Alabama Workers' Comp Blawg

  • 18
  • Jan
  • 2025

Alabama Court of Appeals Addresses Difference Between Subrogation and Right to Reimbursement

                   

On September 20, 2024, the Alabama Court of Civil Appeals released its opinion in the case of Alabama Home Builders Self Insurance Fund, Inc. v. Tumlin wherein it reversed the trial court’s order that denied a self-insurance fund’s motion to reopen a case so that its lien for benefits paid could be addressed after the wrongful death case between a decedent’s spouse and her late husband’s employer settled. The trial court did not rule on the fund’s motion to intervene during the pendency of the lawsuit and then denied the motion to reopen based on the 2-year statute of limitations (SOL). Specifically, it was the trial court’s opinion that the SOL began to run on the date the plaintiff’s late spouse died. In reversing the trial court, the Court of Appeals noted that since the employer was only seeking reimbursement for indemnity benefits, the SOL did not begin to run until the settlement proceeds were paid to the plaintiff. Since the settlement funds were paid to resolve a wrongful death lawsuit, they were classified as punitive damages which is the only type of damage recoverable for wrongful death in Alabama. As such, the entirety of the settlement funds was subject to the subrogation lien.

                  

My Two Cents:   Alabama Code § 25-5-11(b) is the right to reimbursement/subrogation statute referenced above. Although it amounts to a super lien for indemnity benefits (much like child support), it is only a common law subrogation statute when it comes to medical benefits. This means the employer’s right to subrogation of medical expenses only attaches to that portion of the settlement funds or judgment that is allocated to the reimbursement/payment of medical expenses. As you can imagine, the amount that is or should be allocated for that purpose is often a matter for debate and sometimes litigation. If the parties cannot work it out amongst themselves, the Court of Appeals adopted a formula to assist the parties and judge in 2005 in Miller and Miller Const. Co. v. Madewell.

                    

This blog submission was prepared by Mike Fish, an attorney with Fish Nelson & Holden, LLC, a law firm dedicated to representing self-insured employers, insurance carriers, and third-party administrators in all matters related to workers’ compensation. Fish Nelson & Holden is a member of the National Workers’ Compensation Defense Network. If you have any questions about this submission or Alabama workers’ compensation in general, please contact Fish by e-mailing him at mfish@fishnelson.com or by calling him directly at 205-332-1448.

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