Court Clarifies How to Calculate Subrogation Credit Against Injured Worker’s Settlement
- The Kentucky Supreme Court has ruled that an employer’s subrogation recovery must be calculated by subtracting its pro rata share of an injured worker’s legal fees and expenses from the duplicative portion of a third-party settlement before determining reimbursement — not by requiring benefits paid to first exceed those fees, as the Court of Appeals had held.
- The case, K-VA-T Food Stores Inc. v. Blackburn, arose after a grocery store worker was injured falling onto a vendor’s cart, received workers’ compensation benefits from her employer, and separately settled a negligence claim against the vendor for $295,000. The ALJ found one-third of the settlement represented non-recoverable pain and suffering, with the remainder duplicating her workers’ comp benefits.
- The Court reversed the Court of Appeals and reinstated the Workers’ Compensation Board’s opinion, remanding the case for correction of a mathematical error in how the administrative law judge had calculated the deduction for legal expenses.
- The Court explained that the employer is entitled to immediate reimbursement for benefits already paid, plus a credit against future benefits, once its lien is reduced by its proportional share of the worker’s attorney fees and litigation costs.
Worker Misclassification ‘Grows Among Healthcare Staffing Agencies’
- Worker misclassification is a growing issue in healthcare staffing, with the U.S. Department of Labor’s Wage and Hour Division identifying violations, including misclassification, in 80% of its 2022 reviews of residential care, nursing facilities, home health services, and other health-sector institutions.
- Staffing agencies often misclassify workers as independent contractors through app-based platforms that place nurses and aides while still controlling how and when work is performed, or by requiring non-compete clauses that restrict which organizations workers can accept assignments from — both practices that can undercut a genuine independent contractor relationship under federal law.
- Misclassified healthcare workers lose access to minimum wage and overtime protections, employer-provided health insurance, workers’ compensation coverage for on-the-job injuries, anti-discrimination and harassment protections, and paid sick or family leave, while also bearing the full cost of Social Security and Medicare contributions.
New Hampshire Approves 2.9% Rate Reduction
- The New Hampshire Insurance Department (NHID) approved an average 2.9% reduction in voluntary workers’ compensation loss costs for 2027, marking the 15th consecutive year of declines, alongside a 3.4% average decrease in assigned risk rates; both changes take effect for policies starting January 1, 2027.
- The approval came through a rate filing submitted by the National Council on Compensation Insurance (NCCI), a licensed advisory organization that collects workers’ compensation data and prepares loss-cost filings for New Hampshire and other states.
- Voluntary market loss costs in New Hampshire have fallen approximately 68% over the 15-year period, following a 6.1% reduction in voluntary loss costs and a 5.4% reduction in assigned risk rates approved for 2026.
- Insurance Commissioner D.J. Bettencourt called the milestone a reflection of the state’s strong workers’ compensation market, saying lower loss costs help businesses control expenses and invest in operations while maintaining support for injured workers; actual premiums for individual employers will still vary based on insurer, claims history, and other rating factors.