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Third-party claims; subrogation.
a third person is liable to the employee or to the dependents for the
injury or death of the employee, the employer shall be subrogated to
the right of the employee or to the dependents against such third
person. The recovery by such employer shall not be limited to the
amount payable as compensation to such employee or dependents, but such
employer may recover any amount which such employee or his or her
dependents should have been entitled to recover.
Any recovery by the employer against
such third person, in excess of the compensation paid by the employer
after deducting the expenses of making such recovery, shall be paid
forthwith to the employee or to the dependents and shall be treated as
an advance payment by the employer on account of any future
installments of compensation.
Nothing in the Nebraska Workers'
Compensation Act shall be construed to deny the right of an injured
employee or of his or her personal representative to bring suit against
such third person in his or her own name or in the name of the personal
representative based upon such liability, but in such event an employer
having paid or paying compensation to such employee or his or her
dependents shall be made a party to the suit for the purpose of
reimbursement, under the right of subrogation, of any compensation paid.
- Laws 1913, c. 198, § 18, p. 585;
- R.S.1913, § 3659;
- C.S.1922, § 3041;
- Laws 1929, c. 135, § 1, p. 489;
- C.S.1929, § 48-118;
- R.S.1943, § 48-118;
- Laws 1963, c. 283, § 1, p. 844;
- Laws 1986, LB 811, § 37;
- Laws 1994, LB 594, § 1;
- Laws 1997, LB 854, § 1;
- Laws 2000, LB 1221, § 2;
- Laws 2005, LB 13, § 2;
- Laws 2005, LB 238, § 2.
1. Who is third person2. Refusal of employer to sue3. Suit by employee4. Subrogation5. Choice of law6. Notice provisions7. Miscellaneous1. Who is third person
employee can bring suit against a third party at any time, provided
that his or her employer be made a party if that employer has paid
compensation benefits to the employee. Polinski v. Omaha Pub. Power
Dist., 251 Neb. 14, 554 N.W.2d 636 (1996).
- Employee may sue third person for
injuries received, but employer having paid compensation must be made a
party. Niemeyer v. Forburger, 172 Neb. 876, 112 N.W.2d 276 (1961).
- Employer may be made party to
suit by employee against third person. Vontress v. Ready Mixed Concrete
Co., 170 Neb. 789, 104 N.W.2d 331 (1960).
- Owner requiring contractor to
take out compensation insurance is third person as respects employees
of contractor. Matthews v. G. A. Crancer Co., 117 Neb. 805, 223 N.W.
- Subcontractor is immediate
employer of his workmen and all others are third parties even though
interested in enterprise. Boyd v. Humphreys, 117 Neb. 799, 223 N.W. 658
2. Refusal of employer to sue
- A third-party settlement is deemed compensation. Thomas v. Lincoln Public Schools, 9 Neb. App. 965, 622 N.W.2d 705 (2001).
refusal by employer liable for compensation to sue third person for
negligence resulting in injury, not death, of employee, latter may sue
in own behalf, and consent by employer to employee's action is
equivalent to refusal. Luckey v. Union P. R. R. Co., 117 Neb. 85, 219
N.W. 802 (1928).
3. Suit by employee
- Right to bring action rests with
employer until he has neglected or refused to sue. O'Donnell v. Baker
Ice Mach. Co., 114 Neb. 9, 205 N.W. 561 (1925).
employer's vested subrogation interest in settlement proceeds is not
extinguished when the injured employee pursued the claim against the
alleged tort-feasor out of time. Combined Insurance v. Shurter, 258
Neb. 958, 607 N.W.2d 492 (2000).
- If an employer is not joined in
an action, there must be a recovery before the nonjoined employer is
liable for attorney fees; joined parties may be liable for costs even
if there is no recovery. In apportioning cost pursuant to this section,
the critical factor is not whether there is a recovery, but whether the
employer has participated sufficiently in the litigation to be
considered "joined". Janssen v. Tomahawk Oil Co., Ltd., 254 Neb. 370,
576 N.W.2d 787 (1998).
- Employee's right of action
against third persons for negligence survives death of wrongdoer. Rehn
v. Bingaman, 151 Neb. 196, 36 N.W.2d 856 (1949).
- Section does not prevent employee
from suing third party responsible for his injury in his own name but
requires that employer, having paid compensation, be made party. Oliver
v. Nelson, 128 Neb. 160, 258 N.W. 69 (1934).
- If workman, injured by negligence
of third party, obtains assignment from employer of right to bring
action, it may be maintained by workman directly against third party.
Thomas v. Otis Elevator Co., 103 Neb. 401, 172 N.W. 53 (1919).
- Employee has right to sue third
party, though he has settled with employer for compensation, but must
make employer a party. Muncaster v. Graham Ice Cream Co., 103 Neb. 379,
172 N.W. 52 (1919).
an employer, rather than taking advantage of its opportunity to have
the settlement set aside, seeks to share in the settlement proceeds
under this section, the employer is obligated to pay a reasonable
portion of the employee's attorney fees under this section, and any
defect in the notice provided to the employer is waived. Turney v.
Werner Enters., Inc., 260 Neb. 440, 618 N.W.2d 437 (2000).
- An amendment to this section
allowing an equitable distribution between an injured employee and the
employer or insurer of a settlement from a third-party is substantive
rather than procedural in nature; thus, the statute as it was in effect
at the time of the employee's injury controls, and the employee is not
entitled to an equitable distribution of the settlement. Jackson v.
Branick Indus., Inc., 254 Neb. 950, 581 N.W.2d 53 (1998).
- Ordinarily, one who creates a
fund which benefits a workers' compensation subrogee is entitled to
reimbursement for that portion of a reasonable attorney fee
attributable to the benefit conferred; however, a workers' compensation
subrogee is not liable for any portion of a fee exacted by an attorney
who, because of a conflict of interest, abandoned protection of the
subrogee's rights. Lawson v. Smith, 241 Neb. 639, 489 N.W.2d 566 (1992).
- The right of an employer to
subrogation for amounts paid to the injured employee as workmen's
compensation payments is well established in Nebraska statutory law.
Turner v. Metro Area Transit, 220 Neb. 189, 368 N.W.2d 809 (1985).
- Ordinarily a division of
attorneys' fees is not required where the subrogation interest of the
employer or its insurance carrier is fully and adequately represented
by its own counsel and where the services of the employee's attorney
were not relied upon to effect the subrogation recovery. Schulz v.
General Wholesale Coop. Co., Inc., 195 Neb. 410, 238 N.W.2d 463 (1976).
- Subrogated interest of employer
for computation and allocation of fees and expenses is measured by the
workmen's compensation liability relieved or discharged by recovery
against third party. Gillotte v. Omaha Public Power Dist., 189 Neb.
444, 203 N.W.2d 163 (1973).
- This section requires the joinder
of an employer for purposes of subrogation and reimbursement. Rogers v.
Western Electric Co., 179 Neb. 359, 138 N.W.2d 423 (1965).
- Joinder of employer by emp1oyee
in suit against third party is required for purpose of subrogation and
reimbursement. American Province Real Estate Corp. v. Metropolitan
Utilities Dist., 178 Neb. 348, 133 N.W.2d 466 (1965).
- Employer was made party defendant
in action by employee against third party because of right of
subrogation. Singles v. Union P. R.R. Co., 174 Neb. 816, 119 N.W.2d 680
- Compensation carrier, who becomes
obligated for compensation payments, may seek reimbursement. Fisher v.
Chicago, B. & Q. R.R., 171 Neb. 804, 107 N.W.2d 740 (1961).
- Subcontractor made party
defendant for purpose of subrogation. Rumsey v. Schollman Bros. Co.,
156 Neb. 251, 55 N.W.2d 668 (1952).
- This section is for the benefit
of the employer so he may recover from third person. Danner v. Walters,
154 Neb. 506, 48 N.W.2d 635 (1951).
- Where a party made a defendant
for sole purpose of protecting his subrogation rights adopts and seeks
to maintain the position of a plaintiff, a judgment for costs may be
rendered against him. Rehn v. Bingaman, 152 Neb. 171, 40 N.W.2d 673
- Characteristics of statutory
subrogation and equitable subrogation are the same. Burks v. Packer,
143 Neb. 373, 9 N.W.2d 471 (1943).
- Employer was made party defendant
to protect subrogation rights. Jones v. Rossbach Coal Co., 130 Neb.
302, 264 N.W. 877 (1936); Erwin v. Watson Bros. Transfer Co., 129 Neb.
64, 260 N.W. 565 (1935); McDonnell v. Wasenmiller, 74 F.2d 320 (8th
- Measure of employer's right of
subrogation hereunder is reimbursement from third person whose
negligence caused employee's death, for full amount of compensation
paid by employer to employee's dependent, together with the expenses
thereof. Goeres v. Goeres, 124 Neb. 720, 248 N.W. 75 (1933).
- Employer has statutory right of
subrogation to extent of amounts properly paid under workmen's
compensation law, plus expenses of recovering such damages from third
person. Bronder v. Otis Elevator Co., 121 Neb. 581, 237 N.W. 671 (1931).
- Employer must be joined as defendant by virtue of right of subrogation. Vandervert v. Robey, 118 Neb. 395, 225 N.W. 36 (1929).
- Subrogation hereunder is not
barred by employer's concurrent negligence. Graham v. City of Lincoln,
106 Neb. 305, 183 N.W. 569 (1921).
- If employee settles with third
person, by whose negligence he was injured, employer is entitled to
have amount applied on compensation, and notwithstanding settlement,
employer has right to recover against negligent third party to extent
of compensation awarded. Hugh Murphy Const. Co. v. Serck, 104 Neb. 398,
177 N.W. 747 (1920).
- Employer was made party to determine subrogation rights. Solomon Dehydrating Co. v. Guyton, 294 F.2d 439 (8th Cir. 1961).
- The fact that employer's
negligence concurred with negligence of third person does not bar
employer's right to subrogation. Otis Elevator Co. v. Miller &
Paine, 240 F. 376 (8th Cir. 1917).
5. Choice of law
- Employer or carrier does not have
subrogation rights against the independent contractual rights which the
employee might have against an insurance company. Booth v. Seaboard
Fire & Marine Ins. Co., 285 F.Supp. 920 (D. Neb. 1968), rev'd on
other grounds, 431 F.2d 212 (8th Cir. 1970).
employer's or insurer's subrogation interest in an injured employee's
recovery from a third-party tort-feasor is determined by the law of the
state in which the employee obtained workers' compensation benefits.
Turney v. Werner Enters., Inc., 260 Neb. 440, 618 N.W.2d 437 (2000).
- The Workers' Compensation Court
lacks jurisdiction to resolve disputes between employers and employees
concerning the management of suits against third parties brought in
courts of general jurisdiction or the division of funds obtained from a
suit against a third party in a court of general jurisdiction. Because
the existence of federal jurisdiction is a matter of federal law rather
than state law, this section cannot, by itself, confer jurisdiction on
federal courts to resolve subrogation disputes between employers and
employees. The term "district court", as it is used in this section,
does not exclusively mean federal district courts which have been
conferred with jurisdiction by some federal statute; rather, it
includes the district courts of the State of Nebraska as well. Miller
v. M.F.S. York/Stormor, 257 Neb. 100, 595 N.W.2d 878 (1999).
6. Notice provisions
- This section does not take away
or abridge the right of removal to federal court if that right
otherwise exists. State v. Northwestern Engineering Co., 69 F.Supp. 347
(D. Neb. 1946).
reading of this section makes it quite clear that strict compliance
with the written, certified, or registered mail notice provision was
not intended to be mandatory and jurisdictional, and such notice may be
waived in writing or may be implied from unequivocal conduct. The
employer, through its "unequivocal conduct" of seeking to share in the
settlement proceeds, has ratified the employee's settlement with the
tort-feasor and thereby waived the objections it might have had to such
settlement based on a lack of notice under this section. Combined
Insurance v. Shurter, 258 Neb. 958, 607 N.W.2d 492 (2000).
- Substantial compliance with the
notice requirement of this section is sufficient, and the requirement
is met when the other party receives actual notice of a third-party
claim and an opportunity to join in its prosecution. Where subrogated
employer did not receive notice of certain discovery proceedings, but
did have actual knowledge of the lawsuit in which the third-party claim
was asserted, notice requirement of statute deemed satisfied. The
notice required by this section may be waived in writing, or waiver may
be implied from unequivocal conduct. The extent of a subrogated
employer's participation in third-party litigation initiated by an
injured employee is the critical factor in determining whether the
employer has joined the action within the meaning of this section.
Subrogated employer failed to join in prosecution of injured employee's
third-party lawsuit where employer did nothing more than file an answer
and respond to two sets of interrogatories. Austin v. Scharp, 258 Neb.
410, 604 N.W.2d 807 (1999).
- The purpose of the 1963 amendment
to this section would allow the attorney fees to be prorated and one
party must give to the other party notice of filing of suit. Turner v.
Metro Area Transit, 220 Neb. 189, 368 N.W.2d 809 (1985).
- Substantial rather than literal
compliance with notice provisions of this section is sufficient and
strict compliance is not jurisdictional. Versch v. Tichota, 192 Neb.
251, 220 N.W.2d 8 (1974).
- Notice to workmen's compensation
carrier of suit against third party is immaterial to proration of fees
and expenses where carrier is made party and attorneys for carrier
carried their share of trial load, and it is desirable there should be
an agreement for apportionment. Kitchin v. Burlington Northern, Inc.,
382 F.Supp. 42 (D. Neb. 1974).
an employer refuses to make lump-sum periodic lifetime workmen's
compensation benefits due an employee or dependents, and where a
recovery is made against a third party, the obligation of the employer
to continue to make lifetime payments is not extinguished but merely
suspended for the period of time the employer's share of the recovery
satisfies the continuing obligation due the employee. In calculating
the fees and expenses of both an employee and an employer, in
connection with the recovery of damages from a third party, where a
lump-sum agreement is not reached, the fees and expenses are to be
deducted immediately from the recovery, and the employer's share of
such fees and expenses is to be repaid weekly by the employer to the
employee over the period of time benefit payments are due to the
employee. Nekuda v. Waspi Trucking, Inc., 222 Neb. 806, 388 N.W.2d 438
- Under this section, where an
action is filed before a particular court and prosecuted to a final
conclusion, whether by settlement or judgment, that court alone has
jurisdiction to resolve any controversy relating to division of fees
and expenses. Moyer v. Douglas & Lomason Co., 212 Neb. 680, 325
N.W.2d 648 (1982).
- Workmen's Compensation Act bars
action by third party tort-feasor against employer for contribution or
indemnity based on claim arising from the injury. Vangreen v.
Interstate Machinery & Supply Co., 197 Neb. 29, 246 N.W.2d 652
- An employer can bring an action
directly against a third party tort-feasor for injuries suffered by an
employee, but only a personal representative of a deceased employee can
bring an action for wrongful death, which action must be filed within
two years after death. United Materials, Inc. v. Landreth, 196 Neb.
525, 244 N.W.2d 164 (1976).
- Truck rental agreement, as
modified, did not create relationship of employer and employee. United
States F. & G. Co. v. Missouri Valley Constr. Co., 179 Neb. 565,
139 N.W.2d 222 (1966).
- Civil liability of third person
for causing death of employee is not changed by Workmen's Compensation
Act. Luckey v. Union P. R. R. Co., 117 Neb. 85, 219 N.W. 802 (1928).
- Act recognizes common-law
liability of third persons for negligent injury to employee. Tralle v.
Hartman Furniture & Carpet Co., 116 Neb. 418, 217 N.W. 952 (1928).
- A voluntary payment made by a
workers' compensation insurer after the statute of limitations has run
does not remove the bar of the statute of limitations. In workers'
compensation cases, an advance payment by an employer does not remove
the bar of a statute of limitations which had already run at the time
of the payment from a third-party lawsuit. The statute of limitations
bars further suit against an employer if 2 years pass without a payment
of workers' compensation from the employer, including by way of an
advance payment from a third-party suit against a tort-feasor before
the 2-year statute runs, by direct payment by the employer or its
insurer, or by a payment caused to be made by the employer. Thomas v.
Lincoln Public Schools, 9 Neb. App. 965, 622 N.W.2d 705 (2001).
- An injured employee may use the
common fund doctrine to shift an appropriate share of the cost of
workers' compensation litigation to a health care insurer who directly
and substantially benefits by the litigation through reimbursement.
Kaiman v. Mercy Midlands Medical & Dental Plan, 1 Neb. App. 148,
491 N.W.2d 356 (1992).
- Under facts in this settled case,
costs were prorated between employee and intervening compensation
carrier in same proportion they shared in benefits; each to pay own
attorney's fees. Carter v. Par-Kan Construction Co., 348 F.Supp. 1295
(D. Neb. 1972).
- Absent express contract of
indemnity between seller of crane and purchaser, the Nebraska Workmen's
Compensation Act insulated purchaser from contribution or indemnity in
favor of seller in action by purchaser's employee for injuries
sustained while dismantling crane. Petznick v. Clark Equipment Co., 333
F.Supp. 913 (D. Neb. 1971).