Federal District Court Holds Workers Comp Carrier Not Entitled To Third-Party Recovery Paid For Pain And Suffering

| Jan 7, 2014 | Firm News

In a case of first impression in Rhode Island, the federal district court has held that a workers compensation carrier is not subrogated to the worker’s third-party recovery to the extent it was paid for pain and suffering. The court held the carrier was entitled to reimbursement for the amounts paid for medicals bills and lost earnings. It said it must hold an evidentiary hearing to determine the apportionment.

In September 2004, plaintiff was injured at work. The workers compensation carrier (“Carrier”) paid a total of $763,762.45 comprised of $497,848.07 for medical bills and $265,914.38 for lost wages. Plaintiff then filed a Superior Court lawsuit against third-party allegedly responsible for his injury. His alleged damages included medical bills, unreimbursed lost wages beyond what Carrier paid and pain and suffering. He settled with one defendant for $80,000 and reimbursed Carrier $38,122 by agreement. Two other defendants offered to settle for $150,000 and deposited the sum into the registry of the Superior Court pending a resolution of the subject dispute.

Plaintiff filed an action in Superior Court seeking a declaration as to the division of the settlement proceeds. Carrier removed the action to federal court. The court held that a Rhode Island statute, R.I.G.L. §28-25-58, limits Carrier’s reimbursement to the extent of the compensation paid. Since workers compensation payments in Rhode Island do not include pain and suffering, the carrier is not entitled to reimbursement form a third-party recovery to the extent it is paid for the worker’s pain and suffering. The court relied on a Massachusetts appellate court decision, Curry v. Great American Insurance Co., 954 N.E.2d 589 (Mass.App. 2011). The court said it could not determine what apportionment of the settlement proceeds was appropriate without an evidentiary hearing.

It is unclear how the court will determine what portion of the third-party settlement was paid for pain and suffering as opposed to medicals and lost earnings. Presumably, the third-parties will object to discovery of their settlement analysis. This could leave the court with only the subjective evaluation of Plaintiff’s counsel as evidence.

Vellucci v. Miller, C.A. No. 13-91, 2013 WL 6837575 (D.R.I. Dec. 23, 2013)

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