A staple of risk management advice that lawyers have long given to claims professionals is that they should be serious about, and attentive to, the potential for subrogation on claims.
That advice was again provided recently, at a conference, by top experts in this particular niche of the workers' compensation field — including the subrogation guru Gary Wickert, Esq. See "Top Subrogation Mistakes,” https://www.workerscompensation.com/news_read.php?id=26290&type=7 (posting of May 25, 2017).
A top 10 summary of the panel’s comments has now appeared on the Safety National website, as reproduced at the workerscompensation.com link reproduced above. (I’ve reworded their admonitions!)
These practice hints would be invaluable to share with young attorneys or even sophisticated law students who are entering the field.
1. Don’t delay in engaging skilled subrogation counsel. The adjuster who is being ignored by
claimant or his counsel regarding a third party action, or potential for the same, should not delay until the 11th hour to take action on a possible subrogation action. The risks of delay are that evidence may be hard to collect and the tort action statute of limitations may expire.
2. Scrutinize the accident/injury circumstances to discern whether a third-party action, and the potential for subrogation, are present. If necessary, recruit counsel to assist. “Attorneys,” the authors declare, “have recovered sizable amounts in third party claims in cases which initially appeared to [feature] no third party.”
3. The subrogation investigation must be immediate and meticulous. The hours and days immediately after the casualty, the authors insist, “are the key to potential recovery.”
4. Avoid Discount “Vendors.” Subrogation lawyers who promote themselves by advertising a small fee should be avoided. “Low rate vendors,” the authors state, “focus on speed” and may hence not be as thorough as they should.
5. If plaintiff’s counsel is protecting the carrier’s interest, vigilance is still merited. The authors recommend the carrier have its own counsel, at least in serious cases (This writer’s inference.) After all, no lawyer can really serve two masters. If plaintiffs’ counsel does take on this role, a contract should exist, “spelling out the expectations …..”
6. Beware the subrogation waivers you may have (unfortunately) agreed to. Insureds sometimes ask that the carrier waive its right to subrogation and, when the carrier agrees, it demands a premium enhancement. If the carrier has allowed a waiver in a case, so be it, but the authors point out, grimly, that such waivers do, indeed, “eliminate your opportunity for recovery.” However, they also note that care should be undertaken when such waivers are given in the first place. The language must not be so broad that it allows the insured to be impleaded. When that happens, exposure could follow for the carrier under Part 2 of the Policy (Employers Liability).
7. Any required notice rules must be promptly satisfied. As far as the authors are concerned, all potential third parties should be placed on any required notice of potential suit. Also, for state or municipal liability to accrue, many laws require that notice be provided. These notice limits may be shorter than the actual statute of limitations. Also, states often have required language for the notice letters and if you do not follow this precisely potential recovery could be barred.
8. Consider the potential situs of the third-party action. Laws of the various states differ with regard to the cognizability of subrogation claims. As Mr. Wickert has observed elsewhere recently, for example, some states do not allow subrogation until the injured worker/plaintiff has been “made whole.”
9. Don’t rush into a subrogation waiver in the C&R just to pare off reserves. The authors assert, “Carriers are too quick to waive liens as they see it as an easy opportunity to take down a reserve.” The lien, in fact, has value, and responsible adjustment calls for close case evaluation. They counsel, “Don’t give up all or part of it for nothing.”
10. Hire the right expert. If the carrier is to be in charge of the subrogation suit, the correct expert must be retained. In the workers’ compensation/personal context, of course, a key expert is a physician who must be prepared to testify in court.