Subrogating Workers’ Compensation Death Benefits In Alabama

Alabama Flag With GavelWorkers’ compensation subrogation in Alabama isn’t as clear as it might otherwise appear—especially when an employee dies. Alabama’s Survival Statute, § 6-5-462, did not change the common law rule that a cause of action in tort does not survive in favor of the personal representative of the deceased when an employee dies.[1] Therefore, the general rule is that under the survival statute, an unfiled tort claim does not survive the death of the person with the claim.[2] Understanding workers’ compensation subrogation of death benefits in Alabama requires an understanding of the law regarding and the difference between survival actions and wrongful death actions.

Survival Actions. Under common law, any cause of action (the right to bring suit) and any pending action (lawsuit already filed) ended with the death of the plaintiff.[3] Alabama’s Survival Statute is found at § 6-5-462 and it changed that. It provides that any claims for which suit has been filed survive the plaintiff’s death and can continue to be prosecuted by the personal representative of the deceased’s estate. This is true whether or not the employee died of causes related to the original injury.[4] The personal representative of the employee’s estate simply amends the complaint to include a claim for wrongful death.[5] When the employee dies from the original injury, the personal representative must amend the original personal injury complaint rather than file a separate wrongful death action.[6]

However, any cause of action (e.g., personal injuries) for which suit has not been filed at the time of death unrelated to the original injury do not survive and die with the deceased.[7] If an injured employee dies of unrelated causes but hasn’t filed suit at the time of his death, his claim cannot be brought. This is because Alabama’s Survival Statute does not deal with the survival of causes of actions, but with pending actions. A survival action case proceeds as if the deceased were filing and prosecuting his own personal injury case and claiming personal injury damages, but instead the family or personal representative is doing it for him. Damages that the personal representative can claim include loss of wages, medical expenses, pain and suffering, and emotional distress.

Worker Compensation InjuryWrongful Death Actions. Alabama’s Wrongful Death Statute is found at § 6-5-410.[8] If an injured employee dies from causes related to the original injury, workers’ compensation death benefits may be owed and a wrongful death action can be prosecuted by the heirs of the deceased.[9] Alabama is unique among states in that the personal representative of the deceased must make the claim, not just a family member. A family member could be a personal representative, but the deceased may not have appointed one through a will before dying. In this instance, an estate will have to be opened and a probate court will have to appoint a personal representative before any claims can be made. Unlike most states, however, damages under the wrongful death statute are entirely punitive with no consideration of compensatory damages.[10] Many other states allow recovery of economic damages such as medical expenses, funeral expenses, lost wages, and other losses, but Alabama doesn’t take those into account in wrongful death cases. Any wrongful death damages are distributed to the heirs “per stirpes” according to the Alabama laws of descent and distribution. Damages that would have gone to the deceased employee will be dispersed evenly to the estate instead of just to the surviving family members. Beneficiaries have an opportunity to receive money in a survival action case even if they were not related to the deceased and were just in the will.

Subrogation in Death Cases. Given the confusing and unusual nature of Alabama wrongful death and survival actions, it is only natural for there to be confusion when the concept of workers’ compensation subrogation in death cases enters the picture. Alabama approaches this somewhat differently than most states.

To begin with, when an injured employee later dies as a result of his injuries, a workers’ compensation carrier is not entitled to be reimbursed for medical benefits it has paid out of amounts recovered from a third party in a wrongful-death action filed by the employee-decedent’s personal representative.[11] This is because § 25-5-11(a) provides that an employer has a right to “reimbursement” of compensation/indemnity benefits. As to medical benefits, however, the carrier is entitled to “subrogation” rights. The Trott case announced that, despite the subrogation statute, 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) has no greater rights to recover damages that the subrogor (the employee). As a consequence, a carrier is not entitled to be reimbursed for medical benefits paid to a deceased employee, out of amounts recovered from a third party in a wrongful death action filed by the employee-decedent’s personal representative, where the decedent’s personal representative would not be able to recover them.[12] When a carrier is subrogated, it “steps into the shoes” of the decedent’s personal representative and the personal representative cannot recover medical expenses in a wrongful death case. Therefore, a carrier is not entitled to be reimbursed for medical benefits from amounts recovered from a third party in a wrongful-death action filed by the employee-decedent’s personal representative.[13]

Subrogating Alabama Workers' Compensation Some have pointed to the 1997 Court of Appeals decision in Municipal Workmen’s Comp. Fund, Inc. v. Jolly for authority that a carrier is entitled to recover medical benefits under § 25–5–11(a) in a wrongful-death action.[14] However, Jolly does not analyze the distinction between the words “reimbursement” and “subrogation” in § 25–5–11(a) or explain how it reached its conclusion. Furthermore, Jolly relied on the authority of Millers Mut. Ins. Ass’n v. Young, which involved the reimbursement of death benefits from a damages award in a wrongful-death action, not medical benefits. Therefore, the Supreme Court has declined to follow Jolly.[15]

Under Alabama law, compensatory damages cannot be awarded in wrongful death cases. Only punitive damages are available as damages in a wrongful death lawsuit. Alabama is the only state in the entire country that provides for only the recovery of punitive damages. In support of this strange damages rule, Alabama believes that while the value of human life is not capable of being translated into a monetary measurement, punitive damages can be measured by the seriousness of the wrongful act as well as the need to deter similar wrongs in the future. There are many critics of this rule, and Alabama may well change this in the future.

In addition, as explained above, if an injured employee dies from causes unrelated to the work-related injury, any cause of action (e.g., personal injuries) for which suit has not been filed at the time of death do not survive and die with the deceased.[16] If an employee suffers devastating injuries while working, and the workers’ compensation carrier spends millions of dollars in medical care, but dies of a heart attack unrelated medically to the original injury before he files a personal injury suit, his estate cannot file a personal injury lawsuit. It dies with him.

Section 25-5-11(d) provides that a carrier’s right to independently file a third-party subrogation action against a tortfeasor begins once the underlying two-year statute of limitations runs and extends an additional six months. Unfortunately, this means that the carrier must run the risk that the employee dies of unrelated causes within the first two years, or its right to initiate the third-party action may be foreclosed. Alabama has boldly declared that medical expenses cannot be subrogated in a wrongful death action because the personal representative of the employee’s estate does not have the right to recover medical expenses. While there is no case law on point, it follows that a court might rule that if an employee dies of causes unrelated to the original injury, and suit has not yet been filed, the workers’ compensation carrier will be out of luck when its statutory time period for filing a third-party action (up to six months after the statute of limitations on the underlying personal injury cause of action) has expired.

Subrogation professionals should consider engaging subrogation counsel early in Alabama injury claims. Working with local counsel and/or even engaging personal injury lawyers to partner with could save the carrier a considerable amount of money. Entering into a joint prosecution agreement and stipulation is a strategic way to get suit filed early and well before anything unfortunate occurs.

If you have any questions regarding workers’ compensation subrogation in Alabama, please contact Gary Wickert at [email protected].

[1] Continental National Indemnity Co. v. Fields, 926 So. 2d 1033 (Ala. 2005).

[2] Malcolm v. King, 686 So. 2d 231 (Ala. 1996).

[3] § 37:3. Interrelationship between the wrongful-death statutes and the survival statute, Alabama Law of Damages § 37:3 (6th ed.).

[4] King v. National Spa and Pool Institute, Inc., 607 So. 2d 1241 (Ala. 1992).

[5] Id.

[6] Ex parte Burnham Service Co., Inc., 649 So. 2d 1270 (Ala. 1994).

[7] Ala. Stat. § 25-5-11(a); Shelton v. Green, 261 So. 3d 295 (Ala. 2017).

[8] Ala. Stat. § 6-5-410.

[9] Id.

[10] Lance, Inc. v. Ramanauskas, 731 So. 2d 1204 (Ala. 1999).

[11] Trott v. Brinks, Inc., 972 So.2d 81 (Ala. 2007).

[12] Id.

[13] Trott, supra.

[14] Municipal Workmen’s Comp. Fund, Inc. v. Jolly, 709 So.2d 1230 (Ala. App. 1997).

[15] Trott, supra.

[16] Ala. Stat. § 25-5-11(a); Shelton v. Green, 261 So. 3d 295 (Ala. 2017).

Gary L. Wickert

Gary L. Wickert is an insurance trial lawyer and partner with the law firm of Matthiesen, Wickert & Lehrer, S.C. Gary has nearly four decades of litigation experience and is regarded as one of the world’s leading experts on insurance subrogation. He is the author of several subrogation books and legal treatises and a national and international speaker and lecturer on subrogation and motivational topics.