Five things you should know about subrogation in Texas Workers’ Compensation Cases
First Money Rule. “The first money paid [to] or recovered by the employee, or his representatives, belongs to the compensation carrier paying the compensation and until it is paid in full, the employee, or his representatives, have no right to any funds.’ Argonaut Insurance Company v. Baker, 87 S.W.3d 526 (Tex. 2002)
No R&N Limitation on Medical Paid. Section 417.002(a) requires that a compensation carrier be reimbursed out of any third-party recovery for all benefits paid for an injury. The statute does not limit reimbursement to only those benefits that were reasonable and necessary. Since the injured worker receives the benefit of all amounts paid, the carrier is entitled to reimbursement without proving that the amounts paid to the worker or on his behalf were reasonable and necessary. Texas Workers’ Comp. Ins. Fund v. Serrano, 962 S.W.2d 536 (Tex. 1998).
No Subrogation for SIF Payments. Payments made to the subsequent injury fund following a compensable death case where there are no beneficiaries are not considered to be “benefits,” and, therefore, a carrier does not have a right of subrogation. “The unique situation printed here is that no payments or benefits have been made by the association to appellee’s; in fact, it was stipulated that at the time of Aaron Myers death, he was a widower, and all three of his sons were adults and not dependent on him. Therefore, there was no statutory beneficiary under the workers’ compensation act who survived the employee, and the board properly ordered the association to pay the sum of $4,200 to the second injury fund… It has been held that benefits which the statute requires the association to pay are not compensation under the act, but are only payments into the fund for the benefit of those receiving a second injury under the terms of the act.” Texas Employers Insurance Association v. Myers, 496 SW2d 940 (Tex. Civ. App.–San Antonio 1973, no writ.)
No Subrogation in Coverage B Cases. A workers’ compensation carrier may not recoup its payments by asserting a statutory right of subrogation in an employee’s claim of an intentional injury against the employee’s employer (Coverage B or Part 2 Cases). Medina v. Herrera, 927 S.W.2d 597 (Tex. 1996).
Subrogation May be Available against a UM/UIM Carrier in Some Cases. The general rule in Texas, followed by most courts of appeals is that, while a workers’ compensation carrier has a right of subrogation against an employer’s underinsured motorist policy, it has no right of subrogation against the injured worker’s under insured motorists policy based on public policy concerns. See Casualty Reciprocal Exchange v. Demock, 130 S.W.3d 74 (Tex. App. – El Paso 2002, pet. denied).
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