The purpose of worker’s compensation is to provide employees who are injured on the job with insurance coverage, without requiring proof of fault. In exchange for worker’s compensation benefits, employees must agree not to sue their employers. This does not prevent an employee from suing a responsible third-party.
For instance, if an employee falls from a ladder while at work, and it is determined that the ladder was faulty, the employee might file a suit for damages against the company that made the ladder. Likewise, if you are injured in an automobile accident while on the clock and driving your company vehicle, you can sue the third-party who caused the accident.
What happens if I get damages from the third-party?
In Joplin and throughout Missouri, if you are injured in an auto accident caused by someone else, and you receive workers’ compensation benefits, your employer will have, what is known as, a right of subrogation against the third-party who was responsible for your injuries. This means, your employer will have a right to receive reimbursement for any amount of benefits the employer paid on your behalf, related to that injury.
How much does the employer get for its subrogation interest?
In Joplin and throughout Missouri, there is a method for determining who the recovery from a third-party suit will be apportioned, known as “The Ruediger Formula.” Based on this formula, apportionment is determined as follows:
(1) The expenses of the third party litigation should be deducted from the third party recovery; (2) The balance should be 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 amounts due each should be paid forthwith; (4) The amount paid the employee should be treated as an advance payment on account of any future installments of compensation; and (5) the employee should be entitled to future compensation benefits in the event the amount paid him as an advance is exhausted under the provisions under the statute.
Ruediger v. Kallmeyer Brothers Service.
What is the employee entitled to after subrogation?
The truth is, the employee actually becomes the trustee of an express trust for the benefit of the employer for the part of the third-party recovery that is subject to subrogation. So, it does not make a difference if the employee actually receives nothing after the Ruediger Formula is applied. However, Missouri laws allow the employer and employee to reach an agreement about how the balance of recover should be divided. In other words, the law does not prevent the parties from reaching their own settlement agreement. In light of this often harsh formula, it is usually a better to course to get an agreement with the workers’ compensation carrier on a subrogation amount prior to resolving a third-party lawsuit. Be sure to speak to a Joplin workers’ compensation attorney when considering filing suit against a third-party, if you have already received workers’ compensation benefits.