After foiled attempt to deny benefits, Wal-Mart entitled to subrogation credit
Case name: Wal-Mart Stores, Inc. v. Wells, et al., No. 2009-CA-001682-WC (Ky. Ct. App. 02/19/10).
Ruling: The Kentucky Court of Appeals affirmed an award of workers' compensation benefits but held that Wal-Mart Stores Inc. had a subrogation right against the proceeds the worker received in a $900,000 civil settlement.
What it means: According to Kentucky law, an injured worker can pursue a simultaneous civil action against a third party and a workers' compensation claim against his employer, but the employer has a right to subrogation against the proceeds recovered in the civil action that duplicate the workers' compensation benefits.
Summary: A Wal-Mart employee suffered injuries from exposure to carbon monoxide when two contractors performed renovations in a non-ventilated freezer. The employee simultaneously filed a workers' compensation claim against Wal-Mart and civil actions against the two contractors. The civil actions were resolved first, with one contractor settling for $500,000 and the other for $400,000. On the workers' compensation claim, an administrative law judge awarded the employee $440,659 in income and medical benefits from Wal-Mart. Wal-Mart argued that the employee could pursue a workers' compensation claim or a civil claim, but not both. The Kentucky Court of Appeals rejected Wal-Mart's argument. The court explained that a worker can collect awards in a civil action and workers' compensation benefits but cannot collect a civil award that mirrors workers' compensation benefits.
If an employee does pursue both claims, the employer has a right to subrogation against the proceeds recovered in the civil action, the court explained. From the $900,000 civil award, the ALJ determined that $444,080 duplicated the employee's workers' compensation benefits. In Kentucky, the employee's legal expenses are deducted from the employer's portion of the recovery. These fees totaled $317,268. The court affirmed the finding that Wal-Mart was entitled to a $126,812 subrogation credit.
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April 1, 2010
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