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October 1, 2007

This article was originally published in the Subrogator, a publication by the National Association of Subrogation Professionals, Fall, 2007. © Copyright 2007 by NASP. All rights reserved. Republished by Butler with permission from NASP.

State Specific | Alabama

The Supreme Court of Alabama recently limited the rights of a workers’ compensation insurer seeking to recover medical expenses paid on behalf of a worker who later died as a result of his injuries. Alabama’s unique wrongful death statute, which allows for the recovery of punitive damages only, precludes an insurer from recovering medical expenses incurred prior to the worker’s death.

The case of Trott v. Brinks, Inc., No. 1050895, _____ So. 2d _____, 2007 WL 1300734 (Ala. May 4, 2007) concerned a certified question from the United States District Court for the Northern District of Alabama. At issue was whether a workers’ compensation insurer could intervene in a wrongful death action filed by the employer’s estate and recover, in subrogation, medical expenses paid by the insurer to the covered employee prior to the employee’s death.

Following an accident that severely injured a covered worker, the insurer paid approximately $415,000 in medical bills. The worker later died from his injuries. The worker’s estate brought a wrongful death action against the alleged tortfeasor. The insurer intervened in the wrongful death action, claiming that it was entitled to be reimbursed under its contract of insurance for both the death benefits paid, as well as the medical bills it paid prior to the worker’s death.

The Supreme Court of Alabama held, however, that under Alabama law, a workers’ compensation insurer’s subrogation right is no different than the equitable subrogation rights of any other subrogee. As such, the subrogee (here, the workers’ compensation insurer) had no greater rights to recover damages that the subrogor (the employee). Under Alabama law, the only damages recoverable in a wrongful death action are punitive damages. Code of Ala. § 6—5—410. Since the employee is deceased and his only action for damages is for wrongful death and, further, since compensatory damages are not recoverable under such an action, the intervening insurer/subrogee cannot recover medical expenses it had paid to the employee.

The Court specifically held that denying the workers’ compensation insurer’s right to subrogation would not cause the employee to recover twice because the damages recoverable are punitive, designed to punish the third-party tortfeasor, and not to compensate the deceased’s estate for medical expenses and other damages incurred prior to the employee’s death. The Court left open the issue, however, of whether the death benefit paid would still be subject to recovery in subrogation in the event of a judgment against the third-party.