State Supreme Court Reverses Workers’ Comp Ruling

The Connecticut Supreme Court has reversed a state Workers’ Compensation Review Board decision in favor of an injured employee.
The issue in Patrick Callaghan v. Car Parts International LLC was whether an employer who pays post-judgment workers’ compensation benefits is entitled to a credit for the injured employee’s statutory share of a third-party lawsuit.
In its July 31 decision, the state Supreme Court ruled that employers are not entitled to such a credit.
It reversed the Compensation Review Board’s decision and sent the matter back to the board, directing it to “reverse the decision of the commissioner.”
Callaghan was injured in a car accident at work, sued a third party responsible for the crash, and was awarded $100,000 in the third-party suit.
The issue was whether he could keep the statutory 30% of proceeds from the lawsuit after reimbursing his employer for money it paid toward his injury under workers’ compensation.
After paying his attorneys and Car Parts International’s share of the lawsuit, Callaghan’s share was $22,000.
He needed further medical treatment but Car Parts International denied it, arguing it would amount to “double recovery.”

Third Party Damages

Under the Workers’ Compensation Act, when an employee is injured in a work-related accident, employers are required to pay certain benefits—such as medical expenses or compensation if any disability arose from the incident—to the injured employee in exchange for the employee not suing the employer.
When an employee’s injury is caused by a third-party, under the  act, the employer or the employee may sue to recover damages from the third-party responsible for the injuries.
When damages are awarded to the employee, the act requires the employer to be reimbursed from awarded damages for any workers’ compensation benefits the employer behalf of the injured employee.

The employer remains liable for any later workers' compensation benefits due the employee.
Car Parts International argued that allowing Callaghan to keep one-third of the net proceeds, regardless of how much the company is owed for reimbursement, constituted double recovery.
But the Supreme Court ruled otherwise, holding that if Callaghan sued the third-party tortfeasor, he is still entitled to retain one-third of the proceeds from the judgment for his benefit, even if the employer is owed more than what was recovered in the third-party action.

No Double Recovery

The court concluded that there is no double recovery with regards to awards of non-economic damages because those are not compensable under the act.
Car Parts argued that a moratorium on state law that said workers could receive a share of third-party lawsuits in workers' compensation injury cases would preclude them from paying further medical costs for Callaghan.
But the court, noting that workers' compensation does not pay for pain and suffering, said state law is intended to reward employees who sue third parties and to help insurers and employers recover some money.

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For more information, contact CBIA.s Louise DiCocco (203.589.6515)  | @LouiseDiCocco