NC Appeals Court Rules on Employer Lien of Third-Party Damages

In a workers’ compensation case that involves third-party negligence, the employee can seek damages from that third-party. This is usually a good idea, if that option is available, because the amount of compensable damages in a personal injury lawsuit are typically over and above what one might receive in a workers’ compensation claim. car accident

However, one must note that whatever damages you collect from that third party, your employer may retain a lien on the portion it already paid. So for example, your employer covers $50,000 in medical expenses through workers’ compensation and you later win an injury lawsuit against the third-party for $150,000 – which includes $50,000 for medical expenses. Your employer would be entitled to collect its $50,000, and you would only be entitled to collect $100,000.

In a recent case out of the North Carolina Court of Appeals, the court ruled that a defendant ordered to pay an employer directly from an injury judgment was entitled to have the matter reviewed by the superior court. 

According to court records, employee was driving on Highway 86 in North Carolina one August afternoon when his truck, a company vehicle owned by his employer, was struck in the rear by a vehicle operated by another driver. That rear impact caused the worker to strike another vehicle, and worker suffered injuries as a result of the truck accident. Specifically, he suffered a neck injury and needed extensive medication and physical therapy.

The worker collected workers’ compensation insurance and then subsequently filed a personal injury lawsuit against defendant driver.

At trial, evidence showed employee received approximately $7,500 in workers’ compensation benefits. Jurors returned a verdict in favor of plaintiff, determining the driver who caused the rear-end collision was negligent, and awarded plaintiff $11,000.

Initially, the judge reduced plaintiff’s award to the difference between the jury verdict and the amount he’d received via workers’ compensation. However, the judge later amended that verdict and found that the $7,500 payment should be awarded to the employer, while the remaining amount should go to the worker.

Driver appealed. There were a number of amended pre-trial and post-trial orders, and, ultimately, the parties agreed to a lump sum settlement of $15,650.

Subsequent to that, unnamed defendants filed a motion to collect their portion of that lien.

Defendant also filed a motion to determine the workers’ compensation lien in superior court. The judge in that case ruled the matter had already been decided and that to take on that issue would have been res judicata and the court had no jurisdiction to decide this issue.

Defendant appealed, arguing only that the judge erred in denying his motion to determine the amount of unnamed defendants’ lien. The appellate court agreed.

The appeals court noted that the workers’ compensation system was never intended to be a windfall for workers, which is the whole purpose of having the lien. Injured workers have an exclusive right of third-party liability lawsuits in the first year of a claim, but whatever they earn that would otherwise be double-recovery is subject to a subrogation lien.

The crux of defendant’s argument was that res judicata was not applicable here. The appellate court agreed, and remanded the case for further review.

Contact the Carolina workers’ compensation lawyers at the Lee Law Offices by calling 800-887-1965.

Additional Resources:

Murray v. Moody, March 7, 2017, North Carolina Court of Appeals

More Blog Entries:

Study: Hispanic Immigrants, Black Workers at Highest Injury Risk, March 10, 2017, Workers’ Compensation Attorney Blog

Contact Information