It is a tenet of modern workers’ compensation practice that expediency and efficiency in returning an injured employee to work benefits everyone involved. Nowhere is this goal met more directly and effectively than in the securing and utilization of nurse case management services. These professionals coordinate and monitor the medical treatment of injured workers, ensuring timely care, preventing unnecessary procedures, and guiding recovery paths that restore functionality and employability. Given this essential role, it is confounding that in many jurisdictions, the costs associated with these services are not considered reimbursable through subrogation.
When an employee receives workers’ compensation benefits and later recovers damages from a third-party tortfeasor, every state allows for subrogation. This ensures that the compensation carrier is reimbursed for benefits paid to or on behalf of the employee. Workers’ compensation subrogation is one of the key driver for holding down workers’ compensation insurance premiums, which is, in turn, one of the largest costs for businesses large and small in the U.S. Traditionally, workers’ compensation benefits which can be subrogated and recovered include medical expenses, indemnity benefits, and in the case of a fatality, death benefits and funeral costs. However, as the system evolves and adopts best practices for returning injured employees to work as quickly as possible, the scope of what constitutes a “benefit” must evolve too. Nurse case management costs, which accelerate and improve recovery outcomes, should logically be considered as such. In most states, they are not recoverable in subrogation. But they should be. These nurse case management professionals work on behalf of injured workers to coordinate care, manage complex medical issues, and return employees to productive work sooner.
The current patchwork of subrogation rights across jurisdictions reveals the need for a more inclusive approach. While a handful of states, like Michigan (Ziebell v. Wal-Mart, 2001 WL 566162 (Mich.Work.Comp.App.Com. 2001), recognize nurse case management fees as potentially reimbursable if they are shown to be “reasonable and needed,” others, like Illinois, reject reimbursement on the grounds that such services benefit the carrier more than the claimant (Cole v. Byrd, 656 N.E.2d 1068 (Ill. 1995)). This rigid dichotomy ignores the true value of nurse case managers to the recovery process and panders more to the powerful lobbying interests of trial lawyers who want to repay less in subrogation. The deafening irony here is that by deterring the use of nurse case managers whose fees cannot be included in a subrogation lien, the trial lawyers are actually increasing the liens because more benefits must be paid.
Studies and practice show that coordinated medical care reduces the duration of Temporary Total Disability (TTD) and often diminishes the extent of Permanent Partial Disability (PPD). This translates directly to fewer medical procedures, faster return to work, lower overall medical costs, and reduced indemnity payments. The ripple effect is substantial. Subrogation liens become smaller, which in turn increases the “net recovery” for the injured worker when a third-party settlement is reached. Both the employee and the carrier benefit when nurse case management is effectively implemented.
Courts have struggled with this issue largely due to statutory vagueness. For instance, Texas Labor Code § 417.002 allows for reimbursement of “benefits, including medical benefits… paid for the compensable injury.” The Texas Supreme Court in Texas Workers’ Comp. Ins. Fund v. Serrano, 962 S.W.2d 536 (Tex. 1998), emphasized that the statute did not limit reimbursement to only those benefits deemed “reasonable and necessary.” Thus, if an amount was paid as part of a compensable injury claim, it should be reimbursed under the law. Nurse case management fees clearly fit within this paradigm.
Similarly, California’s Labor Code § 3852 and § 3207 describe “compensation” broadly, including all benefits and services paid on behalf of the employee. In Adams v. W.C.A.B., 18 Cal.3d 226 (1976), the court considered that “medical-legal” costs could be credited against future benefits, implying they constitute recoverable compensation. Analogously, nurse case management—when it promotes cure or relief—should logically be included in recoverable costs.
Short-sighted trial lawyers argue that these services are “administrative” or “investigative” in nature, similar to independent medical exams (IMEs), which some courts have held as non-recoverable administrative expenses (e.g., Thomas v. Logue, 2023 234 N.E.3d 380 (Ohio 2023)). However, this argument conflates adversarial and non-adversarial expenditures. Nurse case management differs significantly from an IME in purpose and effect—it serves the claimant’s interests directly by accelerating recovery, enhancing the quality of care, and navigating treatment barriers.
Indeed, the analogy to mitigation of damages is apt. Common Law Courts have historically allowed plaintiffs to recover costs associated with mitigating their losses. If mitigation efforts reduce the overall cost of benefits paid and result in a higher net recovery, they should not only be applauded—they should be reimbursed. Nurse case managers perform precisely this function by ensuring medical resources are efficiently utilized, reducing waste and duplication, and tailoring care to the specific needs of injured employees.
Subrogation statutes often refer to reimbursement for payments made “to or on behalf of” the claimant. In the dissenting opinion of Thomas v. Logue, Justice Kennedy rightly emphasized that expenditures such as independent reviews were conducted “in the interest of” the employee, and thus fell within this language. If such logic is valid for independent reviews, it is even more compelling when applied to nurse case management, which directly benefits employees in their recovery efforts, helping to keep workers’ compensation liens smaller.
Refusing to include nurse case management costs within the definition of recoverable “benefits” disincentivizes carriers from investing in quality care coordination, which paradoxically leads to larger liens and smaller net recoveries for employees. This undermines the very purpose of the workers’ compensation system: to efficiently restore employees to health and work.
In the final analysis, including nurse case management fees in subrogation liens is not merely a legal possibility—it is a practical necessity. It aligns with the dual goals of the compensation system: ensuring swift and complete medical recovery for employees and maintaining fair cost distribution among the stakeholders. Legislators, courts, and practitioners should coalesce around this understanding and modernize the interpretation of “benefits” to include all reasonable expenditures that facilitate recovery. Doing so will not only uphold the integrity of the system but also foster better outcomes for injured workers and employers alike. If Florence Nightingale helped win wars with a lamp and a ledger, surely we can recognize that her modern-day counterparts deserve to be seen as part of the cure—and part of the recovery.
