Third party settlement affects workers' compensation recovery

A recent story illustrates a potential limitation to workers’ compensation benefits. Even if a workplace injury left an employee permanently disabled, there may be a limit to how long he or she can receive payments.

In this example, a 28-year-old California sheriff’s deputy for Sacramento County was critically injured when the department’s helicopter suffered engine failure. The impact was so deadly that two other deputies who were on duty with the young man were killed. Although the young deputy survived, his injuries ended his eight-year career with the department.

Since the accident, the county has been paying the deputy $3,657 per month in workers’ compensation benefits. The year-to-date total of that assistance is over $2 million. However, after the deputy recently settled his lawsuit against the helicopter manufacturer -- for a reported $26 million -- the county ceased making monthly payments to the deputy.

Under California law, an employer may be entitled to offset its workers’ compensation obligations when the injured employee obtains a financial recovery from a third party source. However, the deputy maintains that the county waived this right of offset when it signed a contract with him, agreeing to waive its right of recovery against any future settlement recoveries.

The county has filed a request with the Workers’ Compensation Appeals Board, which is a judicial body composed of seven members who were appointed by the state governor. Since it has judicial powers, the deputy may feel more comfortable being represented by a workers’ compensation attorney. An attorney may have strategies to suggest for presenting a winning case.

Source: sacbee.com, “The Public Eye: Sacramento County halts worker's comp to injured deputy,” Brad Branan, July 28, 2013

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