EARLY INTERVENTION IN SUBROGATION
MATTERS NOW MORE THAN EVER
Article written June 15, 2021
I wanted to provide you with a true story to emphasize the importance of early intervention when you have a workers’ compensation case with subrogation potential. I have a client who had a workers’ compensation case with a subrogation interest of approximately $150,000. The client learned that the claimant had filed a lawsuit against the third party responsible for his injuries. The client assigned the subro case to our office to protect its interest. We immediately noticed that the claimant was represented by a law firm we have dealt with in the past that is on “the naughty list.” This firm has tried to subvert my client’s subrogation interest a number of different times, with some success. The client quickly authorized us to file a motion to intervene into the lawsuit. Upon filing our motion to intervene, the plaintiff then dismissed his case without prejudice (meaning they could refile again anytime). Several months go by and we continued to search all counties on Case.net to see if the case had resurfaced. On one of those searches, we happened to locate that the case had been refiled in a new county. We quickly filed a new motion to intervene, however, before we could get the motion heard, the plaintiff and the defense attorney were able to quickly set the case for trial, the purpose of which was to essentially hoodwink the judge into having a “trial” and enter a judgment on facts that the two attorneys had already agreed upon.
The trial was held in front of a judge only, no jury. The defense attorney appeared via Webex and asked only 3 questions. The entire “trial” lasted twenty-one minutes. At the end of the trial, the judge entered a judgment finding that the plaintiff had suffered $2,000,000 in damages, but that the plaintiff was 90% at fault for his damages. Thus, the award to the claimant was reduced to $200,000. At first glance, it sounds like the plaintiff is entitled to an award of $200,000 and there is plenty of money to satisfy the subrogation interest of $150,000, BUT there is a reason why the plaintiff’s attorney wanted a sham trial as opposed to a settlement.
The effect of the comparative fault finding of 90% fault for the claimant is that the subrogation recovery is reduced from $150,000 to approximately $8,000. Comparative fault is terrible for subrogation recovery. The way the Ruediger reduction works when comparative fault is involved is that it creates a very high reduction on the subrogation amount. That said, in order for the comparative fault reduction to work, a judge or jury must make a determination on the amount of fault. A settlement agreement that implies fault does not work. This is why the parties arranged for the stipulated trial with the judge. In this situation, if the claimant would have simply “settled” his case for $200,000 with no comparative fault, my client would have received approximately $90,000 after Ruediger. However, after having received a finding of comparative fault from a judge, the subro recovery was reduced to approximately $8,000.
Luckily, we were able to discover this information less than 30 days after the judgment was entered. A court still has discretion to set aside its own judgment for up to 30 days after it is entered. We were able to get a hold of the judge and convince her that she was misled into entering this judgment. She ultimately set aside the judgment on the evening of the last day. After having now seen this new scenario, it does not appear that any subrogation case is safe. In this case, the plaintiff was able to set a trial and have it heard in twelve days! If you have a case with subrogation potential, it is very important that you get it to someone right away to prosecute that case for you. If you ever have any questions about a subrogation case you have or in general, do not hesitate to contact VBM at the number below.
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