Effect of Workers’ Compensation Lien on North Carolina Personal Injury Recovery

that-hurt-1450455-1-e1489534365557A recent North Carolina appellate case considered the effect of a workers’ compensation claim on an employee’s recovery in a lawsuit against a third party. The plaintiff was hurt in a car crash while driving in a company truck on a highway. The defendant rear-ended him, and the force caused the truck to hit another vehicle. The plaintiff’s neck was seriously injured.

The unnamed defendants, the employer, and its workers’ compensation insurer accepted the plaintiff’s workers’ compensation claim and paid him $7,432.13 in workers’ compensation medical benefits and indemnity payments.

He sued the defendant, claiming that the defendant negligently caused the accident. At the trial, evidence was presented on the issue of the workers’ compensation benefits paid to the plaintiff. The judge reduced the recovery by the benefits so that judgment against the at-fault party was $3,576.87 plus interest. This judgment was in compliance with N.C. Gen. Stat. § 97-10.2(e). However, the judge entered an amended final judgment providing for a judgment in favor of the employer in the amount of $7,423.13. In the first judgment, the amount of benefits was deducted from the plaintiff’s recovery, but in the second, a sum was specifically awarded to the employer. The plaintiff’s damages stayed the same.

About a year later, the defendant filed a motion in superior court asking the judge to determine the amount of the lien under N.C. Gen. Stat. § 97-10.2(j). The court denied this motion, finding that the amount of the employer’s lien was determined by the earlier amended judgment. Accordingly, the court concluded it didn’t have jurisdiction to determine the unnamed defendants’ lien under subsection 97-10.2(j).

The defendant appealed, arguing that the court had jurisdiction to determine what the amount of the lien was. He and the defendant settled the dispute and signed a release in which the defendant and his insurer agreed to pay the plaintiff a lump sum of $15,654.25. All claims arising from the car accident were released, though the employer and its insurer’s rights to enforce the judgment they’d gotten were preserved.

The employers and its insurer appeared and filed paperwork trying to determine the amount of their lien on the plaintiff’s recovery. This hearing was never scheduled, and the record seemed to show they didn’t proceed because the amended judgment had set how much could be recovered. The plaintiff moved to withdraw his appeal.

However, the defendant driver filed a motion asking the court to decide the workers’ compensation lien amount. The employer and its insurer argued at the hearing that the lien had already been determined by the amended judgment. The defendant driver’s motion was denied as res judicata.

The defendant appealed. He argued that the judge had made a mistake in denying his motion to determine the amount of the employer and its insurer’s lien on the basis of res judicata. The appellate court agreed. It explained that the doctrine res judicata stopped parties from re-litigating all matters that were previously decided. In this case, the employer and its workers’ compensation insurer had to show a final judgment, that the cause of action in the earlier and later suit was the same, and the parties were the same. When an injured employer is entitled to compensation from a third party, the superior court can determine the amount of an employer’s or workers’ compensation carrier’s lien. The court has jurisdiction if a judgment against the third party is obtained or where the employee settles with a third party.

In this case, neither res judicata nor what’s called the superior court judge rule were applicable. The plaintiff’s negligence lawsuit involved a claim for money damages. In contrast, the defendant’s motion asking for a determination of the amount of the lien was narrow and purely statutory. The identity of the parties in the motion was also not the same as the parties to the lawsuit.

Under subsection 97-10.2(j), the amount of the lien was supposed to be determined either after a judgment was obtained or after a settlement, when one party applied for the determination. The defendant was entitled to apply for a determination of the amount of the workers’ compensation lien. The appellate court found that the judge should have determined the subrogation amount at that point. The court reversed the order denying the defendant’s motion and asked the trial court to make a determination of the amount of the workers’ compensation lien.

If you suffered harm in a car accident in North Carolina, the experienced team at Maurer Law may be able to help you recover compensation. Contact us at 919-229-8359 or via our online form.

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