Proposal will Hike Workers’ Comp Costs for Employers

A proposal awaiting action in the House would increase employers’ costs by forcing them to pay a percentage of their employee’s legal fees in certain workers’ compensation claims cases.

Under the current workers’ compensation system, when a third party causes or contributes to an employee’s injury, the employee can bring a lawsuit against that person and the employer can secure a lien on the lawsuit proceeds to recover damages and funds paid out to the employee in workers’ comp benefits.

Under HB-6683, however, an employer joined in the lawsuit would have to pay a percentage of the attorney’s fees for the injured employee, on top of other legal expenses.

That means employers would face triple workers’ comp costs—the cost of benefits paid to the injured employee, legal fees to their own attorney to secure a lien, and a percentage of the employee’s legal fees.

According to the bill’s fiscal note, the proposal would cost the state (as an employer) $430,000 per year in lost revenue and between $1.6 million and $2.5 million for cities and towns if they are made subject to it.

Precisely because of that high cost, however, a new amendment would exclude the state and municipalities from the bill—an action clearly unfair to private-sector employers.

What’s more, HB-6683 is unfair to employers because:

• No other types of liens require the creditor to pay for the legal fees of the original plaintiff.
• Forcing them to pay more legal fees means fewer employers will try to recover the full extent of their expenses.
• When employers join in a third-party lawsuit, generally no one protects their interests. If employers do not retain their own legal counsel, they could end up with an uncollectable or seriously reduced lien.

Employers have the right to intervene in lawsuits to protect their own interests without penalty. Liens are helpful because they provide an effective alternative to filing additional lawsuits; lien recovery helps keep workers’ comp premiums low by allowing insurers to recoup some of their costs without passing them on to consumers.

HB-6683 will make third-party claims litigation longer for employees, more burdensome to the court system and more costly to employers.

CBIA urges lawmakers to reject HB 6683. For more information, contact CBIA’s Kia Murrell at 860-244-1931 or kia.murrell@cbia.com. .