Subrogation issues are often among the most complicated aspects of a workers’ compensation claim. As simply defined by Black’s Law Dictionary, subrogation allows one party to recoup costs from another. In workers’ compensation claims, subrogation may allow an insurer or employer to recover costs paid from another party.

One of the key things to know about subrogation is that a party may be able to claim a “future credit” as a consequence of a claimant’s recovery in a third-party legal action. In this blog post, our Fresno, CA workers’ compensation defense lawyers provide a more detailed explanation of subrogation and future credits.

Third-Party Liability Claims and Workers’ Compensation

In California, a workers’ compensation claim is generally an employee’s sole legal remedy against the business or organization that employs them. In exchange for access to no-fault workers’ compensation benefits, employees lose their right to file a personal injury lawsuit against their employer.

However, all workers retain their ability to file a personal injury claim directly against any other negligent party, including drivers, property owners, subcontractors, and equipment manufacturers. If an injured employee recovers compensation from a negligent third party, their workers’ compensation carrier may be entitled to a reimbursement.

What to Know About California Labor Code Section 3858

Under California law (Labor Code Section 3858), an insurer/employer may be entitled to claim a future credit after the conclusion of a third-party action by a claimant. When a workers’ compensation claimant recovers financial support from a third party—after legal fees and other expenses are satisfied—a carrier may be entitled to a reimbursement under section 3858 and also relief from any continuing obligation to pay the underlying claim.

Future Credits: Three Main Paths After a Third-Party Claim is Resolved

If a workers’ compensation claimant resolves a personal injury case against a third-party tortfeasor—either by a settlement or a verdict—the workers’ compensation carrier’s subrogation case will generally fall into one of three main categories:

  • Seek to recover a sum for a past lien and enter into a Compromise and Release (settlement) of the underlying workers’ compensation claim;
  • Seek to recover a sum for lien recovery and stipulated an additional amount as a future credit against the workers’ compensation claim; or
  • Deal with a dispute from the claimant. In some cases, claimants try to fight against a carrier’s right to a lien and/or their right to a future credit.

If there is a dispute over a workers’ compensation lien or future credits, then the case may go to a trial court. Most often, this occurs when there is an allegation that the employer was also negligent. An employer’s ability to take a future credit could be affected by a finding of negligence.

Call Our Fresno, CA Workers’ Comp Defense Team for Immediate Help

At Yrulegui & Roberts, we are proud to be Central California’s most trusted workers’ compensation defense firm. Our attorneys provide zealous, solutions-driven legal advocacy. Navigating subrogation issues can be complicated, professional guidance and advice is available. If you have questions about workers’ compensation subrogation and future credits, we can help. Contact us now for more information. Our offices are located in Fresno, Bakersfield, and Sacramento.