Insurer could not assert workers' comp lien against proceeds of legal negligence action

Ramsey v. Kohl, _ N.W2d _, No.199240,1998 WL 643092 (Mich. Ct. App. Sept.18,1998).

A Michigan appellate court held that insurers and employers may not assert a workers' comp lien against the proceeds of a legal negligence action.

Here, a man received workers' comp benefits after being injured by exposure to industrial chemicals. He later sued the manufacturers and sellers of the chemicals, but suit was dismissed for failure to properly serve the complaint. Plaintiff then sued his attorneys, alleging legal negligence. The trial court denied the workers' comp insurer's motion to intervene.

Affirming, the appellate court noted that under MICH. COMP. LAWS (sec)418.827, a workers' comp insurer that has paid benefits to an injured employee is entitled to reimbursement from any recovery that the employee obtains in a third-party tort action. However, reimbursement is allowed only where the compensable injury was caused under circumstances creating legal liability in a third party, and only to the extent that the benefits were paid for the same injury.

The court noted whether an insurer may assert a workers' comp lien against the proceeds of a legal negligence action is a question of first impression in Michigan. States prohibiting these claims have relied on the language of their respective reimbursement statutes, the court said. Here, the statutory language plainly limits the application of workers' comp liens to those third-party actions where recovery is sought from persons liable for causing the injury for which compensation is payable.

Here, the court reasoned, plaintiffs lawyers did not cause the injury that led to the payments. Thus, the circumstances causing plaintiff's injury did not create a legal liability in the defendant lawyers. Therefore, the statute does not provide for the imposition of a lien on the proceeds of plaintiff's legal negligence claim.

Plaintiff's Counsel:

Noreen Slank, Southfield, Mich.

Copyright Association of Trial Lawyers of America Dec 1998
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