§10.16 Distribution of Proceeds

• Library: Workers' Compensation Law Deskbook Vol. 2 (2020 Ed.)

C. (§10.16) Distribution of Proceeds

When a recovery is made against a third party, the distribution of the proceeds of that recovery is governed by a formula first set forth in Ruediger v. Kallmeyer Brothers Service, 501 S.W.2d 56 (Mo. banc 1973), but now modified in § 287.150, RSMo 2016, to reduce subrogation for the employee’s comparative fault and to also take into account third-party recoveries made by individuals not entitled to workers’ compensation benefits, such as adult children in a wrongful death lawsuit. The rule is set forth in Ruediger as follows:

1. The expenses of the third-party litigation are first deducted from the third-party recovery.

2. The balance is apportioned in the same ratio that the amount paid by the employer at the time of the third-party recovery bears to the total amount recovered from the third party.

3. The amount due each is paid.

4. The amount paid the employee is treated as an advance payment on account of any future installments of compensation.

5. The employee is entitled to future compensation benefits if the amount paid to the employee as an advance is exhausted.

Ruediger, 501 S.W.2d at 59.

Revisions to § 287.150 since 1993 modified the formula in Ruediger. The employee’s comparative fault must be determined by a trier of fact in order to reduce the employer’s third-party subrogation interest. Section 287.150.3. Settlement after a finding of comparative fault made by the trier of fact preserves the right of the employee to reduce the subrogation interest using the assessment of comparative fault made by the trier of fact. Kerperien v. Lumberman’s Mut. Cas. Co., 100 S.W.3d 778 (Mo. banc 2003); see also Ryder Integrated Logistics, Inc. v. Royse, 125 F. Supp. 2d 375 (E.D. Mo. 2000).

Section 287.150 does not generally provide for a reduction or negation of subrogation when the employer is at fault for the injury or death—except only when the injury or death resulted from occupational disease due to toxic exposure from the employer’s workplace. Challenges to subrogation have been unsuccessfully made based on the employer’s conduct. In Akers v. Warson Garden Apartments, 961 S.W.2d 50 (Mo. banc 1998), overruled on other grounds by Hampton v. Big Boy Steel Erection, 121 S.W.3d 220 (Mo. banc 2003), the employee’s dependents sought workers’ compensation benefits, plus a 15% penalty, and argued that the employer should not be entitled to any subrogation interest on a third-party recovery because the employer had...