Hall v. North Carolina Services Corp. – Workers’ Compensation Liens

Workers’ compensation is known as the “exclusive remedy” for employees injured in the course and scope of employment. That means except for in very rare circumstances, you can’t sue your boss, employer or co-worker for negligence that resulted in a work-related injury.
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However, there is nothing in the law that says you can’t pursue third-party tortfeasors for negligence resulting in your work-related injury. What you should understand, however, is that your employer may assert subrogation rights – i.e., a lien – on all or part of any third-party award, depending on the facts of the case.

Subrogation is a type of legal right that allows one party (your company’s insurance carrier) to make a payment actually owed by another (i.e., third party tortfeasor) and then collect the money from the party that owes the debt after the fact.

Our Winston-Salem workers’ compensation lawyers know that when an employer’s insurer claims subrogation rights on your third-party claim, it has the effect of cutting into the amount you ultimately collect from that third party. It’s important to have the aid of an experienced work injury attorney who can help you navigate these complex legal waters, and ensure you receive the full compensation to which you are entitled.

An example of this in practice was Hall v. North Carolina Services Corp. et al, before the North Carolina Court of Appeals earlier this year.

Here, an employee of a vehicle manufacturer was hit by a driver of an auction company. Finding the injury occurred in the course and scope of employment, plaintiff’s workers’ compensation carrier tendered $87,000 in medical expenses to plaintiff.

Later, worker filed a negligence lawsuit against at-fault driver’s employer, ultimately entering a settlement for $200,000.

Plaintiff then filed a motion pursuant to N.C. Gen. Stat. 97-10.2(j) asking trial court to rule on subrogation amount, if any, owed to the workers’ compensation insurance carrier. The statute indicates the judge can determine the amount at his discretion. Considering a number of factors, trial court in this case set workers’ compensation lien/subrogation at $40,000, meaning worker could still collect $160,000 of the $200,000 settlement.

Employer and insurance carrier appealed, arguing Virginia law – not North Carolina law – should control because the workers’ compensation benefits were meted out in accordance with Virginia law. Virginia allows greater employer/insurer subrogation rights than North Carolina. However, the appellate court disagreed.

In reaching its conclusion, court cited Cook v. Lowe’s Home Center Inc., a 2011 case where similar facts were asserted. There, plaintiff suffered a work injury in North Carolina and entered a lump-sum workers’ compensation settlement agreement with employer according to Tennessee statutes (where firm is based). Plaintiff then obtained a third-party settlement for $2200,000. Worker then sought to reduce the workers’ compensation lien on his negligence settlement, which the court did (down to $30,000). Employer appealed arguing Tennessee law did not allow a lien reduction. However, appellate court rejected that argument, finding North Carolina the appropriate forum for resolution.

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

Additional Resources:
Hall v. North Carolina Services Corp. et al, Feb. 4, 2014, North Carolina Court of Appeals

More Blog Entries
Average Salaries for the Most Dangerous U.S. Job, Oct. 31, 2014, Winston-Salem Workers’ Compensation Lawyer Blog

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