Where Does a Third Party “Stand” on Liens?

by Cranfill Sumner & Hartzog LLP

Dion v. William Robert Batten, Sr. (8/2/16)

Facts and Procedural History:

Plaintiff was employed by Neuwirth as a servicing agent.  In the course and scope of his employment with Neuwirth, he was involved in a car accident.  William Batten failed to stop at a red light and ran into plaintiff.  As a result of the crash, plaintiff sustained multiple injuries.  Plaintiff filed a workers’ compensation claim and received benefits totalling $528,665.61.  Pursuant to N.C. Gen. Stat. §97-10.2(j), Neuwirth and its insurance carrier asserted a lien against any third party recovery.

Plaintiff subsequently filed a civil lawsuit against Mr. Batten.  Mr. Batten had a policy with Nationwide, and Nationwide paid its policy limit of $100,000.00.  The Industrial Commission approved the disbursement of funds from Nationwide.

Plaintiff also maintained insurance policies with Foremost and GEICO that provided UIM coverage.  Following arbitration, it was determined plaintiff was entitled to recover $285,000.00 from these carriers for personal injuries sustained in the crash.  The trial court entered the arbitration award as a judgment.  In entering the judgment, the trial court determined that the arbitration award should be reduced by the amount of $100,000.00 which had previously been paid to plaintiff by Nationwide.

Foremost filed a motion to determine the subrogation amount pursuant to N.C. Gen. Stat. §97-10.2(j).  Following a hearing, the trial court concluded that although the workers’ compensation employer and carrier had paid workers’ compensation benefits to plaintiff totalling $528,665.61, their workers’ compensation subrogation lien could not exceed $285,000.00, that being the total amount of the judgment obtained by plaintiff in his lawsuit.  Ultimately, the trial court concluded the amount of the workers’ compensation subrogation lien should be $190,000.00, which was calculated by subtracting attorney’s fees, interest, and court costs from the judgment amount obtained by plaintiff.

Plaintiff, the workers’ compensation carrier and the workers’ compensation employer appealed, arguing that Foremost was not an employer and lacked standing to apply for a determination of the subrogation amount; and noting that even if Foremost did have standing, the trial court acted outside its subject matter jurisdiction when ruling on Foremost’s motion.

Applicable case law/statute:

The North Carolina Court of Appeals reviewed N.C. Gen. Stat. §97-10.2(j) and held that Foremost did have standing to apply for a determination of the subrogation amount.  Under the plain language of the statute, a third party may apply for a determination on subrogation.  The Court noted Foremost met the statutory definition of a third party because it was the underinsured motorist carrier liable for payment of damages.

The Court of Appeals further determined that the trial court possessed subject matter jurisdiction in this case.  A trial judge has discretion to determine the appropriate subrogation amount.  Moreover, the trial court correctly determined that court costs, attorney’s fees, and interest were not subject to the workers’ compensation subrogation lien.  The Court of Appeals affirmed the trial court’s order determining the amount of the employer and carrier’s workers’ compensation lien.


Be aware a third party tortfeasor can have standing to apply for a determination of a workers’ compensation subrogation lien.  Moreover, the Industrial Commission cannot disburse, and the employer cannot have a lien on, any amount larger than the amount actually recovered from the third party tortfeasor.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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