What are General Third Party Workers Comp Claims?

What Are Third-Party Claims and Underlying Personal Injury Claims in Louisiana Workers Compensation?

Sometimes, an employee is injured while at work due to the actions of someone other than the employer or co-worker.

In such a situation, the injured employee will likely have a workers compensation claim AND a “third-party claim” against the individual (other than the employer or co-worker) who was responsible for the accident or the injury.

Many times, this “third-party claim” is, in fact, a separate personal injury claim.

And often, this separate personal injury claim is known as an “underlying personal injury claim” because this personal injury claim lies underneath the workers compensation claim.

Under Louisiana’s “exclusive remedy rule,” an injured employee is not allowed to sue the employer (or co-workers) for damages such as pain and suffering; an employee may only obtain lost wage benefits and medical benefits for the employer’s workers compensation insurance company.

However, an injured employee can sue third parties (individuals and companies besides the employer or its co-workers) for damages such as pain and suffering.

But both the employee, the employer, and the workers compensation insurance company may have valid claims against the third party.

EXAMPLES OF TYPICAL THIRD-PARTY CLAIMS

Typical examples of situations in which an injured employee may have a workers compensation claim and a third-party claim include the following:

• An on-the-job car or truck accident in which another motorist (besides the employee) was at fault;
• A slip-and-fall or a trip-and-fall accident that occurred on someone else’s property;
• A construction site accident caused by a subcontractor, supplier or utility company;
• A workplace fire caused by dangerous chemicals; and
• A workplace accident caused by defective equipment or machinery.

Nonetheless, the most frequent situations in which an injured employee has a workers compensation claim and a third-party claimer the on-the-job car or truck accidents in which another motorist (besides the employee) was at fault.

RIGHTS OF THE EMPLOYEE AGAINST THIRD-PARTY WRONGDOERS

Under Louisiana law, workers compensation is the “exclusive remedy” between the employer and the employee, meaning that an employee can generally only sue his or her employer through the Louisiana workers compensation system and rules.

However, claims by an injured employee against a third party wrongdoer whose fault brought about the employee’s injury are not through the Louisiana workers compensation system and rules.

Louisiana law expressly authorizes the employee to proceed against any third party for damages even though the employee has been awarded workers compensation benefits by his or her employer for the same injury.

Nonetheless, an employer or its insurance company can be reimbursed – which will prevent double recovery by the employee –  when the employer or its insurance company intervenes in (or steps into) the employee’s lawsuit against the third-party and required that the judgment be in favor of the employer or its insurance company in order to reimburse the employer or its insurance company.

In such a case of intervention by the employer or its insurance company, only the excess recovery goes to the employee; and in some instances, the employer or its insurance company’s “recovery” takes the form of a credit against future compensation owed, permitting the suspension of those future payments.

And, the employer or its insurance company may institute its own suit against the third-party wrongdoer, in which case the employee can intervene in order to ensure that the employee recovers a maximum sum.

Last, if the employee institutes suit for workers compensation benefits, and it is determined that his disability was temporary only and has terminated by the time of trial, this finding is not conclusive in the employee’s subsequent tort claim against a third party for damages for the same injury.

WAYS IN WHICH THE WORKERS COMPENSATION INSURANCE COMPANY CAN RECOVER IN A THIRD-PARTY LAWSUIT

Generally speaking an employer and its workers compensation insurance company can recover in the following ways in a lawsuit against a third party:

1. A reimbursement of workers compensation benefits already paid;
2. A credit against its future workers compensation obligations; and
3. Judicial interest on the amounts that it recovers.

Concerning the reimbursement of workers compensation benefits that have already been paid, if the employer or its workers compensation insurance company is a party in a lawsuit against a third party, any amounts that are recovered against the third party are apportioned so that the claim of the employer or its workers compensation insurance company for reimbursement of workers compensation benefits actually paid get priority over the claim of the injured employee.

In other words, if the recovery from the third party is only enough to cover the reimbursement of workers compensation benefits already paid, then the employer or its workers compensation insurance company will get paid while the injured employee will get nothing.

This is because Louisiana law provides the employer and its workers compensation insurance company with “first dollar” rights to and a lien upon tort recovery, which means that only after the intervenor has recovered what it is due is any excess apportioned to the plaintiff.

And, the employer and its workers compensation insurance company are entitled to reimbursement out of the total amount of damages awarded, regardless of whether those damages are calculated as weekly lost wage (indemnity) benefits paid to the employee or medical expenses paid on behalf of the employee.

In addition to reimbursement for the amounts actually paid to the employee or on his behalf up to the date of trial, the employer and its workers compensation insurance company are often entitled to a credit against the tort recovery for amounts for future workers compensation payments or medical expenses to be undertaken.

In other words, the employer and its workers compensation insurance company are entitled to reimbursement for not only those amounts already paid, but those amounts it will become obligated to pay in the future.

So if the damages awarded in a third-party lawsuit are greater than the amount of the lien of the employer or its workers compensation insurance company, the employer or its workers compensation insurance company is entitled to a credit against its future workers compensation obligation in the amount of the plaintiff’s net recovery – which mean the recovery after attorney’s fees and court costs are deducted – discounted at 6%.

SOCIAL SECURITY DISABILITY INSURANCE AND LOUISIANA WORKERS COMPENSATION

Social Security Disability Insurance (SSDI), also known as Social Security Disability (SSD), is insurance through the United States government in case an individual becomes disabled.

Social Security Disability Insurance (SSDI) is available for workers who have paid into the Social Security trust fund through Social Security taxes on their earnings, as well as for certain dependents of disabled workers who have paid into the Social Security trust fund.

Generally speaking, the definition of a disability is a condition where an individual is unable to engage in any substantial gainful activity because of a physical or mental impairment, where is this impairment is demonstrated by medical evidence (such as objective findings by a medical provider, symptoms, laboratory findings, and subjective complaints by the individual).

A person can qualify for Social Security Disability if he or she becomes disabled under the age of 65 or is a qualified family member of a worker who becomes disabled under age 65.

Social Security Disability payments are for disabilities that have lasted or are expected to last for at least 12 months straight or are expected to result in the death of the disabled individual.

In other words, Social Security Disability payments are intended for long-term or permanent conditions, not for temporary conditions (such as where the disabled individual is expected to quickly recover and return to full-duty work).

Once an individual qualifies for Social Security Disability, the actual disability payments will not begin until five months after the date of the onset of the disability.

However, once an individual qualifies for Social Security Disability, that individual will begin receiving health insurance through Medicare beginning 24 months after the five-month waiting period.

THE SOCIAL SECURITY DISABILITY “OFFSET”

Under Louisiana workers compensation law and United States federal Social Security law, an injured worker in Louisiana can receive both Louisiana workers compensation lost wage benefits and Social Security Disability Insurance (SSDI) benefits at the same time.

However, when an injured worker in Louisiana is receiving both Louisiana workers compensation lost wage benefits and Social Security Disability Insurance (SSDI) benefits at the same time, this injured worker in Louisiana can not receive a total combined benefit of more than 80% of the gross income that this worker was earning before he or she became disabled.   

Additionally, Social Security Disability Insurance (SSDI) benefits can NOT be reduced due to the receipt of social security old-age retirement benefits. So when an injured employee is receiving Louisiana workers compensation lost wage benefits, this employee’s social security benefits may be reduced – or “offset” – so that the combined benefits do not exceed 80% of the employee’s “average current wage” as calculated by the Social Security Administration (SSA).

The Social Security Administration (SSA) calculates the amount of income that the injured employee was earning before his or her disability as the injured worker’s “average current wage,” which is the largest amount under the following three options:

1. The average lifetime earnings of the injured employee;
2. The average earnings during the five years before the injured employee became disabled; and
3. The average earnings during the one year before the injured employee became disabled.

But the maximum total amount of combined benefits that an injured worker is allowed to receive is also limited by the total amount of Social Security Disability Insurance (SSDI) benefits received by all of the members of the injured worker’s family in the first month that workers compensation is received (otherwise known as the “Total Family Benefit”).

The simplified version of the method for calculating a Social Security Offset is as follows:

1. The Social Security Administration first calculates the injured employee’s average current earnings for the period before the employee became disabled;
2. The Social Security Administration then calculates the monthly average of the injured employee’s average current earnings;
3. The Social Security Administration then determines how much the injured employee is receiving each month in workers compensation and Social Security Disability Insurance (SSDI) benefits;
4. The Social Security Administration then determines if the combined income exceeds 80% of the average monthly earnings; and
5. If the combined benefits do exceed 80% of the employee’s average monthly earnings, then the Social Security Administration will reduce the Social Security Disability Insurance (SSDI) benefits by the amount above the 80%.

Additional requirements concerning the Social Security Disability Offset include the following:

1. The Social Security Disability Offset is only available when the injured worker is receiving Permanent Total Disability (PTD) benefits or Permanent Partial Disability (PPD) benefits; 
2. The amount of the Social Security Disability Offset can be re-calculated by the Social Security Administration every three years, which often reduces the amount of the offset;
3. The Social Security Disability Offset is NOT available when the injured worker is receiving Supplemental Earnings Benefits (SEBs) or Temporary Total Disability (TTD) benefits;
4. The Social Security Disability Offset is NOT available for disabilities that arose before September 8, 1978;
5. The Social Security Disability Offset is NOT available for the receipt of social security old-age retirement benefits;
6. The Social Security Disability Offset is NOT reduced by any amount of attorney’s fees that the worker owes to his or her attorney; and  
7. The Social Security Disability Offset can NOT reduce below the amount to which the employee’s total benefits to an amount that is lower than the injured employee’s weekly workers compensation rate.

So for example, let’s say an injured employee had a monthly average current wage before the disability of $3,000, and the employee is set to receive $1,800 each month in workers compensation benefits and $2,200 each month in SSDI benefits.

Since eighty percent of the monthly average current wage of $3,000 equals $2,400, and the combined total of monthly workers compensation benefits and SSDI benefits equals $3,000, which exceeds the 80% average current wage by $600, the SSDI benefit would, therefore, need to be reduced (or “offset”) by $600, meaning the actual monthly SSDI benefit would only be $1,600.

THE SOCIAL SECURITY “REVERSE-OFFSET”

As stated above, when an injured worker in Louisiana is receiving both Louisiana workers compensation lost wage benefits and Social Security Disability Insurance (SSDI) benefits at the same time, this injured worker in Louisiana can not receive a total combined benefit of more than 80% of the gross income that this worker was earning before he or she became disabled.   

So, for this reason, when an injured employee is receiving Louisiana workers compensation lost wage benefits, this employee’s social security benefits may be reduced – or “offset” – so that the combined benefits do not exceed 80% of the employee’s “average current wage” as calculated by the Social Security Administration (SSA).

But, the workers compensation insurance company can request that the Louisiana workers compensation Court reverse this offset – in other words, claim a social security “reverse-offset” – if the OWC Court concludes that the injured worker is entitled to Permanently Total Disability (PTD) benefits. 

So, in all cases where benefits are converted to permanent and total disability benefits, the workers compensation insurance company is entitled to a reverse-offset, lowering what would otherwise be the workers compensation indemnity payment.

In other words, a social security “reverse-offset” allows the workers compensation insurance company to reduce its lost wage benefits by the excess amount above the 80% of the employee’s “average current wage” instead of allowing the Social Security Administration (SSA) to reduce the Social Security Disability Insurance (SSDI) benefits by that amount.

This social security “reverse-offset” exists in Louisiana workers compensation because Louisiana law has decided to give the workers compensation insurance company, rather than the federal government, the benefit of the ceiling placed on both programs by the coordination of benefits.

SETTLEMENTS AND SOCIAL SECURITY “SPREAD” LANGUAGE

A Social Security Offset can have a tremendous impact on the settlement of a workers compensation claim in Louisiana because receipt of a large lump sum settlement can potentially cause a drastic reduction of an employee’s monthly SSDI benefits and might even completely eliminate these monthly SSDI benefits.

Again, this is because an injured worker in Louisiana can not receive a total combined benefit of more than 80% of the gross income that this worker was earning before he or she became disabled.

However, fortunately, specialized “spread” language can be placed into a written settlement agreement that can minimizes or even eliminate the offset altogether.

This “spread” language can minimize or eliminate the Social Security Offset by “spreading” the monthly value of the lump sum settlement over the employee’s life span through a formula approved by the Social Security Administration (SSA).

It is this average monthly benefit – the prorated monthly value of the lump sum settlement over the employee’s life span – that is then used to calculate any Social Security Offset.

In other words, any potential negative impact of a Social Security Offset can be minimized or eliminated by “spreading” the value of the lump sum settlement over time.

Spread language in a written settlement agreement usually looks something like this:

• “Of the $150,000.00 settlement, $30,000 shall be paid as attorney’s fees to the attorney for the employee. The $120,000.00 to be paid to the employe, shall be calculated without commutation of interest, but shall represent the negotiated compromise Agreement that the claimant’s life expectancy is 22.45 years forward from this date, pursuant to the Annuity Mortality Table for 1949 Ultimate, as established by O.C.G.A. §24-4-45, Appendix, Title 24, and that the settlement herein reached represents the payment of $110.28 per week to the claimant over the balance of the 969.44-week life expectancy of the claimant into the future.”

Again, this “spread” language is used to prevent reduction or elimination of Social Security Disability (SSDI) benefits due to the Social Security Offset rule (which provides social security disability benefits will be reduced so that no combination of workers compensation benefits and social security disability benefits can exceed 80% of pre-injury earnings) by projecting the portion of lump-sum disability settlement proceeds over the worker’s remaining life expectancy.

MEDICARE AND LOUISIANA WORKERS COMPENSATION

Once an individual has received 24 months of Social Security Disability Insurance (SSDI) benefits, he or she automatically qualifies for Medicare. 

Medicare is a federal program that provides health coverage for certain individuals who are retired or who have become disabled.

Medicare became intertwined with Louisiana workers compensation in 1981 with the passage of the Medicare Secondary Payer Act (MSPA), which makes Medicare a “secondary payer” in place of third-party obligors (such as workers compensation insurance companies) who are considered “primary payers” under the MSPA.

Critically,  in Louisiana workers compensation, the Medicare Secondary Payer Act (MSPA) prevents cost-shifting from the workers compensation insurance company (who is obligated to pay for medical treatment of the injured worker) to Medicare, which is good public policy since Medicare is funded by taxpayers.

In addition to the MSPA, the Center for Medicare Services (CMS) is authorized by Congress to set forth federal regulations concerning Medicare’s rights with respect to workers compensation claims.

Medicare has the two following significant rights under the Medicare Secondary Payer Act (MSPA):

1. To recover “conditional payments” from the primary payer (such as workers compensation insurance company), which means that if medical treatment is paid for by Medicare, but should be paid by the workers compensation insurance company, then Medicare has the right to recover its payments from the workers compensation insurance company; and
2. To ensure that the primary payer (such as the workers compensation insurance company) adequately funds the employee’s future medical costs in a workers compensation settlement.

So basically, the main point of the Medicare Secondary Payer Act (MSPA) is to “protect Medicare’s interest,” which is important because Medicare (and thus the taxpayers) should not have to pay the medical expenses for a work-related injury that are otherwise owed by the workers compensation insurance company.

MEDICARE SET-ASIDE ARRANGEMENTS (MSAS)

Medicare will not allow the injured worker simply to settle his or her workers compensation claim, pocket all the money for the future medical expenses, and then have Medicare pay for all the future medical expenses.

To avoid such a scenario, Medicare requires that the workers compensation insurance company “set-aside” a portion of that settlement money so that it can be used for future medical expenses, thereby preventing Medicare from having to pay for those future medical expenses.

This process of “setting-aside” a portion of that settlement money is known as a “Medicare Set-Aside Arrangement” or an “MSA” for short.

In Louisiana workers compensation, a Medicare Set-Aside Arrangement (MSA) is a financial agreement that allocates a portion of a workers compensation settlement to pay for future medical services related to the workers compensation injury, illness, or disease.

These funds that are “set-aside” in an MSA must be depleted before Medicare will pay for medical treatment related to the workers compensation injury, illness, or disease.

The Center for Medicare Services (CMS), which sets forth federal regulations concerning Medicare’s rights with respect to workers compensation claims, states that all parties in a workers compensation case have “significant responsibilities” to protect Medicare’s interests when resolving cases that include future medical expenses.

While there are no laws requiring that an MSA be submitted to CMS for review, the recommended method to protect Medicare’s interests is an MSA.

If any party chooses to submit an MSA for review, CMS requests that the party complies with its established policies and procedures.

CMS will only review new MSA proposals when one of the following conditions is met:

1. The claimant is a Medicare beneficiary, and the total settlement amount is greater than $25,000.00; or
2. The claimant has a reasonable expectation of Medicare enrollment within 30 months of the settlement date, and the anticipated total settlement amount for future medical expenses and disability/lost wages over the life or duration of the settlement agreement is expected to be greater than $250,000.00.

The amount of each MSA is determined on a case-by-case basis.

WHEN TO CONSIDER SUBMITTING A SETTLEMENT TO CMS FOR REVIEW

There are no legal requirements that any Medicare Set-Aside (MSA) must be sent to the Center for Medicare Services (CMS) for review or approval.

But if a party does choose to use the MSA review process of the Center for Medicare Services (CMS) in order to obtain approval, CMS requires compliance with CMS’ established policies and procedures.

CMS reviews proposed MSA amounts in order to determine if the proposed MSA amount is sufficient to cover future medical expenses related to the workers compensation settlement, judgment, or award.

If a proposed MSA total settlement amount meets the “workload review” thresholds, the proposal can be submitted to CMS for approval.

CMS will review a proposed MSA amount when the following workload review thresholds are met:

The claimant is a Medicare beneficiary, and the total settlement amount is greater than $25,000.00; or

The claimant has a reasonable expectation of Medicare enrollment within 30 months of the settlement date, and the anticipated total settlement amount for future medical expenses and disability or lost wages over the life or duration of the settlement agreement is expected to be greater than $250,000.00.

A claimant has a reasonable expectation of Medicare enrollment within 30 months if any of the following apply:

1. The claimant has applied for Social Security Disability Benefits;
2. The claimant has been denied Social Security Disability Benefits but anticipates appealing that decision;
3. The claimant is in the process of appealing and/or re-filing for Social Security Disability benefits;
4. The claimant is 62 years and six months old; or
5. The claimant has an End-Stage Renal Disease (ESRD) condition but does not yet qualify for Medicare based upon ESRD.

The $25,000 and $250,000 thresholds are determined by considering all parts of a settlement, including indemnity benefits and attorney’s fees.

If the workers compensation case settles in conjunction with a tort case, the total amount received by the claimant in the settlement of the tort case (not just the net to the claimant after fees and expenses) is also used to determine if the workload threshold is met.

MEDICARE’S ENFORCEMENT RIGHTS IN LOUISIANA WORKERS COMPENSATION

When a proposed MSA amount is submitted to CMS for review and the claimant obtains CMS’ approval, the CMS-approved MSA amount must be appropriately exhausted before Medicare will begin to pay for care related to the beneficiary’s settlement, judgment, award, or other payment.

Claimants who receive a workers compensation settlement, judgment, or award that include an amount for future medical expenses must consider Medicare’s interest concerning future medical treatment.

If Medicare’s interests are not considered, CMS has a priority right of recovery against any entity that received any portion of a third-party payment either directly or indirectly—a right to recover, or take back, that payment.

Medicare may also refuse to pay for future medical expenses related to the work-related injury until the entire settlement is exhausted.

There are two main situations where Medicare may try to enforce its rights following a Louisiana workers compensation settlement:

1. When the employee fails to comply with the rules for administering an MSA; and
2. When the MSA itself (or the lack of an MSA) does not adequately protect the interests of Medicare.

First, when an injured employee fails to comply with the rules for administering an MSA, Medicare will likely require that the employee replace the funds in the MSA, though Medicare may also refuse to pay for related medical treatment until the employee has replaced and exhausted these funds.

Second, if CMS does not approve a settlement, or if a settlement is not even submitted for a CMS for review, CMS has the right to go after the workers compensation insurance company and the employee for a settlement that does not adequately protect Medicare’s interests.

CREDITS AND OFFSETS IN LOUISIANA WORKERS COMPENSATION

Louisiana provides for the following offsets and credits against the obligation of the workers compensation insurance company to pay workers compensation benefits:

1. Offsets for Social Security Disability Insurance (SSDI) benefits (in limited situations);
2. Credits for unemployment benefits;
3. Credits for disability benefits funded by an employer;
4. Credits for workers compensation benefits already paid from the obligation to pay SEBs or PPD benefits;
5. Offsets for certain medical expenses;
6. Credits for voluntary payments of benefits that were not due and payable when made; and
7. Credits for certain recoveries in third-party claims.

First, when an injured worker in Louisiana is receiving both Louisiana workers compensation lost wage benefits and Social Security Disability Insurance (SSDI) benefits at the same time, this injured worker in Louisiana can not receive a total combined benefit of more than 80% of the gross income that this worker was earning before he or she became disabled.

Second, no workers compensation benefits (whether for total disability or SEB payments) are payable for any week in which the employee has received unemployment compensation benefits.

Third, an employee’s Louisiana compensation benefits are reduced to the extent necessary to limit the employee to two-thirds of his or her average weekly wage at the time of injury, if the employee is receiving payments from benefits under disability benefit plans that are funded by the employer, or other workers compensation benefits already paid from its obligation to pay SEBs or PPD benefits

The workers compensation insurance company can also receive credits for:

1. Medical expenses in certain situations;
2. Voluntary payments of benefits that were not due and payable when made; and
3. Credits for third-party claims.

Concerning medical expenses, payment of any medical bill or expense of an injured employee by any person or entity shall extinguish the claim against the workers compensation insurance company for those medical expenses, unless that other person or entity is:

1. The employee;
2. A relative or friend of the employee;
3. Medicaid; or
4. Any other state medical assistance program.

If the employee or the employee’s spouse actually pays premiums for health insurance, either as direct payments or as itemized deductions from their salaries, then this offset will only apply in the same percentage, if any, that the employer of the employee or the employer of his spouse paid the health insurance premiums.

Lastly, Louisiana law does not permit the workers compensation insurance company to take any credits for retirement benefits.

LIENS AND SUBROGATION RIGHTS IN LOUISIANA WORKERS COMPENSATION

A lien is defined as a legal right that an individual or an entity has against the property of another. 

Additionally, subrogation is the legal process of allowing an individual or an entity to make a claim against another to recover benefits it has already paid.

In Louisiana workers compensation, liens and subrogation rights can work in a variety of different ways.

Louisiana law does not limit subrogation recovery to just the employer and the workers compensation insurance company; instead, the right of subrogation is extended to all “persons” who have paid OR become obligated to pay Louisiana workers compensation benefits.

Liens in Louisiana workers compensation claims can come into play in a number of ways and need to be handled as part of the settlement process.

Both the employee and the workers compensation insurance company need to feel confident that an agreed-upon settlement is final so that all duties and obligations concerning the claim are completed; for this reason, it is important to account for any liens that are asserted, or that could be asserted, by any third parties and to come to an understanding of who will be responsible for satisfying any such lien.

HEALTH CARE PROVIDER LIENS AND SUBROGATION RIGHTS

As stated above, liens in Louisiana workers compensation claims can come into play in several ways.

One common way is when a health care provider has unpaid charges for medical treatment that the medical provider rendered to the injured employee so that at the time of settlement there are outstanding medical bills.

Liens for outstanding medical bills can occur when the employee treats with a health care provider that the employer does not know about, and as such the treatment is not approved through the utilization review process.

Under Louisiana law, reimbursement from the workers compensation insurance company for such charges is limited to $750, if the treatment was not emergency care, and any remaining amount above $750.00 cannot be claimed against the employee.

Additionally, all compensable medical expenses incurred before the date of settlement shall be paid by the workers compensation insurance company unless the settlement documents explicitly state otherwise.

Thus, whether or not the $750 cap applies, it is important for the injured employee and the workers compensation insurance company to agree at the time of settlement as to who will pay any outstanding medical bills.

HEALTH INSURANCE COMPANY LIENS AND SUBROGATION RIGHTS

Another common way for a lien to come into play in Louisiana workers compensation is when a health insurance company pays for health care expenses that the workers compensation insurance company is liable.

In such a situation, though, the amount of reimbursement cannot exceed the amount of the workers compensation insurance company’s liability for the workers compensation benefit.

In fact, most health insurance policies exclude payment for treatment that is covered under a workers compensation policy, and the health insurance company will have a claim for reimbursement against the employee if their policy pays for such treatment.

Nonetheless, a lien will very likely arise before a workers compensation settlement when an injured employee uses his or her private health insurance to pay for medical treatment, and that lien must be handled before executing the settlement documents.

Also, Louisiana law provides a credit in favor of the employer for any medical expenses paid by another entity, which includes a health insurance company, unless the employee or employee’s spouse pays the premiums for such insurance and then the credit is proportional based on payments made by the employee or spouse.

So the general rule is that the employer gets a credit for payments made by a health insurer, but if the employee has a lien letter from his own health insurance company, then deciding who will be responsible for reimbursing the health insurance company can be negotiated in the settlement.

MEDICARE LIENS AND SUBROGATION RIGHTS

Payment of workers compensation medical expenses by Medicare and Medicaid can also result in liens against a workers compensation settlement.

Medicare will want to be paid back most, if not all, of the amount it paid; little to no reduction will be provided on amounts due and owing to Medicare.

Louisiana law specifically provides that payment by Medicare, Medicaid, or other state medical assistance programs does not remove the workers compensation insurance company’s obligation to pay for such medical treatment.

Additionally, federal law provides that Medicare’s “conditional payments” for workers compensation benefits must be reimbursed.

Medicare conditional payment amounts should be determined before settlement negotiations; for this, most workers compensation insurance companies have contracts with organizations that can perform a conditional payment search.

The workers compensation insurance company will want to know in advance what those conditional payments might be because, generally speaking, paying Medicaid liens and Medicare conditional payments becomes the responsibility of the workers compensation insurance company at the time of settlement.

THIRD-PARTY LIENS AND SUBROGATION RIGHTS

Under Louisiana law, the employee is entitled to proceed both by claiming workers compensation benefits from the employer and its workers compensation insurance company while at the same time filing a claim or lawsuit for damages against a third-party wrongdoer.

However, the employee will not be able to recover for the same damages twice – otherwise known as “double recovery” – because the employer and its workers compensation insurance company are entitled to “intervene” in the employee’s third-party lawsuit and require that the judgment be in favor of the employer to the extent required to reimburse or indemnify the employer and its workers compensation insurance company.

In other words, the employer and its workers compensation insurance company will be reimbursed for what they have to pay in workers compensation benefits, and only the excess amount will go to the employee.

In some cases, the “recovery” of the employer and its workers compensation insurance company takes the form of a credit against future workers compensation benefits owed, which then permits the suspension of those future payments.

Also, the employer or its workers compensation insurance company may institute its own lawsuit against the third-party wrongdoer (otherwise known as the tortfeasor), in which case the employee is allowed to intervene to ensure that the employee receives the maximum amount of money that the employee may be entitled.

So, Louisiana law gives the employer and its workers compensation insurance company two methods of proceeding to enforce its substantive rights:

1. The employer and its workers compensation insurance company can bring a separate suit against the third person, without regard to whether the employee has brought suit, or is planning to do so; and 
2. The employer and its workers compensation insurance company can assert its rights using an incidental demand – typically known as an intervention – in the employee’s suit against the same third person.

However, even though Louisiana law gives the employer and its workers compensation insurance company the right to proceed against a third person for reimbursement of the amount of compensation “actually paid” to an injured employee, the employer or its workers compensation insurance company may validly waive its right of reimbursement if it chooses to do so, and this waiver is often called a “waiver of subrogation.”

SECOND INJURY FUND CLAIMS IN LOUISIANA WORKERS COMPENSATION

Louisiana’s “Second Injury Fund” or “SIF” is a trust created by state law and administered by the State Second Injury Board (“SIB”) that is funded by payments from workers compensation insurance companies and self-insured employers.

The purpose of the Second Injury Fund is to persuade employers – who otherwise might worry about an increase in workers compensation insurance costs – to hire employees who have pre-existing conditions that constitute “permanent partial disabilities.”

The Second Injury Fund accomplishes this by reimbursing some of the workers compensation benefits paid when an employee who has such a pre-existing condition suffers an injury at work and at the same time meets certain legal requirements.

Specifically, the Second Injury Fund legally requires that the workers compensation insurance company prove that:

1. The employee has a preexisting condition constituting a “permanent partial disability;”
2. The employer knew about the condition when the employee was hired or hired the employee after learning about the condition; and
3. The preexisting permanent partial disability combines or merges with a disability caused by a compensable work injury to produce an overall disability that is materially and substantially greater than would have resulted from the work injury alone.

In other words, the Second Injury Fund rewards an employer for employing and retaining people who might otherwise be thought of as a liability risk, and thereby increases the employment opportunities for people with medical conditions that might otherwise discourage hiring and retaining by an employer.

Of course, the workers compensation insurance company that qualifies for reimbursement from the Second Injury Fund is not then relieved of its obligation to the injured worker.

Instead, such a workers compensation insurance company must still pay full workers compensation benefits to the injured worker and then seek reimbursement from the Second Injury Fund for the workers compensation benefits paid to the employee.

The Second Injury Fund is financed by the workers compensation insurance companies, who make annual payments to the Second Injury Fund, according to assessment amounts – which is a percentage of the gross premium received by the insurer for writing workmen’s compensation insurance in the preceding calendar year – as determined by the Second Injury Board.

THIRD-PARTY CLAIMS IN WORKERS COMPENSATION MOTOR VEHICLE ACCIDENTS IN LOUISIANA WORKERS COMPENSATION

Unfortunately, accidents that happen going to or from work from home  – or otherwise known as commuting – generally are not covered by Louisiana workers compensation because an employee who is commuting to or from work is not in the course of his or her employment.

This general rule – sometimes called the “coming and going rule” – is so well accepted that in order for the employee to succeed in his or her case, the employee must show that he or she falls under an exception to this rule.

But there are certainly exceptions to the “coming and going rule.”  These exceptions include the following circumstances:

1. If the operation of a motor vehicle is one of the employment duties of the employee.
2. If the employer pays the employee for travel time, provides a company car, or reimburses the employee for travel costs.
3. If the employee is injured traveling from one work site to the next.
4. If the employee is injured traveling (even from home) with some duty, which he must perform for the employer en route.
5. If the accident happens on the employer’s premises.
6. If the employee was injured at a dangerous place adjacent to his employer’s location (also known as the threshold doctrine).

And again, workers compensation covers all work-related duties. For an on-the-job car or truck accident, this includes activities such as:

• Performing a job that involves or requires driving as a duty of the job position;
• Performing a job that has no fixed office location, but involves traveling for work, and ;
• Performing a job that involves making deliveries of supplies or products;
• Traveling when transportation is provided by the employer;
• Traveling to attend a meeting with a client or a work-related conference;
• Transporting a co-worker to a meeting or other work-related event; and
• Traveling to perform an errand requested by the employer or a superior.

So if an employee is involved in an on-the-job car or truck accident, and the accident was not the employee’s fault, the employee will likely also have a third-party civil personal injury claim against the driver who caused the incident.

In such a such, the injured employee can pursue both workers compensation benefits and a civil claim and should do so in order to maximize recovery.

Typically, the employee will recover lost wages and medical benefits on the workers compensation claim, and property damage (such as vehicle repairs) and pain and suffering damages on the third-party civil personal injury claim.

However, once in cured employed receives a personal injury settlement for such an on-the-job car or truck accident, the workers compensation insurance company will likely have a lien on those funds to seek repayment of the benefits that the employee received for medical care and lost wages.

But the workers compensation insurance company will not have a right to any of the other funds, such as the funds recovered fir property damage (such as vehicle repairs) and pain and suffering damages.

WHO EXACTLY IS A THIRD PARTY IN LOUISIANA WORKERS COMPENSATION?

Since the employee is entitled to proceed against a “third person” for tort damages, and the employer or the insurance company is entitled to proceed against a “third person” for reimbursement of compensation paid, then it is important to know who a “third person” is for these purposes.

The following are NOT third persons as to the employee, and they are thus immune from a proceeding in tort:

• The employee’s actual employer; 
• The employee’s co-workers, under that same employer, including supervisory employees or executive officers; 
• Any principal (statutory employer) as to the employee;
• Any employees of a principal; 
• A partner, if the employee is employed by a partnership; and
• An officer, director, or stockholder of the employee’s employer or any principal.

However, this immunity does not extend to protect:

• Any of the above persons against their liability “resulting from an intentional act;”
• Any officer, director, partner, stockholder, or employee of a principal or employer or who is “not engaged at the time of the injury in the normal course and scope of his employment;” or
• A partner whose partnership has been formed for the purpose of evading workers compensation liability.

Moreover, a “third person” in Louisiana workers compensation will ordinarily be a person or entity outside the broad employment situation altogether, such as:

1. Another driver in a vehicular accident;
2. The manufacturer of a defective product; or
3. A customer of the employer.

But some persons related in various ways to the employment picture may still be considered third persons, such as the employees of a contractor, who must be considered as third persons as far as the employees of a principal are concerned.

This concept is often termed as being able to “sue down” but not being able to “sue up.”

Also, if a person ordinarily a co-employee of the injured employee (and thus immune from a tort suit) becomes the borrowed employee of another employer, it can be argued that the immunity of this co-employee is lost (unless that other employer is a principal).

AN UNINSURED MOTORIST INSURANCE CARRIER IS NOT A THIRD PERSON IN LOUISIANA WORKERS COMPENSATION

If an employee is injured in a compensable accident but is prohibited from suing his or her employer or a co-employee in a personal injury tort lawsuit, it can be argued that the employer or co-employee is a person from whom the employee is “legally entitled to recover damages” but who is “uninsured” in the sense that the employee cannot recover anything from him.

However, Louisiana courts have consistently ruled that an injured employee is not entitled to recover from an uninsured motorist carrier providing coverage either to the employer or co-employee, or to the injured employee himself or herself.

In other words, an Uninsured Motorist insurance company or carrier is not considered a “third person” for Louisiana workers compensation claims.

The third-party tort action allowed under Louisiana law is intended to permit the injured employee to seek tort recovery against persons genuinely outside the employment family altogether.

But Louisiana law does not allow the injured employee any additional tort recoveries against the employer or co-employee beyond those expressly provided (such as for an intentional act).

THE LOUISIANA STATUTES FOR THIRD-PARTY CLAIMS IN LOUISIANA WORKERS COMPENSATION

The primary Louisiana statutes regarding third-party claim in workers compensation are La. R.S. 23:1101, La. R.S. 23:1102, La. R.S. 23:1103, La. R.S. 23:1104, La. R.S. 23:1032,  and La. R.S. 23:1205, which read as follows:
§1101.  Employee and employer suits against third persons; effect on right to compensation
A.  When an injury or compensable sickness or disease for which compensation is payable under this Chapter has occurred under circumstances creating in some person (in this Section referred to as “third person”) other than those persons against whom the said employee’s rights and remedies are limited in R.S. 23:1032, a legal liability to pay damages in respect thereto, the aforesaid employee or his dependents may claim compensation under this Chapter and the payment or award of compensation hereunder shall not affect the claim or right of action of the said employee or his dependents, relations, or personal representatives against such third person, nor be regarded as establishing a measure of damages for the claim; and such employee or his dependents, relations, or personal representatives may obtain damages from or proceed at law against such third person to recover damages for the injury, or compensable sickness or disease.

B.  Any person having paid or having become obligated to pay compensation under the provisions of this Chapter may bring suit in district court against such third person to recover any amount which he has paid or becomes obligated to pay as compensation to such employee or his dependents.  The recovery allowed herein shall be identical in percentage to the recovery of the employee or his dependents against the third person, and where the recovery of the employee is decreased as a result of comparative negligence, the recovery of the person who has paid compensation or has become obligated to pay compensation shall be reduced by the same percentage.  The amount of any credit due the employer may be set in the judgment of the district court if agreed to by the parties; otherwise, it will be determined pursuant to the provisions of R.S. 23:1102(A).

C.  For purposes of this Section, “third person” shall include any party who causes injury to an employee at the time of his employment or at any time thereafter provided the employer is obligated to pay benefits under this Chapter because the injury by the third party has aggravated the employment related injury.

D.  Repealed by Acts 2005, No. 267, §2.

Acts 1976, No. 147, §2; Acts 1985, No. 931, §1; Acts 1989, No. 454, §4, eff. Jan. 1, 1990; Acts 1990, No. 973, §1; Acts 1997, No. 1354, §1, eff. July 15, 1997; Acts 2005, No. 257, §§1, 2.

§1102.  Employee or employer suits against third persons causing injury; notice of filing

A.(1)  If either the employee or his dependent or the employer or insurer brings suit against a third person as provided in R.S. 23:1101, he shall forthwith notify the other in writing of such fact and of the name of the court in which the suit is filed, and such other may intervene as party plaintiff in the suit.

(2)  Any dispute between the employer and the employee regarding the calculation of the employer’s credit may be filed with the office of workers compensation and tried before a workers compensation judge.  However, any determination of the employer’s credit shall not affect any rights granted to the employer or the employee pursuant to R.S. 23:1103(C).

B.  If a compromise with such third person is made by the employee or his dependents, the employer or insurer shall be liable to the employee or his dependents for any benefits under this Chapter which are in excess of the full amount paid by such third person, only after the employer or the insurer receives a dollar for dollar credit against the full amount paid in compromise, less attorney fees and costs paid by the employee in prosecution of the third party claim and only if written approval of such compromise is obtained from the employer or insurer by the employee or his dependent, at the time of or prior to such compromise.  Written approval of the compromise must be obtained from the employer if the employer is self-insured, either in whole or in part.  If the employee or his dependent fails to notify the employer or insurer of the suit against the third person or fails to obtain written approval of the compromise from the employer and insurer at the time of or prior to such compromise, the employee or his dependent shall forfeit the right to future compensation, including medical expenses.  Notwithstanding the failure of the employer to approve such compromise, the employee’s or dependent’s right to future compensation in excess of the amount recovered from the compromise shall be reserved upon payment to the employer or insurer of the total amount of compensation benefits, and medical benefits, previously paid to or on behalf of the employee, exclusive of attorney fees arising out of the compromise; except in no event shall the amount paid to the employer or insurer exceed fifty percent of the total amount recovered from the compromise.  Such reservation shall only apply after the employer or insurer receives a dollar for dollar credit against the full amount paid in compromise, less attorney fees and costs paid by the employee in prosecution of the third party claim.

C.(1)  When a suit has been filed against a third party defendant in which the employer or his insurer has intervened, if the third party defendant or his insurer fails to obtain written approval of the compromise from the employer or his insurer at the time of or prior to such compromise and the employee fails to pay to the employer or his insurer the total amount of compensation benefits and medical benefits out of the funds received as a result of the compromise, the third party defendant or his insurer shall be required to reimburse the employer or his insurer to the extent of the total amount of compensation benefits and medical benefits previously paid to or on behalf of the employee to the extent said amounts have not been previously paid to the employer or his insurer by the employee pursuant to the provisions of Subsection B of this Section.  Notwithstanding such payment, all rights of the employer or his insurer to assert the defense provided herein against the employee’s claim for future compensation or medical benefits shall be reserved.

(2)  Nothing herein shall be interpreted to affect the rights of the employer or his insurer to otherwise seek reimbursement for past or future compensation benefits and medical benefits against a third party defendant or his insurer without regard to the actions of the employee on whose behalf said compensation and medical benefits were paid.

(3)  Repealed by Acts 1989, No. 454, §10, eff. Jan. 1, 1990.

Amended by Acts 1983, 1st Ex. Sess., No. 1, §1, eff. July 1, 1983.  Acts 1984, No. 852, §1; Acts 1985, No. 926, §1, eff. Jan. 1, 1986; Acts 1989, No. 454, §§4, 10, eff. Jan. 1, 1990; Acts 1997, No. 1354, §1, eff. July 15, 1997; Acts 2005, No. 257, §1.

§1103. Damages; apportionment of between employer and employee in suits against third persons; compromise of claims; credit

A.(1) In the event that the employer or the employee or his dependent becomes party plaintiff in a suit against a third person, as provided in R.S. 23:1102, and damages are recovered, such damages shall be so apportioned in the judgment that the claim of the employer for the compensation actually paid shall take precedence over that of the injured employee or his dependent; and if the damages are not sufficient or are sufficient only to reimburse the employer for the compensation which he has actually paid, such damages shall be assessed solely in his favor; but if the damages are more than sufficient to so reimburse the employer, the excess shall be assessed in favor of the injured employee or his dependent, and upon payment thereof to the employee or his dependent, the liability of the employer for compensation shall cease for such part of the compensation due, computed at six percent per annum, and shall be satisfied by such payment. The employer’s credit against its future compensation obligation shall be reduced by the amount of attorney fees and court costs paid by the employee in the third party suit.

(2) No compromise with such third person by either the employer or the injured employee or his dependent shall be binding upon or affect the rights of the others unless assented to by him.

(3) Any dispute between the employer and the employee regarding the calculation of the employer’s credit may be filed with the office of workers compensation and tried before a workers compensation judge. If a third party action has been filed in a district court, such dispute shall be filed in the district court and tried before a district judge unless the parties agree otherwise. However, any determination of the employer’s credit shall not affect any rights granted to the employer or the employee pursuant to R.S. 23:1103(C).

B. The claim of the employer shall be satisfied in the manner described above from the first dollar of the judgment without regard to how the damages have been itemized or classified by the judge or jury. Such first dollar satisfaction shall be paid from the entire judgment, regardless of whether the judgment includes compensation for losses other than medical expenses and lost wages.

C.(1) If either the employer or employee intervenes in the third party suit filed by the other, the intervenor shall only be responsible for a share of the reasonable legal fees and costs incurred by the attorney retained by the plaintiff, which portion shall not exceed one-third of the intervenor’s recovery for prejudgment payments or prejudgment damages. The amount of the portion of attorney fees shall be determined by the district court based on the proportionate services of the attorneys which benefitted or augmented the recovery from the third party. The employee as intervenor shall not be responsible for the employer’s attorney fees attributable to postjudgment damages nor will the employer as intervenor be responsible for the attorney fees attributable to the credit given to the employer under Subsection A of this Section. Costs shall include taxable court costs as well as the fees of experts retained by the plaintiff. The pro rata share of the intervenor’s costs shall be based on intervenor’s recovery of prejudgment payments or prejudgment damages.

(2) When recovery of damages from a third party is made without filing of a suit, the employer shall be responsible for an amount, not to exceed one-third of his recovery on pre-compromise payments, for reasonable legal fees and costs incurred by the attorney retained by the employee or his dependent in pursuit of the third party matter. The responsibility for payment of this amount shall exist only if there is written approval of the compromise by the employer, his compensation carrier, or the compensation payor.

D. An insurer shall grant its insured a dollar-for-dollar credit for any amount on any claim paid pursuant to this Chapter on the employer’s behalf and recovered in the current year, less any reasonable expenses incurred in the recovery by the insurer, in an action or compromise pursuant to this Section and R.S. 23:1102. The credit shall be used by the insurer in the calculation of the loss experience modifier promulgated by and in accordance with the rules of the National Council on Compensation Insurance, to be applied in determining the annual premium paid by the employer for workers compensation insurance under this Chapter. The group self-insurance fund shall apply the loss experience modifier authorized by R.S. 23:1196.

Amended by Acts 1958, No. 109, §1; Acts 1989, No. 454, §4, eff. Jan. 1, 1990; Acts 1997, No. 53, §1; Acts 1997, No. 59, §1; Acts 1997, No. 1354, §1, eff. July 15, 1997; Acts 2016, No. 470, §1.

§1104.  Quantification of employer fault

In a suit brought pursuant to R.S. 23:1101, the fault of persons immune from suit in tort under R.S. 23:1032 shall be assessed as a percentage of the aggregate fault of all persons causing or contributing to the employee’s injury, and the fault so assessed shall not be reallocated to any other person or party.  The recovery had in such a suit by the employer or any other person having paid or having become obligated to pay compensation shall be reduced by the fault so assessed.  This reduction is in addition to but not duplicative of any reduction made pursuant to Civil Code Articles 2323, 2324, and 2324.2 and R.S. 23:1101(B).

Acts 1996, 1st Ex. Sess., No. 15, §1.

§1032.  Exclusiveness of rights and remedies; employer’s liability to prosecution under other laws

A.(1)(a)  Except for intentional acts provided for in Subsection B, the rights and remedies herein granted to an employee or his dependent on account of an injury, or compensable sickness or disease for which he is entitled to compensation under this Chapter, shall be exclusive of all other rights, remedies, and claims for damages, including but not limited to punitive or exemplary damages, unless such rights, remedies, and damages are created by a statute, whether now existing or created in the future, expressly establishing same as available to such employee, his personal representatives, dependents, or relations, as against his employer, or any principal or any officer, director, stockholder, partner, or employee of such employer or principal, for said injury, or compensable sickness or disease.

(b)  This exclusive remedy is exclusive of all claims, including any claims that might arise against his employer, or any principal or any officer, director, stockholder, partner, or employee of such employer or principal under any dual capacity theory or doctrine.

(2)  For purposes of this Section, the word “principal” shall be defined as any person who undertakes to execute any work which is a part of his trade, business, or occupation in which he was engaged at the time of the injury, or which he had contracted to perform and contracts with any person for the execution thereof.

B.  Nothing in this Chapter shall affect the liability of the employer, or any officer, director, stockholder, partner, or employee of such employer or principal to a fine or penalty under any other statute or the liability, civil or criminal, resulting from an intentional act.

C.  The immunity from civil liability provided by this Section shall not extend to:

(1)  Any officer, director, stockholder, partner, or employee of such employer or principal who is not engaged at the time of the injury in the normal course and scope of his employment; and

(2)  To the liability of any partner in a partnership which has been formed for the purpose of evading any of the provisions of this Section.

Amended by Acts 1976, No. 147, §1; Acts 1989, No. 454, §2, eff. Jan. 1, 1990; Acts 1995, No. 432, §1, eff. June 17, 1995.

§1205.  Claim for payments; privilege of employee; non-assignability; exemption from seizure; payment of denied medical expenses

A.  Claims or payments due under this Chapter shall have the same preference and priority for the whole thereof against the assets of the employer as is allowed by law for any unpaid wages of the laborer; and shall not be assignable, and shall be exempt from all claims of creditors and from levy or execution or attachment or garnishment, except under a judgment for alimony in favor of a wife, or an ascendant or descendant.

B.  Any company which contracts for health care benefits for an employee shall have a right of reimbursement against the entity responsible for the payment of workers compensation benefits for such employee if the company paid health care benefits for which such entity is liable.  The amount of reimbursement shall not exceed the amount of the entity’s liability for the workers compensation benefit.  In the event the company seeks recovery for such in conjunction with a claim against any other party brought by the employee, the company may be charged with a proportionate share of the reasonable and necessary costs, including attorney fees, incurred by the employee in the advancement of his claim or suit.

C.(1)  In the event that the workers compensation payor has denied that the employee’s injury is compensable under this Chapter, then any health insurer which contracts to provide health care benefits for an employee shall be responsible for the payment of all medical benefits pursuant to the terms of the health insurer’s policy.  Any health insurer which contracts to provide health care benefits for an employee who violates the provisions of this Subsection shall be liable to the employee or health care provider for reasonable attorney fees and costs related to the dispute and to the employee for any health benefits payable.

(2)  The payment of medical expenses shall be recoverable pursuant to and in accordance with Subsection B of this Section.  However, if it is determined that the workers compensation payor was responsible for payment of medical benefits that have been paid by the health insurer, the obligation of the workers compensation payor for such benefits shall be to reimburse the health insurer one hundred percent of the benefits it paid.  If it is determined that the workers compensation payor was responsible for payment of benefits and its denial of responsibility is determined to be arbitrary and capricious, then the health insurer shall also be entitled to recover legal interest on any benefits it paid, calculated from the date such benefits were due.

(3)  Any claim filed against the workers compensation carrier by the health insurer or health providers in accordance with this provision shall not be subject to timely filing requirements, nor does prescription run until such time as the workers compensation claim reaches a resolution by final judgment or settlement.

(4)  Any claim filed by a health care provider against a health insurer pursuant to this Section shall be filed no later than one hundred eighty days after the denial by the workers compensation payor.

Acts 1995, No. 449, §1; Acts 2004, No. 554, §1.