Insurance companies, workers’ compensation ones included, are in the money-making business. Their goal is to profit from collecting insurance premiums, not incur further debt.
Maryland workers’ comp insurance providers pursue a debt recovery process called subrogation whenever possible to minimize or eliminate their losses. Below, we’ll provide a more in-depth explanation of what the subrogation process entails and who it impacts the most.
What Is Subrogation?
Subrogation is a legal construct that provides creditors, such as workers’ comp or auto insurance companies, who make payments on behalf of others, such as paying on claims, with the means to seek relief for the damages or losses they’ve sustained. This so-called equitable doctrine minimizes the chance of some other party enjoying unjust enrichment, which means unfairly benefiting from a financial arrangement.
How Does the Subrogation Doctrine Apply in Maryland Workers’ Comp Cases?
The Annotated Code of Maryland Insurance Article Section 6-203 spells out how companies can become group self-insured for workers’ comp purposes if, among other factors, they can produce a financial statement showing they possess $1,000,000 or more in net assets.
Maryland law allows self-insured employers and any others required to maintain coverage through a workers’ comp carrier to seek reimbursement for any benefits they’ve paid out if evidence suggests that a third party caused a worker’s injury.
How Does Subrogation Affect Your Workers’ Comp Claim in Maryland?
If you get hurt on the job, you can expect your self-insured employer or their workers’ comp insurer to pay your medical bills and at least a portion of the lost wages you’ve sustained. However, you might also be eligible to file suit against one of the following third parties for their role in causing your injuries:
- A manufacturer of a product that maimed you
- A colleague that caused you harm
- A motorist who struck you while you were operating a vehicle for your job
- A defective car’s manufacturer that left you hurt
- A property or business owner that didn’t adequately maintain their premises, resulting in your personal injury
If you ultimately filed a claim against a third party like one of the ones above and secured a settlement, the employer or their workers’ comp insurer would be entitled under Maryland law to receive reimbursement for the monies they’ve previously paid out. They could place a lien on any award you were to receive from that third party. Thus, this explains why workers’ compensation subrogation is often called a workers’ comp lien.
The goal of having this subrogation doctrine in place in Maryland is to ensure the injured employee doesn’t receive any additional third-party personal injury awards at the expense of costing the workers’ comp carrier to suffer an unnecessary financial loss.
How Soon Must a Maryland Subrogation Lawsuit Be Filed?
There’s a three-year statute of limitations that applies to Maryland workers’ compensation lien cases that stem from negligence that results in a worker’s personal injury or wrongful death.
That same 3-year statute of limitations also applies if a government entity is the negligent party in the Maryland subrogation action. There is an additional requirement that applies to subrogation actions filed against government entities outlined in Maryland Code Annotated Section 12-106. Plaintiffs must provide written notice of their intention to sue within a year of the incident occurring. However, this obligation isn’t applicable to a third-party claim, for example.
Another detail to know about statutes of limitations as they apply to Maryland workers’ comp subrogation matters is that insurers retain the exclusive rights to hold third parties liable for up to two months after the issuance of a settlement per the Labor and Employment Maryland Code Annotated Section 9-902. Injured employees or the insurer are eligible to file suit once those two months have lapsed. However, the employer qualifies for a statutory lien on any compensation the worker recovers in those instances.
How the Maryland Contributory Negligence Statute Applies to Workers’ Comp Subrogation Cases
Maryland subscribes to the contributory negligence doctrine instead of a comparative negligence one when personal injury cases are concerned. Personal injury victims, including workers’ comp ones, are generally not entitled to recover compensation if they’re deemed at least 1% liable for the injury accident that occurred.
The Role a Workers’ Compensation Lawyer Plays in Legal Matters Involving Subrogation
Any unexpected injury can be overwhelming to deal with. However, most work injury victims find some solace in knowing that they will likely qualify for workers’ compensation benefits to cover their medical expenses, some of their lost wages, and other costs they incur.
It can be confusing if you go to settle a claim and find out that your self-insured employer or their insurance company has placed a workers’ comp lien on your prospective award. This is where being represented by a lawyer like ours at Belsky Weinberg & Horowitz, LLC can be helpful. Our attorneys often negotiate significantly reduced settlements compared to what those insurers and employers demand as reimbursement.
Dealing with third-party liability workers’ compensation matters in Maryland can be complex, which is why we recommend that you don’t go at it alone. Instead, reach out to one of our attorneys in our Baltimore law office for help in navigating such legal matters to ensure your rights to compensation are preserved.