendant, who had failed to stop at a red light.  As a result of the crash, Plaintiff sustained multiple injuries.  Because the crash occurred during the course and scope of Plaintiff’s employment with Neuwirth, Plaintiff was entitled to, and filed a claim for, workers’ compensation benefits pursuant to Chapter 97 of the North Carolina General Statutes.”  

The trial court performed a series of very interesting calculations.

The trial court further concluded that although Neuwirth and Brentwood paid workers’ compensation benefits to Plaintiff totaling $528,665.61, “their workers[’] compensation subrogation lien [could not] exceed $285,000.00, that being the total amount of the [j]udgment obtained by [Plaintiff] in this lawsuit in compensation for his injuries.”  Accordingly, the trial court found the amount of the workers’ compensation subrogation lien to be “$190,000.000, which is calculated by subtracting attorney’s fees ($95,000.00), interest ($74,291.50) and court costs ($160.00) from the judgment amount obtained by Plaintiff [] by [j]udgment in this lawsuit ($359,451.50).”  Plaintiff, Brentwood, and Neuwirth appeal. 

Court Room North Carolina Work Comp Subrogation Gavel
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There was a standing case on subrogation that reversed the prior case law.

An examination of Easter-Rozelle reveals that the quote Appellant’s urge us to follow is obiter dictum.

The NC Court of Appeals agreed with the trial court.

Appellants contend that N.C.G.S. § 97-10.2(j) mandates a finding by the trial court regarding the “amount of costs of the third party litigation to be shared between the employee and employer” (the “cost sharing consideration”), and that, in the present case, the trial court’s order is incomplete for failing to make any findings of fact regarding the cost sharing consideration.  While we agree with Appellants that, under our precedents, an order must contain a finding of fact regarding the cost of the third party litigation to be shared between the employee and employer, we conclude that the trial court’s order in the present case adequately addressed this required consideration.

As mentioned previously, this is a case to print out and read if you as an adjuster have any North Carolina  Work Comp subrogation files that you are handling, or as an employer involved with a subrogation case.  You may hear of this case again in the near future.

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James Moore

Raleigh, NC, United States

About The Author...

James founded a Workers’ Compensation consulting firm, J&L Risk Mgmt 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:

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  • Bloomberg Business News
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  • Insurance Journal
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