ILNews

Third-party settlement ends fund liability

Jennifer Nelson
January 1, 2008
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The Indiana Supreme Court held in a case of first impression in worker's compensation that when a settlement with a third-party ends an employer's liability, the liability of the Second Injury Fund will also be terminated. However, when the Indiana Worker's Compensation Board approves an agreement by the employer to continue paying worker's comp benefits after the settlement, the injured employee may make a claim to the Second Injury Fund.

In Ronald Mayes v. Second Injury Fund, No. 93S02-0802-EX-0107, Ronald Mayes appealed the Indiana Worker's Compensation Board's decision to deny his claim for entry into the Second Injury Fund on the basis of his confidential settlement with Federal Express, a third-party, after he was injured while working for Main Tech Corporation while on site at Fed Ex.

The Indiana Court of Appeals affirmed the board's decision, which ruled the settlement alleviated Main Tech from having to pay any further compensation and alleviated the Second Injury Fund from the need to pay. The fact Main Tech voluntarily agreed to continue to pay Mayes is outside the purview of the Indiana Worker's Compensation Act.

The Supreme Court overturned the board's decision because in the settlement between Mayes and Fed Ex, Main Tech voluntarily maintained its liability even though it would have been terminated under Indiana statute. The board approved this agreement and therefore approved a continuation of liability, wrote Chief Justice Randall T. Shepard.

"... (T)he Second Injury Fund's liability is derivative of the employer's liability. If the Board approves an agreement continuing an employer's liability despite third party settlement, it follows that the Second Injury Fund should also remain liable," he wrote.

If Main Tech and Mayes hadn't sought approval by the board, then Main Tech's payments to Mayes would have been outside the purview of the Indiana Worker's Compensation Act. The board could have refused to approve the agreement, but since it did not, Mayes' settlement with Fed Ex didn't terminate the Second Injury Fund's liability.

"In the future, if the Board is concerned about double recovery, it should refuse approval of agreements involving confidential settlements or insist that the agreement contain a provision releasing the Second Injury Fund from liability," the chief justice wrote.

The high court determined in general, under Indiana statute, the Second Injury Fund's liability is a derivative of the employer's liability, and as such, settlements with third parties preclude Second Injury Fund eligibility.

The Indiana General Assembly's decision to make explicit reference to Second Injury Fund benefits in its enactment on termination after a third-party settlement led the court to rule the legislators intended for the liability of the Second Injury Fund to be a derivative of the employer's liability.

The policy of Indiana Code Section 22-3-2-13 is to bar any worker's compensation, regardless of who pays it, in the event the employee gets money from a third-party settlement that is as much or more than the total amount of recoverable compensation, he wrote.
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  1. It's a big fat black mark against the US that they radicalized a lot of these Afghan jihadis in the 80s to fight the soviets and then when they predictably got around to biting the hand that fed them, the US had to invade their homelands, install a bunch of corrupt drug kingpins and kleptocrats, take these guys and torture the hell out of them. Why for example did the US have to sodomize them? Dubya said "they hate us for our freedoms!" Here, try some of that freedom whether you like it or not!!! Now they got even more reasons to hate us-- lets just keep bombing the crap out of their populations, installing more puppet regimes, arming one faction against another, etc etc etc.... the US is becoming a monster. No wonder they hate us. Here's my modest recommendation. How about we follow "Just War" theory in the future. St Augustine had it right. How about we treat these obvious prisoners of war according to the Geneva convention instead of torturing them in sadistic and perverted ways.

  2. As usual, John is "spot-on." The subtle but poignant points he makes are numerous and warrant reflection by mediators and users. Oh but were it so simple.

  3. ACLU. Way to step up against the police state. I see a lot of things from the ACLU I don't like but this one is a gold star in its column.... instead of fighting it the authorities should apologize and back off.

  4. Duncan, It's called the RIGHT OF ASSOCIATION and in the old days people believed it did apply to contracts and employment. Then along came title vii.....that aside, I believe that I am free to work or not work for whomever I like regardless: I don't need a law to tell me I'm free. The day I really am compelled to ignore all the facts of social reality in my associations and I blithely go along with it, I'll be a slave of the state. That day is not today......... in the meantime this proposed bill would probably be violative of 18 usc sec 1981 that prohibits discrimination in contracts... a law violated regularly because who could ever really expect to enforce it along the millions of contracts made in the marketplace daily? Some of these so-called civil rights laws are unenforceable and unjust Utopian Social Engineering. Forcing people to love each other will never work.

  5. I am the father of a sweet little one-year-old named girl, who happens to have Down Syndrome. To anyone who reads this who may be considering the decision to terminate, please know that your child will absolutely light up your life as my daughter has the lives of everyone around her. There is no part of me that condones abortion of a child on the basis that he/she has or might have Down Syndrome. From an intellectual standpoint, however, I question the enforceability of this potential law. As it stands now, the bill reads in relevant part as follows: "A person may not intentionally perform or attempt to perform an abortion . . . if the person knows that the pregnant woman is seeking the abortion solely because the fetus has been diagnosed with Down syndrome or a potential diagnosis of Down syndrome." It includes similarly worded provisions abortion on "any other disability" or based on sex selection. It goes so far as to make the medical provider at least potentially liable for wrongful death. First, how does a medical provider "know" that "the pregnant woman is seeking the abortion SOLELY" because of anything? What if the woman says she just doesn't want the baby - not because of the diagnosis - she just doesn't want him/her? Further, how can the doctor be liable for wrongful death, when a Child Wrongful Death claim belongs to the parents? Is there any circumstance in which the mother's comparative fault will not exceed the doctor's alleged comparative fault, thereby barring the claim? If the State wants to discourage women from aborting their children because of a Down Syndrome diagnosis, I'm all for that. Purporting to ban it with an unenforceable law, however, is not the way to effectuate this policy.

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