I am involved in a case where we are attempting to settle our case with the manufacturer of a defective product and the company that rented the device to my client's employer. Worker's compensation carrier has quite a large lien. We have made a part of our settlement that we be allowed to settle around the carrier and that respondents to our claim be responsible for any claimed subrogation of the carrier. I intend to file a petition to approve settlement and settle around the carrier in circuit court. The petition will be an original filing as there is no current ongoing lawsuit.
AR. Code Ann. §11-9-410 (a) allows an injured worker to pursue a third party claim or lawsuit, but the comp carrier "shall be entitled to reasonable notice and opportunity to join in the action." Subsection (b) allows for the employee (compensation beneficiary) to pursue a claim for benefits over and above what the carrier has paid out Here is where it gets interesting. under subsection (c), the settlement of a claim brought under (a) compensation beneficiaries claim or (b) carrier's claim "must have the approval of the court or of the commission, except that the distribution of that portion of the settlement which represents the compensation payable under this chapter must have the approval of the commission."
If a settlement is reached, then the matter may not be settled until three days written notice to all parties with an interest in the claim of the intent to settle.
HOW TO SETTLE THE CLAIM AROUND THE CARRIER. It certainly appears that if you follow the statute and you recite in your release that the claim is setting non-compensation claims and that a subsection (b) claim is preserved then you can settle take the money and not have to pay the carrier. The burden then shifts to the carrier to pursue its benefits. The only support I could find to this proposition after the 1993 amendments to the worker's compensation act, is the case of Smith v. Chemical Leaman Tank Lines, Inc. 285 F.3d 750 (8th Cir. 2002). Smith recites that the Comp act was amended in 1993 "because courts had 'continually broadenend the scope and eroded the purpose of the [act].'" The amendments were to appeal, annul and hold for naught all prior decisions on the [act]. The Smith court found no conflict between the 93 amendments strict construction requirements and the settle around doctrine so long as the carrier's rights were preserved.
Any circuit court decisions would be appreciated.
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