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JENNIFER ANDRISEN SELZLER | CLAIMS ASSOCIATES, INC.

SUBROGRATION: It aff ects you

Subrogation is one of those insurance terms that you try to know enough about to be educated… but yet you don’t want to be an expert. It can be a complicated system with policy, statutes, and case law. You need to know enough to talk in general conversation, but do you really need to know what it’s all about? The short answer is YES!

Subrogation is the means in which the Fund receives reimbursement for payments. The Fund has the same rights afforded to the victim. In a workers’ compensation claim, the “victim” is the employee. If an employee is injured due to another’s negligence, the employee has the potential for recovery. Subrogation allows the Fund, which pays the benefi ts, to step into the shoes of the employee and have the same right of recovery as that employee. Subrogation allows the work comp benefi ts to be recovered from the tortfeasor or “wrong doer.”

The primary purpose of subrogation, according to the National Association of Subrogation Professionals, is “to prevent a victim from recovering twice for the same loss.” In a workers compensation claim example, the employee could receive work comp benefi ts and also pursue a liability settlement. The principal of subrogation

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SDCL 62-4-40 indicates that the insurer/provider may collect recovery “in his own name.” This means that the work comp carrier can pursue recovery regardless of the intention of the employee to pursue a liability claim.

SDCL 62-4-38 explains that if an employee receives a recovery from a third party, the recovery is an offset against any further workers compensation benefi ts.

It is important for all the people involved in a claim - employer, employee, claims person, and attorney - to understand the principle of subrogation and how South Dakota law re-enforces it. The SDML Workers Compensation Fund coverage document supports the principal with the following language:

Each member agrees that in the event of the payment of any loss by the Fund under this agreement, the Fund shall subrogate to the extent of such payment to all rights of the member against any person or other entity legally responsible for damages of or on said losses, and in such event, the member hereby agrees to render all reasonable assistance, other than pecuniary assistance, to effect recovery by the Fund under such right.

The Fund has a fi nancial interest in recovery since they paid the benefi ts. Claims Associates, Inc. attempts to identify any subrogation potential from criminal restitution to civil tort. This could be a police offi cer who was injured while someone was resisting arrest or a meter reader who slipped and fell on the ice or an employee involved in a motor vehicle accident. If workers’ compensation benefi ts are due, these benefi ts will NOT be effected. The employee does not lose any rights to use the work comp system. The Fund just gains the right to recover what they paid in benefi ts.

If a claim is submitted and you feel that a third party is responsible for the injury, please do not hesitate to discuss this further with our offi ce. There may or may not be a potential, but if we do not explore it, we will never know. ■