Colorado, Employee's Entitlement to Uninsured/Underinsured (UM/UIM) Benefits
The Supreme Court of Colorado, on September 30, 2024, in
Klabon v. Travelers Property Casualty Co. of America, ruled as a matter of first impression that an employee who receives workers compensation (WC) benefits after a work-related injury caused by an underinsured third-party tortfeasor is not barred from suing the employer's UM/UIM carrier.
In this case, an employee sustained compensable injuries in a motor vehicle collision. After settling the claim with the at-fault driver's auto liability insurer, the employee filed another claim against the employer's UM/UIM insurer. The UM/UIM insurer argued that, as a WC beneficiary, the employee was barred from seeking recovery of UIM benefits from the employer's policy. The federal court where the case was pending asked the Colorado Supreme Court to weigh in on the issue.
The Colorado Supreme Court considered the application of Colorado statute 8-41-102—which immunizes an employer and its WC insurer from suit by an employee injured in the course of the employment—and provides that WC benefits are the exclusive remedy an employee has against an employer for injuries arising out of and in the course of employment. The court reasoned that to immunize an insurance carrier that
does not insure the employer's WC liability would conflict with the plain language of the statute and further added that the exclusive remedy rule would not be applicable in this case. The court noted that the state's WC law expressly permits an injured employee to recover both WC benefits and sue a third-party tortfeasor for damages. Moreover, when the third-party tortfeasor is uninsured or underinsured, a suit to recover UM/UIM benefits, even from an employer's UM/UIM carrier, is not a suit against an employer.
Colorado, Scope of Division Independent Medical Examination (DIME)
On September 12, 2024, the Colorado Court of Appeals, Division VI, in
Peitz v. Industrial Claim Appeals Office, considered for the first time whether the workers compensation (WC) administrative rules of procedures require a physician who is conducting a DIME to evaluate only those body parts designated on the DIME application form.
An employee sustained work-related injuries and, after receiving several treatments, continued to experience pain in some areas. The treating physician determined that the employee was at maximum medical improvement (MMI) and assigned a 30% impairment rating. Subsequently, the employer sought a DIME, which provides an independent evaluation of medical issues related to MMI and impairment. On the DIME application form, the employer selected the
spine and lumbar area as those to be evaluated. After the examination, the DIME physician concluded that the employee was not at MMI because the employee's chronic pain disorder and
hip pain still needed to be addressed. The employer challenged this finding alleging that WC Rule of Procedure 11-5 prevents the DIME physician from evaluating body parts that are not designated on the DIME form.
The court of appeals held that Rule 11-5 only provides a schedule to determine the amount of fees that a physician may charge for a DIME based on the designated body part and the date of injury. Further, the court reasoned, Colorado statute 8-42-107.2, which addresses the DIME procedures, makes no mention of any substantive limitation on the examining physician's assessment of MMI based on the number of body parts selected on the DIME form. The court concluded that nothing in the rules of procedure or the statutory framework prevents the DIME physician from considering body parts not included in the application form.
Nevada, Insurer's Right to Subrogation
On September 19, 2024, the Supreme Court of Nevada, in
Amtrust North America, Inc. v. Vasquez, held that litigants and courts should rely on the application of Nevada statute 616C.215(5)—which controls a WC insurer's lien rights—when adjudicating workers compensation (WC) liens.
In this case, a WC insurer intervened as subrogee in a third-party lawsuit filed by the injured employee against multiple defendants in connection with injuries sustained in the course and scope of employment. The trial court held that the WC insurer was not entitled to any recovery on its WC lien based on the application of two prior supreme court cases
Breen v. Caesars Palace—requiring an insurer to participate in, and bear a portion of, the costs of the third-party litigation and
Poremba v. Southern Nevada Paving—requiring WC insurers to assess only a portion of the settlement funds designated to compensate solely for expenses covered by WC, which generally excludes noneconomic damages.
The supreme court reversed the trial court’s order, holding that both decisions relied on,
Breen and Poremba, should be overruled to the extent that they conflict with Nevada statute 616C.215(5), which provides that a WC insurer's lien applies to the
total amount of settlement proceeds. According to the court, the statute does not require a WC insurer to participate in the third-party claim or bear costs of litigation. Furthermore, the court determined, a WC insurer may assess the total proceeds of a third-party settlement regardless of whether they are designated as economic or noneconomic damages.
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