Employee blocked from getting double recovery on third-party claim

Under Indiana law, when an employee receives an award from a third party that is greater than the workers' compensation benefits received by the employee, a lien is created for the benefit of the employer or the employer's insurance carrier.

Case name: Travelers Indemnity Co. of America v. Jarrells, No. 29A02-0807-CV-669 (Ind. Ct. App. 05/21/09).

Ruling: The Indiana Court of Appeals reversed a finding by the trial court and remanded the case to determine the lien amount due to the insurance carrier. The Court of Appeals held that the carrier was entitled to a lien and/or reimbursement from the employee's personal injury recovery from a contractor.

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What it means: Under Indiana law, when an employee receives an award from a third party that is greater than the workers' compensation benefits received by the employee, a lien is created for the benefit of the employer or the employer's insurance carrier.

Summary: An employee for a steel erection firm was severely injured when a wall fell on him while working at a construction site. The firm's insurance carrier did not dispute that the accident occurred in the scope of his employment and paid the employee's workers' compensation benefits in full, amounting to $66,000. The employee brought a third-party personal injury action against the site's general contractor and won a $508,750 judgment in a jury trial. The carrier asserted a lien on the award to recoup the benefit it paid the employee. It argued that the employee received a double recovery and that the jury did not understand the instructions. The employee contended that the instructions were clear and the jury had taken the employee's receipt of workers' comp benefits into consideration when it made its award.

The Indiana Court of Appeals found that the carrier was entitled to a lien against the jury's award. It held that the carrier was entitled to repayment for the benefits it paid the employee. Otherwise, the employee would receive a double recovery from the third-party suit and the workers' compensation benefits.

The court determined that while the instructions may have been confusing, the court's job was not to second-guess the jury. The court ruled the employee must reimburse the workers' compensation carrier and keep the remainder of the award.

July 6, 2009

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