New Way Found to Increase Employers’ Workers’ Comp Costs
Most lawmakers understand that the state’s budget crisis and poor economy should stop costly legislation from being seriously considered this year. Obvious economic obstacles, however, have actually inspired some legislators to devise new ways to increase employers’ costs.
One such proposal is HB-6683, which would needlessly increase employers’ costs in workers’ compensation cases by making them pay a percentage of their employee’s legal fees.
For example, an employee who has an auto accident while in a company car has a right to receive medical, wage replacement, and other workers’ comp benefits from the employer. While the employee can sue the third party, who actually caused the injury, the employer also has a right to be compensated for its damages and expenses through a creditor’s lien in the third-party lawsuit.
Under HB-6683, if the company joins or “intervenes” in the lawsuit, it would have to pay a percentage of the injured employees’ attorney’s fees on top of its own legal and other expenses. That means a business would face triple workers’ comp costs: the cost of workers’ compensation benefits paid to the injured employee; legal fees to its own attorney to secure a lien; and then a percentage of the employee’s legal fees.
HB-6683 is unfair and costly to employers, and here’s why:
• No other types of liens require the creditor to pay for the legal fees of the original plaintiff; workers’ compensation cases should be treated similarly.
• If employers are forced to pay more legal fees, fewer will try to recover the full extent of their expenses. Since employers often agree to reduce their lien amounts in order to facilitate case settlement, HB-6683 would hinder speedy resolution of third-party claims by severely diminishing, if not altogether eliminating, any incentive for the employer to take less than its full lien amount.
• When a business joins in a third-party lawsuit, generally no one protects its interests. The employee’s attorney may even become an adverse party with legal interests that conflict with the employer’s. If the employer does not retain legal counsel, it may end up with an uncollectable or seriously reduced lien.
Employers have the right to intervene in lawsuits to protect their own interests without penalty. HB-6683 will make third-party claims litigation longer for employees, more burdensome to the court system, and more costly to employers (including the state and municipalities) at a time when business costs are rising and revenue is falling.
CBIA urges lawmakers to reject HB-6683 as highly unnecessary and costly. For more information, contact CBIA’s Kia Murrell at 860-244-1931 or firstname.lastname@example.org.
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