When someone is hurt by a third party while working, they may have grounds for a workers’ compensation claim and a civil suit. When this occurs, the injured individual’s settlement in the civil suit will have a lien placed on it by their employer or their employer’s workers’ compensation insurance company. This lien placement is known as subrogation and can cost you thousands in your settlement.
Missouri law requires that workers’ compensation insurers accept a reduced lien when pursuing subrogation. The formula which is used to calculate this lien is known as the Ruediger Formula.
To better understand how subrogation can impact your settlement it is important to understand what goes into computing the Ruediger Formula. The formula consists of the following elements R.S.Mo. 287. 150:
- Total amount paid in Worker’s Compensation
- Total amount in civil claim
- Divide line 1 by line 2
- Take line 2, subtract attorney’s fees and costs
- Multiply line 3 by line 4
Line five will represent the subrogation amount owed.
When dealing with a subrogation of a workers’ compensation claim, it is important to remember these five aspects of a subrogation claim:
- Your worker’s compensation claim must settle first, this actually at the benefit of the client
- Attorneys should ensure their contract applies to both the civil claim and workers’ compensation claim – and they are to be paid from the civil claim, this will result in a reduced subrogation interest from your employer
- Your employer or their insurer’s subrogation interest includes the amount paid in medical bills
- A spouse’s consortium settlement arising out of the third-party claim can be protected from subrogation Bridges v. Van Enterprises, 992 S.W.2d 322 (Mo. App. S.D. 1999)
- When calculating subrogation, comparative fault must be determined by the trier of fact and a settlement for an amount less than a verdict DOES NOT annul the findings of comparative fault