AVOIDING THE RUEDIGER PROBLEM
By Ross A. Bridges, VBM Attorney
Article written October 19, 2022
We are all familiar with the dreaded Ruediger calculation which always serves to greatly reduce your subrogation recovery. The Ruediger recovery concept came from a Missouri Supreme Court case named Ruediger v. Kallmeyer Brothers Services, which was handed down in 1973. The point of the case was to interpret the Missouri subrogation statute which explains that, if the employee receives a recovery on a third-party action, the employer and insurer must share in a pro rata share of the reasonable attorney's fees and expenses in incurring that recovery.
Interestingly, however, if you follow the history of the Missouri subrogation statute, it was originally written so that only the employer and insurer could pursue the third-party case when an injured worker is injured on the job. Later, the statute was amended to allow the injured worker to also pursue the recovery should he/she choose to do so. The statute added that, in that situation, when the injured worker pursues the recovery on his own, the employer and insurer shall share in a pro rata portion of the attorney's fees and expenses incurred.
The Ruediger case helped to define how that pro rata calculation is made. The Ruediger case, however, was premised on the concept that the injured worker was the one to obtain the recovery. What happens if the employer or insurer obtains the recovery without the assistance of the injured worker? There is a more recent, but less known, case from the Court of Appeals where the Insurer intervened into the case brought by the injured worker and both sides assisted in the ultimate recovery.
The main question of the case was, does the Ruediger formula apply even if the employer and insurer assist in obtaining the recovery? That case ultimately stated that the Ruediger formula was premised on an injured worker bringing the recovery on his own, and that it should not strictly apply when the employer or insurer assists in the recovery.
The court ultimately remanded the case back down to the Labor and Industrial Relations Commission to make a determination as to how much each side should contribute to the cost of pursuing this recovery.
If you have a case with subrogation potential and want to avoid the Ruediger problem, please feel free to contact VBM for assistance. We have experienced great success in bringing these claims and avoiding the dreaded Ruediger reduction.
vbmlaw.com | (573) 777-4488 | firstname.lastname@example.org