State Office of Risk Mgmt. v. Carty: Workers’ Compensation Death Benefits and Third-Party Settlements

Our workers’ compensation attorneys know that a wrongful death settlement is typically a complex undertaking, which can lead to further litigation when an insurance carrier demands to be reimbursed for benefits already paid. When those benefits were paid under a workers’ compensation claim, it can become even more complex.

sterilisation.jpgState Office of Risk Management v. Carty, shows us just how complicated matters can become.

In State Office of Risk Management, Jimmy Carty was participating in training in Texas when he died. His wife and three young children survived Carty. In Texas, the State Office of Risk Management (“Risk Management”) serves as the workers’ compensation insurance company that covers all state employees. Risk Management paid for Carty’s medical bills and funeral expenses. Risk Management also paid workers’ compensation in the form of death benefits to Carty’s wife and children.

Typically, people do not associate workers’ compensations benefits with death benefits, but benefits are commonly paid. For example, the Workers’ Compensation Rules of the North Carolina Industrial Commission provide specific forms for Agreement for Compensation for Death and Notice for Death Awards.

In State Office of Risk Management, the plaintiffs brought civil action against Ringside Inc. and Kim Pacific Martial Arts, alleging that their defective products contributed to Carty’s death at the training academy. They reached a settlement agreement with Ringside in the amount of $100,000 and agreed to reimburse Risk Management $20,000 of the settlement award. Afterward, the plaintiffs then settled with Kim Pacific in the amount of $800,000. There was no agreement to give any portion of that money to Risk Management, which intervened seeking reimbursement. Risk Management had paid a total of just over $153,000 to Carty’s family for medical bills, funeral expenses, and weekly death benefits. After fees and expenses were deducted, along with the $20,000 already received by Risk Management, the judge awarded Risk Management an additional $78,000 (approximately). The remaining money was allocated between Carty’s widow and his surviving children.

The judge also stated that this money paid to Risk Management would be treated as an advance towards future weekly death benefits paid to his heirs and that those weekly benefits would resume after sufficient time had elapsed to account for the lump sum. In other words, Risk Management was still required to pay weekly death benefits to the children despite this settlement. However, it would not have to pay anything for $78,000 in future payments. Once enough weeks had passed to satisfy the advance, then payments would resume. In making such a ruling, the court found that benefits owned to multiple persons (Carty’s wife and children) involved in a settlement are to be apportioned based upon amount that they had already received. Risk Management appealed this ruling.

The appeals court was concerned with this issue of apportionment and held that a carrier’s rights to a third-party settlement are determined by treating it as a single collective recovery and not separate recoveries by each beneficiary.

If you have been injured at work, contact the Lee Law Offices at 800-887-1965.

Additional Resources:

State Office of Risk Mgmt. v. Carty, June 20, 2014, Supreme Court of Texas

More Blog Entries

Conley v. Alaska Communications – Third Party Lawsuits Following Work Injuries, May 24, 2014, North Carolina Workers’ Compensation Lawyers Blog

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