Detailed Answer
Under South Dakota law, when you collect workers’ compensation benefits for a workplace injury and later pursue a personal injury claim against a third party, your workers’ compensation insurer has a statutory right of subrogation. This means the insurer can seek reimbursement from any third-party recovery. The key statute is SDCL 62-7-9:
Subrogation Rights (SDCL 62-7-9): “If any third person is liable to pay damages to an employee… for the injury for which compensation has been paid by the insurer, the insurer shall be subrogated to the rights of the employee.” See the full text at https://sdlegislature.gov/Statutes/Codified_Laws/DisplayStatute?type=statute&title=62&chapter=7&number=9.
1. Timely Notice: Notify the workers’ compensation insurer in writing when you file a third-party lawsuit. South Dakota case law confirms that timely notice preserves the insurer’s lien and avoids waiver.
2. Allocation of Settlement: Structure your settlement agreement to allocate damages among past and future medical expenses, lost wages, and pain and suffering. Clear allocations help determine what portion of the award is subject to the insurer’s lien.
3. Calculating Offsets: State law limits an insurer’s recovery to the amount it paid on your behalf, minus a proportionate share of attorney fees and litigation costs. For example, if you recover $100,000 and pay $25,000 in fees, the insurer’s lien is reduced by 25%.
4. Negotiating with the Insurer: Your attorney can negotiate a written agreement with the insurer to fix the subrogation amount or arrange structured payments. This prevents surprise liens after you receive your portion of the settlement.
5. Avoiding Personal Liability: Disbursing settlement funds to yourself before resolving the insurer’s lien may create personal exposure. Always satisfy or contractually address the lien in your release documents.
6. Involving an Attorney: A lawyer experienced in both workers’ compensation and personal injury law can coordinate the claims, calculate net recovery, and draft settlement language that protects your interests.
Helpful Hints
- Provide immediate written notice to the workers’ compensation insurer when you file a third-party claim.
- Track all medical bills and wage-loss payments the insurer covered.
- Ask your attorney to negotiate a specific allocation of damages in your settlement documents.
- Ensure the insurer’s reimbursement calculation accounts for your attorney fees.
- Obtain a written agreement or lien waiver from the insurer before disbursing funds.
Disclaimer: This article is for informational purposes only and does not constitute legal advice. Consult a qualified attorney for guidance on your specific situation.