Jackson v. Eagle KMC LLC, 782 Ariz. Adv. Rep. 7 (App. Div. I, January 16, 2018) (J. Orozco)
NATURE AND EXTENT OF WORKERS COMP LIEN SUBROGATION AND ASSIGNMENT RIGHTS IN THIRD PARTY ACTION DETERMINED BY LAW WHERE COMP BENEFITS ARE PAID.

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."