MWL’s subrogation expertise is not limited to effectively subrogating all lines of insurance for its clients. Recently, our expertise and authority in workers’ compensation subrogation resulted in several Nebraska legislators and a lobbying concern to reach out to MWL and rewrite Nebraska’s workers’ compensation subrogation statutes.
Judicial Decisions that Disrupted Nebraska’s Subrogation Balance
In recent years, Nebraska’s workers’ compensation subrogation system experienced an unexpected detour, not by legislative failure or inaction, but through judicial overreach that threatened to undo decades of carefully crafted statutory balance. The Nebraska Supreme Court, in a handful of decisions widely viewed by industry experts and insurers as judicial activism, introduced ambiguity and unpredictability into the process of reimbursing workers’ compensation liens from third-party settlements.
The First Blow: In re Estate of Evertson (2016)
In 2016, the Nebraska Court of Appeals decided the case of In re Estate of Evertson, 889 N.W.2d 73 (Neb. 2016) struck the first blow. Bruce F. Evertson was killed in a work-related motor vehicle accident with a tractor-trailer unit driven by Dennis Dobrinski. Travelers, the workers’ compensation carrier for the employer, paid significant benefits to the widow and was obligated to continue payments for nearly 28 years. Evertson’s estate settled its third-party case for $500,000, of which $125,000 was allocated to Evertson’s adult son, $125,000 was allocated to Evertson’s adult daughter, and $250,000 was allocated to the widow. A hearing was held on November 17, 2014 to determine a “fair and equitable” division of the $250,000 settlement proceeds allocated to the widow. Travelers claimed a subrogation interest in the entire $250,000 allocated to Darla pursuant to § 48-118. On December 29, 2014, the ruled that a “fair and equitable” distribution of the settlement proceeds was:
Darla: $207,416.69;
Attorneys: $42,583.31 for their fees; and
Travelers: $0
The court considered such unrelated factors such as a “dream home” the Evertsons had just purchased and the “fact” that Travelers had been paid premiums and insurance companies are in the business of assuming risk.
On appeal, the Nebraska Court of Appeals approved the distribution, noting that the distribution of proceeds of a judgment or settlement under § 48-118.04 is left to the trial court’s discretion and there is an abuse of discretion standard on appellate review. The court, on appeal, did not consider the $1 million UIM policy and the settlement of $500,000 from that policy. This is because the record on appeal did not establish that UIM benefits had or would be received.
Continuing Erosion: Kroemer v. Omaha Track Equip., L.L.C. (2017)
On June 16, 2017, the Nebraska Supreme Court again revisited the “fair and equitable” distribution factors to be considered. Kroemer v. Omaha Track Equip., L.L.C., 898 N.W.2d 661 (Neb. 2017). Kroemer was injured while employed for Ribbon Weld, LLC and settled his third-party case for $150,000 despite a $207,555 workers’ compensation lien. The trial court held a “fair and equitable allocation hearing”, at which it made the following allocation:
$94,834.27 to Kroemer;
$55,165.73 for attorney fees and expenses; and
$0 to the workers’ compensation carrier.
In allocating the recovery, the trial court considered the premiums paid to the carrier and the “comparative risk to the insurance carrier versus Kroemer.”
MWL Drafts Legislative Bill 313 to Restore Fairness
In 2025, a possible legislative course correction arrived when MWL was asked to draft Legislative Bill 313—a decisive effort to restore clarity, fairness, and legislative intent. The heart of the issue lies in the language inserted into Neb. Rev. Stat. § 48-118.04, which instructs courts to ensure a “fair and equitable” distribution of third-party settlement proceeds when both an injured worker and a compensation carrier had competing claims. While seemingly benign, this vague standard became a judicial weapon.
Wisconsin’s Proven Model as the Blueprint
Recognizing the crisis, Nebraska legislators, with the help of a local lobbying group, reached out to MWL to develop a legislative solution that would curb the courts’ misuse of the “fair and equitable” standard and restore balance to the system. Drawing on decades of experience and helping draft best-in-class statutory frameworks, MWL crafted Legislative Bill 313 to mirror the most favorable workers’ compensation subrogation statute in the country—Wisconsin’s § 102.29.
Legislative Path: From LB 313 to LB 455 and AM678
Legislative Bill 313 was introduced by Senator Teresa Ibach on January 16, 2025, and proposed a transparent, structured formula for the allocation of third-party recoveries. After deducting reasonable recovery costs, one-third of the net proceeds would go to the injured worker, the compensation carrier would then be reimbursed for benefits paid, and any remaining funds would return to the injured worker. This model, long-established in Wisconsin, provides a simple, litigation-reducing, and court-tested mechanism for balancing the interests of all parties.
Nebraska carriers had often found themselves unable to recoup large sums paid out in medical expenses and indemnity benefits, even when third-party recoveries were substantial. Plaintiffs’ attorneys routinely argued that the carrier’s recovery should be reduced or barred under an elastic “fairness” standard that had no statutory basis and invited judicial discretion seemingly incapable of being abused. This erosion of subrogation rights undermined one of the core principles of workers’ compensation: the employer pays the benefits even though it didn’t cause the injury, but recovers from the true at-fault party when available.
Unfortunately, as of June 2025, Nebraska Legislative Bill 313 (LB 313) has not been enacted as standalone legislation. However, key provisions from LB 313 were incorporated into another bill, LB 455, through Amendment 678 (AM678), which was adopted by the Nebraska Legislature on June 6, 2025. Although LB 313 did not advance independently, its provisions formed part of LB 455, which progressed through the legislative process.
Through AM678, filed on March 25, 2025, the provisions of LB 313 regarding subrogation and the distribution of third-party claim proceeds were added to LB 455. This amendment provided a defined statutory formula: after deducting reasonable recovery expenses, one-third of the remaining amount would go to the employee or their representative; the employer or workers’ compensation insurer would then be reimbursed for compensation payments made or obligated; any remaining balance would return to the employee or their representative.
Final Outcome: Effort Blocked in 2025
Despite the promise of a legislative course correction, LB 455 ultimately failed to pass. The bill, though prioritized and debated, died in chamber on June 6, 2025, and is no longer pending before the Nebraska Legislature. The bill faced opposition from plaintiffs’ attorneys and trial lawyer associations who benefit from the broad discretion granted by the “fair and equitable” standard and stood to lose substantial contingency fees under a more defined and balanced formula. Procedural maneuvers also played a role: motions were filed to indefinitely postpone, bracket, or recommit the bill. Although it was prioritized and debated, LB 455 died in chamber on June 6, 2025, without reaching a final vote. As a result, the bill is no longer pending before the Nebraska Legislature. This marked a significant setback in the effort to restore clarity to Nebraska’s subrogation framework and to correct the judicial distortions introduced by recent case law.
Why the Fight Continues
Nonetheless, the legislative journey of LB 313 and LB 455 illustrates a coordinated and well-supported attempt to bring normalcy and fairness back to Nebraska’s workers’ compensation subrogation process. It also marked a coordinated effort between lobbyists and subrogation professionals—a beacon of hope that legislators well known for their subrogation blinders are beginning to protect a very important aspect of the American economy. Subrogation success is passed on in the form of lower workers’ compensation premiums for businesses small and large.
The implications of the proposed reform remain relevant. It would restore the ability of workers’ compensation insurers to reasonably expect reimbursement when a third party is responsible for the injury, helping to control the costs of insurance and promoting equitable recovery.
The lobbying effort behind LB 313 and LB 455 was notable for its cooperation between lawmakers, legal experts, and subrogation professionals. MWL’s involvement lent national expertise to the process, ensuring that Nebraska’s solution was not only grounded in precedent but also tested and effective. The selection of Wisconsin’s statute as a model was no accident: courts there have repeatedly upheld its clarity and fairness, making it a natural blueprint for Nebraska’s solution.
Several commentators and industry voices praised the reform effort. The legal blog at the Nebraska law firm of Baylor Evnen highlighted how the proposed language would remove uncertainty and level the playing field between injured workers, their attorneys, and compensation carriers. Meanwhile, analysis from Citizen Portal AI and MWL’s own legislative updates emphasized the urgent need for reform and the Legislature’s bold attempt to respond.
