A Primer on Workers' Compensation Subrogation
| Publication year | 1992 |
| Pages | 1931 |
1992, September, Pg. 1931. A Primer on Workers' Compensation Subrogation
Workers' compensation subrogation is a complicated and confusing area of Colorado law. Although the subrogation statute has been in existence since the first workers' compensation legislation, much case law has been devoted to sorting out the relationship which is created by it. Further, with the legislature's substantial revision of tort law in Colorado, the situation has become even more complicated. Any time a worker sustains an injury which was caused by someone who is not a co-employee or an employer, that worker is entitled to bring a suit for the recovery of damages. However, that employee is required to repay benefits paid to or on behalf of the worker under the Workers' Compensation Act, codified at Articles 40--47 of Title 8 of the Colorado Revised Statutes.
This article discusses the statutes and key cases dealing with third-party claims and subrogation.
CRS §8--41--203 (formerly §8--52--108) provides for subrogation and assignment in workers' compensation claims. The statute allows an injured employee to bring a suit against another not in the same employ. The proceeds of the suit then are used to repay benefits paid by the compensation carrier, with the remainder going to the employee. The first issue to be determined is who comprises "another not in the same employ."
The employee is entitled to bring suit against another for negligence or "wrong." Accordingly, claimants can bring claims both for simple negligence (such as an automobile accident or products liability) and for intentional acts and other "wrongs." The statute itself is uncomplicated until the claimant is injured by a co-employee acting outside the course and scope of the employees' duties or is injured by a co-employee before or after working hours.
If the claimant is injured by a co-employee who is acting within the course and scope of his or her employment at the time of the act, the claimant's third-party claim will be barred.(fn1) As to intentional acts by employers, it must be determined whether the intentional act of the employer arose out of the employment relationship. If the act did arise out of that relationship, claims by the claimant for third-party liability against the employer will be barred.(fn2) The co-employee immunity rule does not apply if the conduct originated from a matter personal to the alleged tortfeasor or originated from a neutral source unrelated to the employment relationship.(fn3)
Further, the Colorado Supreme Court has held that a doctor employed by the employer is not considered a co-employee for the purposes of co-employee immunity under the Workers' Compensation Act. In Wright v. District Court,(fn4) the court relied on the "dual capacity" doctrine to find that the physician was acting as both a doctor and a co-employee at the time of the injury. The court found that the malpractice occurred during the physician-patient relationship, as opposed to the co-employee relationship. Therefore, the doctor's malpractice was not immune from liability.
Finally, the Colorado Supreme Court has held that the acts of insurance adjusters in adjusting the workers' compensation claim do not arise in the employment relationship. Thus, claims resulting from such acts are not barred by the Workers' Compensation Act.(fn5)
The statute also becomes complicated in areas dealing with subcontractors and general contractors and whether employees of different contractors can be considered "in the same employ." Primarily, the courts look at whether a negligent employee is suing an employer who potentially could be liable for benefits under the Workers' Compensation Act. Accordingly, in cases of general contractor liability, where the claimant is able to "go up the ladder" to the general contractor to find coverage for a work-related injury, that general contractor will be held to be entitled to the exclusivity provision of the Workers' Compensation Act.(fn6)
Because subcontractors of the claimant's employer cannot be held responsible for payment of compensation under CRS §8--41--401, they are not entitled to the bar against suits in tort. This also applies to sister subcontractors. Accordingly, this creates the rule of "sideways and down, but not up." In other words, a claimant may bring a claim against a sister subcontractor or against a subcontractor, but may not proceed against a general contractor.(fn7)
The claimant also would be entitled to bring a claim against subsidiary or parent corporations, or sister subsidiaries, for the negligence of their employees.(fn8) In the case of Bain v. Doyle,(fn9) the Colorado Court of Appeals held that where an owner of real property leases that property to any lessee for the purpose of conducting business, the statutory employer exclusion against civil tort actions does not apply.
Pursuant to CRS §8--41--401(3), an independent contractor may choose to be exempt from workers' compensation. However, that independent contractor will not be entitled to proceed against a co-employee or general contractor for negligence in excess of $15,000. Thus, those who would be entitled to a complete bar against claims for negligence now may be liable for a total amount of $15,000.
Under the 1969 case of Continental Sales v. Stokesbury,(fn10) the Colorado Supreme Court held that a claimant may make a claim against a borrowing employer for negligence. Accordingly, in a situation where a day service...
To continue reading
Request your trial