Completing A Subrogation Investigation

Subrogation is a large part of the investigation and handling of insurance injury claims. Most times a lot of carriers will sign off on subro because they feel the injury was due to operator error or a safety violation in general.

Yes machine operators or manufacturing employees in general make their fair share of errors, but there are some good guidelines to remember before you rule out subrogation:

What was the root cause of the injury?

Any time a machine injures an employee, you have to make sure the machine is not touched or altered until an adjuster or field adjuster can get out to the scene and investigate. This includes taking pictures, obtaining machine operation manuals, purchase orders, company safety protocol, training records, and so on. The machine should be locked and tagged out, and roped off from further use until the investigation is complete. Once the machine is used again, you lose out on a chance to complete a thorough investigation.

Consult Counsel promptly after obtaining all of the injury details.

Once your investigation is complete, you have to talk to your attorney of choice about what options you have, if any. Let the attorney provide you with the next steps in what to do and who to place on notice for your subro claim.

Complete a recorded statement from the injured worker and from any applicable witnesses.

Subrogation claims take a long time to be worked up to completion. This can take months to years in duration. The last thing you want is to chase around witnesses months later to find out details concerning the injury. The more time that goes by the less likely they will remember details important to your claim having a successful outcome.

Gather all paperwork on the machine and the purchase details from the employer.

You also need a lot of information from the employer. This includes purchase info, maintenance records, leasing paperwork if applicable, how much the machine has been used in daily operations, how the training of operating the machine is completed and who performs the training, and so on. A good rule of thumb is that you would rather have too much information versus not enough.

Find out if you can file for your subrogation claim directly, or if the employee has to file action against the manufacturer and you can follow behind them.

Many jurisdictions have very particular laws on how to pursue subro, and who can take action. Oftentimes the insurance carrier has to wait to file subro on their own, sometimes up to a handful of years post injury. The way carriers get around this is to get the employee to file, and then the carrier piggybacks on their claim by adding themselves in to the suit. Generally, any settlement proceeds that come later on will be split between the employee, the carrier, and the Counsel involved. Recovery will likely only come once the worker is at MMI, so all costs for wage loss and medical expense are accounted for and a final number for exposure is arrived at.

Weigh the costs versus the outcome.

If the claim is not too severe, you have to figure out if it is worth the cost and expense to actually pursue a subro claim. If we are talking about a medium-level laceration and a little time off of work, chances are that it will cost more to pursue subro versus just paying the cost and getting the worker back to work. But just because the claim is minor doesn’t mean the carrier can’t put the manufacturer on notice and see if they can work out a little deal of their own, if applicable in that jurisdiction. However many legal issues lie in wait, and these are the costs to determine if it is worth the time and effort or not. Every state will be different, so do your homework.

Ultimately, machine manufacturers have a duty to engineer and create machines that are safe for occupational use. Even though a worker may have made an operating error that does not protect the manufacturer 100% of the time. Why was the machine able to be operated without a guard? Why does the machine not turn off should material jam and make the machine inoperable? Why did this injury happen and what steps could have been taken to prevent an injury like this from occurring in the first place?

Subro claims are confusing, costly, and require a lot of hours to work up to be successful. You have to be on the ball from the very start, and adjusters have to gather a ton of information in order to even have a chance at being successful. So identify your subro avenue, complete the investigation, get your counsel to direct you, and make your choices from there. I would rather properly rule subrogation out from a global standpoint versus seeing an adjuster rule it out on their own just by saying the operator made an error in judgment.

Author Michael Stack, CEO Amaxx LLC. He is an expert in workers’ compensation cost containment systems and helps employers reduce their workers’ comp costs by 20% to 50%. He works as a consultant to large and mid-market clients, is a co-author of Your Ultimate Guide To Mastering Workers Comp Costs, a comprehensive step-by-step manual of cost containment strategies based on hands-on field experience, and is the founder & lead trainer of Amaxx Workers’ Comp Training Center, which offers the Certified Master of Workers’ Compensation national designation.

Contact: mstack@reduceyourworkerscomp.com.

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Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker, attorney, or qualified professional.