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Choice of Law Regarding Automatic Assignment of Workers Compensation Claim

Posted by Ted A. Schmidt | Feb 14, 2019 | 0 Comments

Jackson v. EAGLE KMC L.L.C., __Az Adv. Rep. __ No. CV-18-0056-PR (January 2, 2019) (J. Gould) https://www.azcourts.gov/Portals/0/OpinionFiles/Supreme/2019/Jackson%20v.%20Eagle.pdf

LAW OF STATE WHERE WORKERS COMPENSATION BENEFITS ARE PAID DETERMINES ASSIGNMENT RIGHTS OF EMPLOYER AND EMPLOYEE

The plaintiff was a truck driver for a Drivers Management, a Nebraska company,  being trained by Eagle, an Arizona company. The training was conducted in Arizona. While plaintiff was riding in a vehicle driven by an Eagle employee in Arizona she was injured in a collision. Plaintiff made a workers compensation claim in Nebraska which was paid.

Just before the two year statute of limitations ran on her claim the Eagle employee negligently caused her injury, she filed a lawsuit in Arizona naming that driver and pursuant to Nebraska law, naming her employer Drivers Management. Nebraska law provides where workers compensation is paid the employer has a subrogation interest against any recovery against a third party and if suit is brought by the worker against the third party the employer must be named in the lawsuit. Nebraska, unlike Arizona, has no statute assigning a third party claim to the workers compensation carrier after a year. 

Eagle's motion for summary judgment based upon A.R.S. § 23-1023(B)  was granted by the trial court. Eagle argued this statute automatically assigned this claim to the workers compensation carrier after one year and plaintiff no longer had a right to pursue it. The Arizona Court of Appeals reversed. The Arizona Supreme Court vacated the court of appeals decision and reversed and remanded the superior court stating:

We hold that Arizona's automatic assignment provision in A.R.S. § 23-1023(B) does not apply when an employee receives workers' compensation benefits under another state's laws. Rather, the law of the state in which an employee's workers' compensation is paid determines the assignment rights of the employer and employee.

See Quiles v. Heflin Steel Supply Co., 145 Ariz. 73, 77 (App. 1985); Restatement (Second) of Conflict of Laws § 185 (Am. Law Inst. 1971)

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About the Author

Ted A. Schmidt

Ted's early career as a trial attorney began on the other side of the fence, in the offices of a major insurance defense firm. It was there that Ted acquired the experience, the skills and the special insight into defense strategy that have served him so well in the field of personal injury law. Notable among his successful verdicts was the landmark Sparks vs. Republic National Life Insurance Company case, a $4.5 million award to Ted's client. To this day, it is the defining case for insurance bad faith, and yet it is only one of several other multi-million dollar jury judgments won by Ted during his career. He is certified by the State Bar of Arizona as a specialist in "wrongful death and bodily injury litigation".

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