According to Minn. Stat. §176.061, Subd. 1 and Subd 4,
an injured employee cannot sue the employer for work-related injuries as the
workers’ compensation benefits are his or her exclusive remedy. However, the
employee and an employer or workers' compensation carrier who pay benefits are
entitled to pursue a district court action for damages against a negligent
third-party. These situations most commonly occur in construction, motor
vehicle, product and premises liability accidents as well as an occasional
medical malpractice claim involving an employee injured at work.
If a recovery is received from the third-party
tortfeasor, the proceeds are generally allocated according to Minn. Stat.
§176.061, Subd. 6*:
The proceeds of all actions for damages or of a
settlement of an action under this section... shall be divided as follows:
After deducting the reasonable cost of collection, including but not limited to
attorneys fees and burial expense in excess of the statutory liability, then
One-third of the remainder shall in any event be
paid to the injured employee or the employee’s dependents, without being subject
to any right of subrogation.
Out of the balance remaining, the employer or the
special compensation fund shall be reimbursed in an amount equal to all benefits
paid under this chapter to or on behalf of the employee or the employee’s
dependents by the employer, less the product of the costs deducted under clause
(a) divided by the total proceeds received by the employee or dependents from
the other party multiplied by all benefits paid by the employer or the special
compensation fund to the employee or the employee’s dependents.
Any balance remaining shall be paid to the employee or the employee’s
dependents, and shall be a credit to the employer or the special compensation
fund for any benefits which the employer or the special compensation fund for
any benefits which the employer or the special compensation fund is obligated
to pay, but ahs not paid, and for any benefits that the employer or the
special compensation fund is obligated to make in the future. There shall be
no reimbursement or credit to the employer or to the special compensation fund
for interest or penalties.
*It should be noted that
the employee or the employer can also choose to settle their respective claims
separately pursuant to the Naig [Naig v. Bloomington Sanitation, 258 N.W.2d 81
(Minn. 1977)] and Folstad [Folstad v. Eder, 467 N.W.2d 608 (Minn. 1991)] cases.
Also, after a verdict or if all the parties consent to the total settlement
pursuant to Minn. Stat. 176.061, subd.8a, the employee has the option to request
the district court judge to distribute the proceeds in a manner that may deviate
from the statutory formula pursuant to Henning [Henning v. Wineman, 306 N.W.2d
Subrogation and WCRA
If a subrogation recovery is received, the net
proceeds are first used to reimburse the WCRA for amounts paid or payable. In
reported claims, the member needs WCRA approval to waive subrogation. See
Member’s Reference Guide/ Claims Reference Guide/
Waivers of Subrogation