On March 4, 1791, Vermont joined the Union as the fourteenth state. It has long prided itself on independence, deliberate policymaking, and a certain laconic New England sensibility. But in the world of workers’ compensation subrogation—where uncertainty can mean millions in lost recovery—Vermont’s traditional caution has left subrogation professionals often waiting decades for answers. One of the longest-standing unanswered questions was whether a workers’ compensation carrier in Vermont has subrogation rights or reimbursement rights when the injured worker’s third-party claim is lost due to the legal malpractice of the worker’s attorney.
A Landmark Decision Arrives
On July 18, 2025, over 234 years after it celebrated statehood, Vermont finally answered the question. In WWSAF Special Partners Group, LLC (Series D) v. Costello, Valente & Gentry, P.C., 2025 WL 2014425 (Vt. July 18, 2025), the Vermont Supreme Court considered whether a workers’ compensation carrier—or its assignee—has standing to file a legal malpractice lawsuit against a third-party law firm that previously represented the injured worker in a failed third-party action. The plaintiff in WWSAF had acquired the subrogation rights of the compensation carrier, which had paid benefits to an employee injured in the course of employment. The law firm the employee hired to pursue the third-party action allegedly missed critical deadlines, and the case was dismissed. WWSAF, seeking to recover the compensation payout, brought a legal malpractice action against the law firm.
Decision and Industry Implications
The Vermont Supreme Court answered with a resounding “no.” The Court held that legal malpractice claims are personal to the client and cannot be pursued by third parties, even those who suffer a direct financial injury as a result of the attorney’s negligence. The carrier’s attempt to piggyback its reimbursement rights onto the malpractice claim was rejected. The Court emphasized the strong public policy interest in protecting the sanctity of the attorney-client relationship and limiting malpractice exposure to actual clients. In other words, a carrier—even one that could have recouped its lien had the case been properly handled—cannot bring a malpractice claim when the employee does not.
This decision finally resolves a long-standing ambiguity. Until now, subrogation professionals could only speculate. It underscores the challenge highlighted in my earlier article, “Subrogating the Unknown: Undecided or Imponderable Issues Subrogation Professionals Face.” In that piece, I captured the essential frustration of the industry: too many critical subrogation issues remain unanswered, and courts are slow to fill in the gaps. Subrogation law is filled with gray areas, state-specific inconsistencies, and silent statutes. The WWSAF decision is a reminder that while subrogation demands precision, we are often operating in legal fog.
The WWSAF case puts an exclamation point on my earlier thesis. It is an example of the years, sometimes decades, subrogation professionals must wait for courts to address unresolved questions. And when they finally do, the result may shut the door completely—requiring professionals to reevaluate long-standing practices, arguments, and theories.
Still Waiting: Medical Malpractice Subrogation in Vermont
Ironically, Vermont still hasn’t addressed whether a workers’ compensation carrier may assert a lien or subrogation right in a third-party medical malpractice claim—another long-standing unknown and a conundrum which arises much more frequently than legal malpractice cases. But the logic and language of 21 V.S.A. § 624—Vermont’s workers’ compensation subrogation statute—strongly supports such a right. That statute broadly authorizes recovery against “some person other than the employer” who is legally liable for the injury. Courts in other states have routinely held that when a medical provider negligently treats a compensable work injury, causing further harm, that provider becomes a legally liable third party under workers’ compensation subrogation statutes. The workers’ compensation carrier, having paid benefits related to that medical negligence, should retain subrogation rights to any recovery from that provider. There’s no language in Vermont’s statute that disallows such recovery. But again, until the issue is squarely presented and decided, we are left with arguments, not answers.
In the meantime, we are left—as we so often are—to our own creativity and advocacy. When faced with subrogating the unknown without precedent to rely on, the winner is usually the one who can craft the most persuasive argument. Subrogation counsel with experience across all fifty states can often draw persuasive parallels to decided cases in similar jurisdictions, helping to fill the vacuum until binding law catches up.
It is in those moments where subrogation becomes not just law, but craft. And it is in those moments that we would do well to remember the words of Mark Twain: “Whatever you say, say it with conviction.”
