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Workers Comp Subrogation Crisis – Not Pursuing Third Parties


Continuing Workers Comp Subrogation Crisis – Money Still Being Left Behind

In our claim file reviews, one area that claims adjusters seem to constantly miss is the subrogation aspects of a file.  If I did not see this as a Workers Comp subrogation crisis, I would not write so many articles on the subject.

Check out the list of links at the end of this article on some of my subrogation articles.

The claims adjusters are not necessarily to blame for this current situation.  Read on to see why the adjusters are not necessarily responsible for the near-misses.

This article, by Attorney Gary Wickert, reminded me of how complicated subrogation can be in some Workers Comp files. The article is worth a read if you want to see how things may not work out on certain case settlements.

pic of old greek money workers comp subrogation crisis
Wikimedia Commons – Jon Eben Field

Subrogation Definition

Let us start with my definition of subrogation.  When an employer purchases workers comp coverage, the carrier provides them with first-party insurance.  The policy covers the second party – the injured employee.

A third party that is not named in the policy may become responsible for the injured employee’s injuries.   The workers comp carrier can pursue the third party and their insurance carrier for reimbursement for the benefits paid to the injured employee.

Subrogation allows this pursual of the third party to occur if the workers comp adjuster realizes that responsibility for an accident could have resulted from a third party.   If the adjuster passes over this reimbursement opportunity, a reduction in payouts and future premium reductions will not happen on the file.

I sometimes hear that “we have a subrogation specialist contractor” where files are referred to in case of a subrogation situation.  However, if the subrogation is not identified, having a specialist does not matter.

See the links at the bottom of this article for subrogation examples.

Ending The Workers Comp Subrogation Crisis With Training

I was trained as an all-lines claims adjuster many years ago.   Bringing in an attorney to discuss subrogation for an hour provides a 30,000-foot view.

The insurance world, as in many professions,  has become more of a group of specialists than generalists.  As Workers Comp claims handling became more complicated, adjusters were trained and licensed in only one line of insurance.

I am still a huge proponent of the Associate in Claims designation.  My encouragement to obtain the AIC  is not based on the fact that I have the designation.   The AIC comes the closest to the old school all lines claims training.   Some carriers will reimburse the costs as the adjusters pass each test.

A simple letter (certified return receipt) to the third party’s insurance carrier or to the injured employee’s attorney,  if they are represented, preserves the subrogation interests in a Workers Comp file.

How Do Insurance Carriers and TPAs Provide Training on Subrogation?

Subrogation training could occur as part of the initial training process for new adjusters.  Is that being done with most carriers?  How about the experienced WC adjusters?

I do not have all the answers on how to train adjusters to avoid an upcoming workers comp subrogation crisis.  Please put any suggestions in the comments.

Other articles on this subject: (also search for subrogation in the search box)

Subrogation Letter Can Recover File Funds

Three Concerns With Subrogation

Subro Online Access Nets Insured $85,000 Subro Recovery

How To Pursue Subrogation With Vehicle Accidents

Subrogation Recovery Claims Services 




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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