The Mississippi Supreme Court recently dropped a bombshell and announced that in order to be reimbursed for its statutory workers’ compensation lien, a workers’ compensation carrier or employer must intervene into the third-party action. Liberty Mutual Ins. Co. v. Shoemake, 2013 WL 1831793 (Miss., May 2, 2013). If it does not do so, its subrogation claim is waived.
In Liberty Mutual Ins. Co. v. Shoemake, Richard Shoemake was injured in Alabama but received workers’ compensation benefits from Liberty Mutual under Mississippi law. He brought and settled a third-party action in Alabama state court and reimbursed Liberty Mutual only the amount it was entitled to recover under Alabama law. Liberty Mutual, which knew of but did not join or intervene into the Alabama lawsuit, then sued Shoemake in Mississippi Circuit Court, seeking full reimbursement as allowed under § 71–3–71. In granting the Shoemake’s summary judgment, the Circuit Court held that Alabama law applied and further concluded that Liberty Mutual’s failure to intervene in the Alabama action barred Liberty Mutual’s claim. The Court of Appeals reversed, holding that Mississippi law governed the amount of Liberty Mutual’s subrogation claim and that Liberty Mutual was not required to intervene in the Alabama action to become entitled to reimbursement under Mississippi law. The Supreme Court reversed the Court of Appeals, holding for the first time that § 71–3–71 requires a workers’ compensation insurer to join or intervene in a third-party action to become entitled to reimbursement.
That Court held that the language of § 71–3–71 clearly conditions the employer or insurer’s right to reimbursement upon the employer or insurer’s joinder or intervention in the third-party action:
The acceptance of compensation benefits from or the making of a claim for compensation against an employer … shall not affect the right of the employee or his dependents to sue any other party at law for such injury or death, but the employer or his insurer shall be entitled to reasonable notice and opportunity to join in any such action or may intervene therein. If such employer or insurer join in such action, they shall be entitled to repayment of the amount paid by them as compensation and medical expenses from the net proceeds of such action (after deducting the reasonable costs of collection) as hereinafter provided. M.C.A. § 71-3-9.
The phrase “if such employer or insurer join” means that the employer or insurer is entitled to repayment under the statute only if it first joins or intervenes into the action. In explaining its decision, the Court noted that the phrase “if such employer or insurer join in such action” can be fairly read to mean “join or intervene in such action.” The preceding sentence unambiguously gives an employer or insurer the right either to join or intervene in the third-party suit. The Legislature’s choice of the word “join” to describe the employer or carrier’s participation in the suit should not be construed strictly as meaning that joinder alone, and not intervention as well, is the only means by which an employer or carrier may become entitled to reimbursement. The Court recognized that joinder and intervention are distinct concepts governed by different procedural rules, although it said they may be used interchangeably. However, the Court said that the plain language of § 71–3–71, which pre-dates the adoption of Mississippi’s rules of civil procedure, allows either joinder or intervention, and the Court said that either will suffice to protect an insurer’s or employer’s right to reimbursement.
The Court suggested that this new mandatory intervention requirement can be fulfilled either by filing a petition to intervene or a petition to join in the cause of action. It also noted that nothing prohibits an employer or insurer from entering a contractual subrogation agreement with the employee whereby joinder or intervention would be unnecessary. It obviously also wouldn’t apply to a situation where the carrier files the third-party action pursuant to § 71-3-71. Rather, the Court emphasized that an employer or insurer cannot simply sit out a third-party action filed by the employee and later, after judgment has been entered and all funds dispersed, then sue to enforce its statutory subrogation claim. It also noted that this decision is not a retreat from Mississippi’s long-standing policy of preventing the employee from receiving a double recovery – but because Liberty Mutual slept on its rights while the third-party action was adjudicated in Alabama, it had to forgo its rights of recovery.
Mississippi liberally allows an intervention at any point before the final distribution of funds to prevent a double recovery for the injured worker and ensure that an employer or insurer who has paid compensation will be fully reimbursed. Sneed v. Verdun, 611 So.2d 947 (Miss. 1992); Miss. Food & Fuel Workers’ Comp. Trust v. Tackett, 778 So.2d 136 (Miss. App. 2000); McDonald v. E.J. Lavino Co., 430 F.2d 1065 (5th Cir. 1970).
This case moves Mississippi into the “must hire subrogation counsel” column. If you have workers’ compensation subrogation cases involving Mississippi benefits, contact Gary Wickert at [email protected].