Subrogation for the Claims Examiner - Part 1

Sunday, June 9, 2002 | 0

First, let's review the overriding purpose of subrogation - money. Keep in mind throughout this discussion that subrogation must, above all else, make economic sense. There is no justice in subrogation - it's all about the recovery. If the expense of obtaining a recovery exceeds the actual recovery, then subrogation is not an option.

Given that reality, a quick review of what is subrogation is in order.

In workers' compensation insurance, there is a basic premise that employment-related injuries or illnesses qualify for coverage without consideration of negligence of the employer or the employee. It is therefore commonly referred to as "no fault" - meaning that the employer is covered regardless of whether the employer caused the injury (except in certain egregious situations), and the employee likewise can recover benefits regardless of the employee's contribution to his or her injury (again, there are exceptions).

Likewise, in most states, workers' compensation is the "exclusive remedy" for the employee, which generally means that the employee cannot sue the employer or co-employee for a job related injury or illness.

However, parties outside the employer-employee relationship do not enjoy the protection of the exclusive remedy doctrine, and most states allow civil actions (law suits) against the persons or organizations other than the employer that caused injury to the injured worker. These parties are referred to as third party tortfeasors. Most states permit the injured worker to sue the responsible third party and recover monetary damages.

The challenge is to maximize recovery of the monetary aspect of the claim. As the case matures, don't just pay out the benefits, but put into place a strategy for getting reimbursed for them. Almost as good as money is "credit" against an Award. Credit can be as "good" as money! It can allow you to eliminate future exposure and close your comp file. Remember that the goal in subrogation is to get as much as one permissibly and legally can at the least expense. Not only is this good business, but doing so creates a great image of the claims department (and as a consequence the carrier) in the eyes of the employer/customer (remember our past articles on looking at the claims department as a marketing arm of the carrier/TPA).

Okay - now you're ready to show the employer just how good the claims department is, but who are the players in a subrogation setting?

Remember that as a workers' compensation defendant, you are essentially a third party in a subrogation claim, or an intervenor. Your rights to recovery are dependent on the liabilities and rights of the plaintiffs and defendants in the subrogation case. You will be seeking recovery generally against another insurance company, especially when the injury was the product of a motor vehicle accident or product liability situation. In such cases you will be dealing with liability claims techs and defense attorneys. Make sure you send the defense representatives a letter as soon as any subrogation potential is identified.

On the other side of the spectrum are the attorneys for the plaintiff/applicant. Usually these are two different attorneys, though they represent the same person. Remember that their job is to get as much money as possible for their client, not you! They will resist as much as possible your attempts to make a subrogation recovery because the more you get, the less their client (and by association, them) get. Don't expect them to make a recovery for you!

Our next article will go into some of the more technical aspects of analyzing a case for subrogation recovery.

Author Cyndi Koppany is Vice President in charge of Training for Cambridge International. She can be reached at ckcyndi_koppany@cisgi.com.