On October 11, 2023, Cranfill Sumner LLP held our annual Legal Summit, a virtual event featuring insightful presentations by our attorneys that focused on the latest legal developments in North Carolina. Presentations covered hot topics in risk management, business law, regulatory updates, employment law, education law, workers’ compensation, and more. Below is a question Roy Pettigrew fielded from an attendee after his presentation “Anatomy of a 97-10.2(j) Hearing”.

Question: In a situation where a workers’ compensation carrier and the Plaintiff’s attorney have an agreement as to the prosecution of the third-party claim, do they have to divulge what the agreement is to the third-party liability carrier, especially where the workers’ compensation carrier has never asserted a lien or given notice to the third-party liability carrier? And, how can the Plaintiff and the workers’ compensation carrier get the benefit of the full amounts paid under the Workers’ Compensation Act, where there is no notice of the “lien”?

Answer: If the workers’ compensation carrier paid workers’ compensation benefits on account of injury caused by the third party, there is an automatic lien conferred by statute (N.C. Gen. Stat. § 97-10.2). There is no notice requirement whatsoever. Depending on the date of loss, that generally dictates who can prosecute the third-party defendant/liability carrier in “their” name, be it the workers’ compensation “employer” (discouraged by the statute), or the Plaintiff (which is preferred as the injured worker is the real party in interest). 

So, if I am representing the workers’ compensation carrier, I first have to inquire or determine whether the Plaintiff (i.e. injured worker) will cooperate in the suit, by being the named “party plaintiff.”  This is required by Section 97-10.2.  So, it is not uncommon for me, if representing the workers’ compensation carrier (and the Plaintiff), to have the workers’ compensation carrier and the Plaintiff enter into a “Joint Prosecution Agreement,” which would allow one attorney to represent both entities simultaneously.

Absent a “Joint Prosecution Agreement,” there could be a “conflict of interest,” unless the workers’ compensation carrier and the Plaintiff come to an arrangement beforehand as to how any third-party recovery from the liability carrier is to be divided.  In other words, that is the whole reason for the “Joint Prosecution Agreement.” If they come to that agreement, then one attorney can represent both, as the Joint Prosecution Agreement resolves the conflict of interest.

As for discoverability of the “Joint Prosecution Agreement,” I will not voluntarily disclose it in my cases.  But, I could see situations where – certainly if the case goes to trial – there is a charge conference on jury instructions, how it may be relevant.  Perhaps certain other circumstances too. Whether you, as a third-party liability carrier could get your hands on it, would probably depend on the Judge, how discovery unfolds, etc.