Workers’ Compensation Subrogation – Expect a Push to Settle Subrogation Claims

The Colorado Supreme Court has held that an alleged at fault third party, who settles a Workers’ Compensation Subrogation lien or claim, under C.R.S. § 8-41-203, extinguishes the injured employee’s claim entirely for past medical expenses that were paid for under the Workers’ Compensation Act.

This holding will create a significant incentive for at-fault third parties and their insurance carriers, to settle workers’ compensation liens early, and without the involvement of the injured employee. The decision will also provide a significant incentive for Respondents to pursue their liens or intervene in the claimant’s litigation as it will be more cost effective to do so due to the value the Colorado Supreme Court.

Pollart Miller expects workers’ compensation adjusters, subrogation adjusters and employers to see a significant increase in parties requesting to settle these liens earlier in litigation and more often.  It may also result in paying lower settlement amounts in exchange for re-assignment of the subrogation liens back to the employee.

Prior to this case, injured employees had successfully argued that they should be permitted to claim damages for past medical expenses in the amounts that would regularly be billed by medical providers, rather than the reduced amounts paid under the Workers’ Compensation Act’s Fee Schedule.  This had the effect of significantly increasing the employees’ claimed damages in civil matters that could be presented to a jury. In some cases, the employee’s claimed damages were three to four times higher at trial than the amount of the benefits.

Given the Colorado Supreme Court’s holding that if the alleged at-fault third party settles the workers’ compensation lien with the Respondents, the injured employee is no longer permitted to make a claim for any past medical services that were paid for under the Act. This holding significantly decreases the employee’s recoverable damages at trial.

(Scholle v. Delta Air Lines, 2021 CO 20)

Three Justices did dissent, and it is expected that the Plaintiffs’ Bar will strongly press the Colorado Legislature to address and reverse this decision with statutory changes to Colorado’s Made Whole Doctrine, or to the Colorado Workers’ Compensation Act.

Now however, the current state of the law will make settling workers’ compensation liens very attractive to at fault third parties and their insurers, and should provide Colorado Workers’ Compensation lien holders a better opportunity to recover higher amounts in settlement, and an opportunity to recover those amounts earlier in the litigation process.

Please contact Ian Ray Mitchell at our office to learn about the steps you’ll need to consider to take advantage of, and protect your interests in subrogation liens and recoveries go forward.