Trucker's failure to secure employer's consent to settlement ends further benefits

Under Indiana law, an employer's liability for an employee's workers' compensation benefits terminates if the employee settles a claim against a third party for the same injury without first obtaining the employer's consent to the settlement.

Case name: Smith v. Champion Trucking Co., Inc., No. 93S02-0906-EX-276 (Ind. 04/15/10).

Ruling: The Indiana Supreme Court upheld the Workers' Compensation Board's decision dismissing the employee's application to adjust his claim for permanent impairment and additional medical expenses. His failure to obtain the employer's consent to a third-party settlement relieved the employer from further workers' compensation liability.

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What it means: Under Indiana law, an employer's liability for an employee's workers' compensation benefits terminates if the employee settles a claim against a third party for the same injury without first obtaining the employer's consent to the settlement.

Summary: A truck driver was injured in Ohio and sued the third-party motorist at fault. He settled the case with the motorist for $10,342 because the motorist had only $12,000 in liability coverage. Although the employee's attorney notified the employer of the employee's intention to sue the motorist, he did not inform the employer of the time and place of the settlement negotiations, nor did the employer take part in the negotiations. Shortly after the settlement, the employee was told by a neurosurgeon that he had a potential permanent impairment that would warrant additional workers' compensation benefits. The Indiana Supreme Court upheld the dismissal of the employee's application for adjustment of his claim. His failure to obtain the employer's consent to the third-party settlement terminated the employer's liability.

The court explained that by settling without the employer's consent, the employee foreclosed the employer's ability to recover from the motorist. The employee "proceeded to consummate the settlement in the face of a long line of cases holding that his course of action could produce a forfeiture of claims to additional compensation," the court said.

The court also rejected the employee's argument that the "absolute bar" provisions did not apply where the amount received from the third party exceeds the total workers' compensation claim. It noted that "the unequivocal bar language is in no way qualified" by whether the employer can be reimbursed from the settlement proceeds.

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June 10, 2010

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