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Supreme Court decides that worker only pays back true recovery

On Behalf of | Apr 20, 2013 | Workers' Compensation |

An interesting decision by the Supreme Court of the United States will likely affect how workers’ compensation is paid out in the future in Colorado and across the country. The case involved an airline mechanic who was injured on the job and whose medical bills had been paid by his employer, US Airways. After he had recovered, the mechanic had filed a personal injury lawsuit against the driver that caused the car accident in which he was injured. He also received some money from his insurance company. The question the justices were deciding was exactly how much did the man have to pay his employer back.

The health plan for US Airways states that if an injured employee recovers from a third party, he or she must reimburse the employer for what it had paid out. While this may seem to be a relatively clear statement, the employee’s situation created a peculiar result.

When the mechanic was injured, he received $66,866 for his medical expenses from US Airways health insurance. When he went after the other driver and asked his insurance for reimbursement, he received $110,000. The problem was that lawyers’ fees were 40 percent of the award, meaning that he only received $66,000 from third parties. At question was whether the mechanic would have to pay $866 of his own money to reimburse his employer following his injury.

The Supreme Court eventually ruled, in a 5-4 decision, that the employee would only need to reimburse his true recovery, up to the amount paid by his employer. Writing for the majority, Justice Elena Kagan noted that it would be unfair to force an employee to pay his employer more than he had received.

What this means for workers’ compensation in Colorado still remains to be seen, but it could play out quite interestingly in future cases.

Source: The New York Times, “Supreme Court Rules in Favor Of 1 Worker, but Not Another,” Adam Liptak, April 16, 2013

To find out more about the Colorado workers’ compensation system in general, please visit our website.


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