Kolter No Title
| Publication year | 2002 |
| Citation | Vol. 2002 No. 09 |
September 2002. Kolter No Title
Mark H. Kolter, Esq.
Generally, the exclusive remedy doctrine in workers' compensation law restricts a worker who is injured on the job to the recovery of limited workers' compensation benefits as the only remedy for that injury. Tort claims for full damages are generally not permitted unless an exception to the exclusive remedy doc-trine exists in the particular case. A "third party action" is one such exception, where a tort claim may be brought by or on behalf of the injured worker against the person who caused the injury, who is known in the law as the "third party."
Third-party actions benefit injured workers because the workers typically obtain a substantially greater net recovery through full tort damages. The remedy for the injury is not restricted to workers' compensation benefits alone. Employers and workers' compensation insurers also have a major stake in identifying work injuries caused by third parties, because third-party actions provide a direct means for them to recover reimbursement from the third-party for any workers' compensation benefits paid. In effect, the law also allows employers and workers' compensation insurers to substitute any net payments received from the third party by the injured worker for future workers' compensation benefits that would otherwise be payable.(fn1) Thus, third-party actions generally foster cooperation between the injured employee, the employer, and the workers' compensation insurer, to achieve the common goal of holding the third party wrongdoer ("tort-feasor") responsible for losses caused by the injury. Losses to the employee, employer, and the workers' compensation insurer are thereby reduced or eliminated.
This article reviews the legal rules governing third party actions in Vermont. First, the exclusive remedy doctrine and its exceptions are examined in Parts I and II. Next the legal processes by which third-party actions are commenced are outlined in Part III. Finally, the sometimes complicated settlement issues in third-party actions are identified and analyzed in Part IV.
Historically Workers Compensation Is A "Limited Remedy"
The historic legislative compromise which underpins the exclusive remedy doctrine, and the workers' compensation system as a whole, is stated by Vermont Supreme Court Chief Justice Barney in Sienkiewycz vs. Dressell,(fn2) as follows:
The cost, delays and complications of recovery [by injured employees] under the old common law [tort system], with its rules relating to contributory negligence, fellow servant negligence and the like, too frequently meant that recovery for the ordinary employee was either out of reach or too little, too late. The legislature, following a national trend, set up a schedule of benefits for employee injury in a manner "expeditious and independent of proof of fault." In return for this surer and swifter compensation [through workers' compensation], the worker gives up his right to sue his employer [in a tort action].(fn3)
In theory then, the injured employee generally receives the swift and sure, though limited, remedy of workers' compensation, even if the injury was the employee's own fault. Workers' compensation is not a fault-based system. The employer, on the other hand, is generally protected from lawsuits by injured employees. Even if the worker's injury was caused by employer negligence, as a rule the injured employee's exclusive remedy is to receive workers' compensation benefits provided by the employer or its workers' compensation insurer.
Only Five Types of Workers' Compensation Benefits
A significant problem with this scheme is that injured employees are often left with substantial uncompensated losses when workers' compensation is the sole available remedy. In Vermont there are only five types of scheduled workers' compensation benefits.(fn4) These are: (1) temporary disability, paid as a wage replacement from the time of injury until the employee either returns to work or reaches a medical endpoint; (2) permanent disability, paid when a "permanent impairment"(fn5) is caused by the work injury, and intended to compensate for the employee's lost future earning capacity presumed to flow from the permanent injury; (3) medical expenses, for treating the work injury; (4) vocational rehabilitation services, intended to provide training or other assistance to return the employee to suitable work when the work injury prevents resumption of his or her pre-injury employment; and, (5) death benefits, including burial expenses and benefits for surviving spouses, dependent children and other dependents.(fn6)
In practice, workers' compensation medical benefits are usually adequate to pay for all necessary medical expenses for the treatment of any given work injury. The amount of compensation allowed for the other four scheduled benefits, however, is often inadequate to meet the intended goals.
Tort Damages Make the Injured Claimant "Whole"
The purpose of tort damages is to redress all harms, losses, and expenses suffered by the injured employee, and in that sense, to make the employee whole from the injury. For example, tort dam- ages generally include full compensation for all lost wages in the past and the future resulting from the injury. In the tort system there is no schedule of benefits limiting this recovery to anything less than the total actual wages lost. In contrast, under the workers' compensation schedule an injured worker's wage loss reimbursement is established by mathematical formulas which often limit the recovery for lost wages to far less than the claimant's true loss. Similarly, in a tort claim, a jury deter-mines the value of a permanent injury based upon the individual circumstances presented, not a pre-established schedule that does not account for individual circumstances. Numerous types of tort dam-ages are completely uncompensated by the workers' compensation benefit schedule. These include, for example, pain and suffering, lost enjoyment of life, emotional distress, and loss of spousal consortium.
If there is no tort claim available because of the exclusive remedy doctrine, the injured worker bears the full uncompensated loss. The employer or workers' compensation insurer bears the full cost of all compensation benefits payable. A first step in analyzing claims arising from any work injury, therefore, is to determine whether the injured worker is limited to the exclusive remedy of workers' compensation. Or, is a tort claim available to make the injured worker whole, and to reimburse the employer or its workers' compensation insurer for compensation benefits?
II. EXCEPTIONS TO THE RULE:
Vermont's exclusive remedy rule is set forth in Section 622 of Title 21, Vermont Statutes Annotated, as follows:
622. Right to Compensation
Exclusive.
Except as provided in subsection 618(b) and section 624 of this title, the rights and remedies granted by the provisions of this chapter to an employee on account of a personal injury for which he is entitled to compensation under the provisions of this chapter shall exclude all other rights and remedies of...
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