A workers’ compensation claim can involve complex legal controversies. Insurers will often deny claims or seek reimbursement for their expenses, sometimes taking benefits away from injured workers who are struggling to get back on their feet. In 2017 the Nevada Supreme Court took on one such case in Poremba v. Southern Nevada Paving, 388 P.3d 232 (2017), which limited the power of insurers to limit benefits for workers who have received compensation through other means.
The facts of Poremba
The workers’ compensation claim in Poremba arose from injuries Mr. Poremba suffered when the truck he was driving was hit by a backhoe operated by another employee. The insurer accepted Mr. Poremba’s original claim. At the same time, Mr. Poremba also sued the backhoe operator and his employer, which resulted in a settlement. Importantly, the settlement didn’t specify what it was compensating Mr. Poremba for. That is, it didn’t require him to allocate his settlement award to medical expenses, his lost earnings potential, or his pain. He used the money from the settlement to pay for his outstanding healthcare debts, additional treatment, and personal expenses, such as mortgage payments and food. Id. at 234-35.
After Mr. Poremba’s injuries made it impossible for him to go back to work, he tried to reopen his workers’ compensation claim. This time the insurer denied the claim, arguing that his use of his settlement funds to pay for things other than medical bills foreclosed further recovery for his injuries. Id.
What is insurance subrogation?
A workers’ compensation insurer is sometimes entitled to be reimbursed for expenses it pays on behalf of an injured worker. As happened in Poremba, an injured worker can in certain circumstances pursue a personal injury claim against an employer or other responsible person. When the worker recovers damages from a personal injury claim, the insurer can ask a court for reimbursement from the personal injury award for costs the insurer has borne on behalf of the worker. This process is called insurance subrogation. From a policy standpoint, the idea is that the insurer is recovering for costs that were the responsibility of someone else.
The insurer in Poremba had denied the worker’s request to reopen his claim on grounds that he had not exhausted his third-party damages award to pay for his medical expenses. Id. at 234. The lower court had also provided that the insurer would be entitled to subrogation for the full amount of Mr. Poremba’s third-party settlement. Id. But the Supreme Court disagreed.
How Poremba helps injured Nevada workers
In Poremba, the Supreme Court clarified how injured workers’ damages awards work in two important ways. First, the injured worker needn’t spend all of a third-party award before reopening a workers’ compensation claim. Second, an insurer is only entitled to reimbursement (that is, subrogation) for damages that are ordinarily covered by workers’ compensation. Importantly, this does not include pain and suffering, or personal expenses like mortgage payments. Id. at 238.
The ruling in Poremba has been criticized for not fully accounting for the legal rules governing insurance subrogation. As such, it may be subject to further argument in future cases. Injured workers who are considering reopening their claims should consult with an attorney to understand how these issues may affect their ability to receive additional benefits.
For over 45 years, the experienced workers’ compensation attorneys at the law firm of Greenman Goldberg Raby Martinez have given personalized, caring advice to clients in the Las Vegas area. If you are fighting with an insurer and would like to speak to an attorney about your legal options, call us today at 702-388-4476, or ask us to call you by leaving a note on our contact page.