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Choice of Law: Workers Compensation Subrogation Rights

Posted by Ted A. Schmidt | Feb 08, 2018 | 0 Comments

Jackson v. Eagle KMC LLC, 782 Ariz. Adv. Rep. 7 (App. Div. I, January 16, 2018) (J. Orozco)

Plaintiff, a South Carolina resident, was employed as a truck driver by Drivers Management, a Nebraska company. Drivers Management contracted with Eagle, an Arizona company, to train Jackson to drive a semi-tractor trailer. During training plaintiff was seriously injured riding as a passenger in a truck driven by an Eagle instructor when the vehicle rolled.  Plaintiff recovered workers compensation in Nebraska then after a year sued Eagle in Arizona naming Drivers Management as a defendant so as to protect its subrogation rights against Eagle.  The trial court dismissed the lawsuit finding it time barred by A.R.S. §23-1023.B. The Arizona Court of Appeals reversed and remanded.

A.R.S. §23-1023.B requires an Arizona employee recovering workers compensation benefits to bring suit against any third parties responsible for her injury within one year at which time the claim, by operation of law, is assigned to the employer to allow the employer to pursue reimbursement/subrogation rights against the third party for an additional year.  The right to sue can be reassigned by the employer to the employee after the year runs but without the reassignment the employee has no third party claim to bring a year after the injury under Arizona law.

Here because plaintiff sought and recovered workers compensation under the laws of Nebraska, plaintiff's and the employer's subrogation rights were governed by Nebraska law. Nebraska has no equivalent to A.R.S. §23-1023.B. There is no automatic assignment to the employer in Nebraska and the employee has two years to bring the third party claim there. "When compensation has been paid the law of the state of compensation should govern in third-party actions including the nature and extent of lien subrogation, and assignment rights."

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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