Oregon Comp Board Reviews Third Party Claim Distribution

Posted on Jan 17, 2015

The Oregon Workers’ Compensation Board recently looked at an issue regarding the distribution of a “third-party” settlement.

A “third-party claim” in the Oregon Workers’ Compensation system occurs when a worker is injured on the job, but the injury is caused by some other person’s careless behavior. For example, if a delivery driver is struck by another motorist while making a delivery, and suffers an injury, the delivery driver has a claim for workers’ compensation benefits because he was injured on the job. However, this injured worker also has a “third-party” claim against the person who caused the collision.

When an injured worker has a third party claim, he has obligations to the insurance carrier. Basically, the injured worker may pursue the claim directly against the negligent or careless party. However, the injured worker must reimburse the workers’ compensation insurance carrier for benefits that it provided to the injured worker.

There are statutes and rules in place that govern how much the injured worker is required to reimburse the workers’ compensation carrier out of any recovery from the claim made against the responsible or careless party. Sometimes, there is no dispute about the amount of required reimbursement. Sometimes, there is.

In this case, an injured worker made a claim against a third party, but the injured worker’ spouse also made a claim for a “loss of consortium.” A loss of consortium claim is a claim for damages suffered by a spouse or a family member of a person who has been injured or killed as result of someone else’s careless or otherwise wrongful conduct.  This settlement was a combined settlement. In other words, the settlement encompassed both the injured worker’s damage, but also the losses suffered by the spouse. This is important because the portion of the settlement for spouse’s claim would not be subject to reimbursement to the workers’ compensation carrier.

The Board had to resolve many procedural issues. The insurance company that paid benefits had previously sought a hearing to determine the “just and proper” distribution of the settlement proceeds. However, the Board found that this request was premature. Several years elapsed, and the insurance company again sought a hearing. It also provided an affidavit discussing how the settlement should be apportioned. The Board allowed the second hearing, and also allowed the affidavit to be considered.

Unfortunately, this matter came to hearing because the parties could not come to some agreement about how to distribute the settlement proceeds. The Board emphasized that it would have preferred that the parties come to some agreement. Because an affidavit was submitted, the Board found that the injured worker had a right to cross-examine the person making the affidavit. As a result, the case is sent back to the hearings office for another hearing.

In an effort to avoid these kinds of disagreements, the Board suggested that in the future, parties involved in combined settlements like this could avoid protracted litigation. One option is for the insurance company to disapprove a proposed settlement until there is some determination as to what part of the settlement is for the injured worker, and what part of the settlement is for the spouse. If a case was submitted to the Board like this in the future, the Board would likely refuse to approve any settlement until there was a specific allocation of the settlement between the spouse and the injured worker.

Most of the time, third-party settlement distribution issues do not go this far. However, in some cases, it makes sense to have the settlement evaluated before seeking approval from the workers’ compensation carrier.

If you have an accepted workers’ compensation claim, and are looking at a potential third-party claim, give us a call at 503-325-8600. There are many issues surrounding third-party claims, and we can help you understand your claim.