The Insured's Role in Subrogation Recovery

In short, subrogation refers to a workers’ compensation insurance company’s right to recover money paid on a workers’ compensation claim from a third party (or their insurance company) when the injury was caused by the actions or negligence of that third party. In this context, the term third-party refers to someone other than the injured employee or their employer.

Generally speaking, there are 3 types of workers’ compensation claims that are potentially caused by a third party.

  • One of these is an incident that is caused by the direct action or inaction of a third party. One example of this is a motor vehicle accident in which the other driver is at fault. Another example of this is a dog bite incident that is caused by the failure of the dog owner to control the dog.
  • Another type of workers’ compensation claim that is potentially caused by a third party is an incident in which defective or malfunctioning machinery or equipment that is owned or maintained by a third party caused or contributed to the incident. One example of this is when a vehicle is routinely inspected and maintained by a third-party mechanic and the brakes stop working, causing an accident.
  • Lastly, the third type of workers compensation claim that could be caused by a third party is an incident that happens on property owned by someone else. One example of this is a delivery driver who slips and falls on a sidewalk that was not properly maintained by the homeowner.

One important thing to remember is that workers’ compensation is considered “primary” insurance for any work-related injury or illness that that is compensable. That means that regardless of who is at fault for a work-related injury, the workers’ compensation insurance company must pay for the claim. However, subrogation allows the workers’ compensation insurance company to seek reimbursement from a third party when that third party caused or contributed to the incident.

As an insurance agent, you are well aware of the tremendous impact that successful subrogation recovery can have on an insured’s experience modification factor. However, not all employers and (certainly not all employees) really understand why subrogation is such a big deal. They might even go as far as expressing, “Why should I care if the workers’ compensation insurance company gets reimbursed, as long as the claim gets paid?” The answer is simple. Employers and employees alike should want their workers’ compensation insurance carrier to recover as much as possible from at-fault parties through subrogation because the company’s experience modification rating (and by extension their future insurance premiums) are influenced by the cost of the claims. This is not too different than many other types of insurance.

Midwestern Insurance Alliance has a subrogation recovery team with an excellent track record of recovering from at-fault third parties. However, it is a team effort. Our subrogation recovery team relies on employers doing their part to make them successful. For that reason, it is important that all employees know what is expected of them if they are injured at work and there might be a third-party liability for their injury.

Recently, Midwestern Insurance Alliance has undertaken an aggressive effort to help our policyholders educate employees, supervisors, and managers about their role in subrogation recovery. To make training simple and easy to remember, we reduced the role of the employee to the following 5 actions.

  1. Notify
  2. Document
  3. Photograph
  4. Report
  5. Seek Treatment

To make it more practical, we applied the above actions to 3 types of workers’ compensation claims that are often able to be subrogated — dog bites, motor vehicle accidents, and slip and fall incidents. With each of these incidents, employees can greatly improve the likelihood of subrogation recovery.

Dog Bites

If bitten by a dog while in the course and scope of employment, an employee should…

  1. NOTIFY the owner of the dog or the homeowner where the incident occurred if they are home and get the name and phone number of the person that notified.
  2. DOCUMENT the address where the incident occurred, the name on the package being delivered (for parcel delivery contractors), the name and phone number of the person that notified, and the name and phone number of any witnesses that saw what happened.
  3. PHOTOGRAPH the delivery location, the injury, and even the dog if it can be done safely.
  4. REPORT the incent to a supervisor immediately, before driving away – providing the supervisor with the name and contact information of the dog-owner or homeowner notified of the incident, the delivery address, and the photos taken onsite.
  5. SEEK TREATMENT – If the dog bite draws blood or causes severe damage, the employee should contact Animal Control or the local police immediately and seek medical treatment.

Motor Vehicle Accidents

If involved in a motor vehicle accident while in the course and scope of employment in which the other driver was at least partially at fault…

  1. NOTIFY a supervisor immediately as well as the police.
  2. DOCUMENT the location of the accident, the name and badge number of the responding police officer, the name and phone number of the other vehicle’s driver, and the name and phone number of any witnesses that saw what happened.
  3. PHOTOGRAPH the accident scene, damage to vehicles, and the driver’s license and insurance card of the other vehicle’s driver.
  4. REPORT the incent to a supervisor immediately, before leaving the accident scene – providing the supervisor with the name and badge number of the responding police officer, the name and phone number of the other vehicle’s driver and any witnesses, and the photos taken at the accident scene.
  5. SEEK TREATMENT – If injured, seek medical treatment.

Slip and Fall Incidents

If you slip and fall while in the course and scope of employment because of a physical hazard on someone else’s property…

  1. NOTIFY the homeowner or business representative where the incident occurred if they are present and get the name and phone number of the person notified.
  2. DOCUMENT the address where the incident occurred, the name on the package being delivered, the name and phone number of the person notified, and the name and phone number of any witnesses that saw what happened.
  3. PHOTOGRAPH the location where the slip/fall occurred and the area around it.
  4. REPORT the incent to a supervisor immediately, before driving away – providing the supervisor with the name and contact information homeowner of business representative notified, the delivery address, and the photos taken onsite.
  5. SEEK TREATMENT – If injured, seek medical treatment.

Information needed for successful subrogation is more difficult to obtain with time. If at all possible, remain at the location of the incident until you get the information discussed in this video, and report the incident to your supervisor while you are still at the location where you were injured.

Managers and supervisors must keep in mind that being injured on the job can be a traumatic event for employees and they may not be in a state of mind to remember the 5 actions discussed above, or even to consider whether there may be third-party liability for their injury. For that reason, it is important that with each injury reported that managers/supervisors…

  • Ask questions that help assess whether there might be subrogation potential.
  • Remind the employee to follow these 5 actions every time there is subrogation potential.
  • Solicit documentation and photos from the employee that will aid in subrogation recovery.

Provide Midwestern Insurance Alliance with the names, addresses, photos, and other information as quickly as possible – ideally at the same time that the incident is reported.

Insurance agents can assist their clients by communicating the strategy advocated above, reviewing past claims to determine if their have been missed subrogation recovery opportunities due to the lack of information provided to the insurance carrier, and ensuring that employers understand the impact that subrogation can have upon experience modification ratings.