Generally an employee that is injured in the workplace may not bring common law tort claims against their employer. Minn. Stat. § 176.031. While in most instances the employee cannot bring common law claims against their employer for work related injuries, an at-fault third party may seek contribution from the employer for damages owed to the injured employee based on the Minnesota Supreme Court’s ruling in Lambertson v. Cincinnati Corp., 312 Minn. 114, 257 N.W.2d 679 (Minn. 1977).
Contribution claims by third parties against the employer are commonly known as Lambertson claims. The employer’s Lambertson liability is separate and distinct from the right of subrogation. While the employer’s workers’ compensation carrier’s subrogation rights stem from the duty to pay compensation benefits under the Part One portion of the workers’ compensation policy, the employer’s duty to pay contribution (Lambertson liability) normally falls under the Part Two employer’s liability portion of the policy.
In the past, the Minnesota Supreme Court held that the recovery for the contribution claim was not to exceed the compensation benefits paid or payable by the employer. Id. at 130. However, an employer typically does not recover all workers’ compensation benefits paid and payable from their workers’ compensation subrogation action. Despite this, subsequent case law held that an employer could be liable to the third party for the amount of workers’ compensation benefits paid and payable even when the employer did not recover the full amount of workers’ compensation benefits paid and payable under the statutory allocation. Kordosky v. Conway Fire & Safety Inc., 33 W.C.D. 574, 304 N.W.2d 616 (Minn. 1981).
Practically speaking, this created additional exposure for the employer/insurer, contrary to the policy behind the Minnesota Workers’ Compensation Act, which favors limited liability for employers. The intent of the Workers’ Compensation Act is to ensure injured employees are able to obtain expedient medical treatment at a reasonable cost to the employer:
It is the intent of the legislature that chapter 176 be interpreted so as to assure the quick and efficient delivery of indemnity and medical benefits to injured workers at a reasonable cost to the employers who are subject to the provisions of this chapter.
Minn. Stat. § 176.001. Presumably in response to this case law and Lambertson, the legislature essentially codified Lambertson, granting third parties a right to bring a claim for contribution against employers and clarifying that the right to recover from an employer was limited to the amount the employer “recovered” pursuant to the statutory allocation:
Subd. 11. Right of contribution.
To the extent the employer has fault, separate from the fault of the injured employee to whom workers’ compensation benefits are payable, any non-employer third party who is liable has a right of contribution against the employer in an amount proportional to the employer’s percentage of fault but not to exceed the net amount the employer recovered pursuant to subdivision 6, paragraph (c) and (d).
Minn. Stat. § 176.061, subd. 11 (emphasis omitted).
- Calculating the Employer’s Comparative Fault in the Lambertson Context.
The Minnesota Supreme Court explained how an employer’s comparative fault is handled when asserting a workers’ compensation subrogation claim against the “at-fault” party and simultaneously the subject of a Lambertson contribution claim. In Johnson v. Raske Bldg., Inc., 276 N.W.2d 79, 79-80 (Minn. 1979), an employee was working for employer, N.H. Sandberg Erection Company (“Sandberg”), on a construction project when he suffered a fatal work injury. Id. A trustee brought an action against the general contractors for the construction project, Raske Building Systems, Inc. (“Raske”) and H.K. Ferguson Company (“Ferguson”). Id. at 80. The employee’s employer paid decedent employee’s beneficiaries $41,000 in workers’ compensation benefits. Id. A trustee then brought a wrongful death action against Raske and Ferguson, who impleaded Sandberg for contribution. Id. Sandberg (the employer) cross-claimed to enforce its statutory subrogation rights. Id.
A jury, by special verdict, set damages in the wrongful death action at $105,000.00 and found plaintiff’s decedent 5% negligent, the employer Sandberg 50% negligent, and general contractors Raske and Ferguson 55% negligent. Id.
The Court held that when an employer pays workers’ compensation benefits and the employee recovers a judgment against a third-party tortfeasor, the employer is entitled to reimbursement of the benefits paid pursuant to § 176.061, subd. 6(c), even though the employer is found negligent. Id. at 81.
Specifically, the Court stated the correct procedure for apportionment is:
The third-party tortfeasors, here Raske and Ferguson, should pay the entire verdict ($99,750) to the plaintiff. Id. The employer should then contribute to the third-party tortfeasor an amount proportionate to its percentage of negligence, but not to exceed the amount of workers’ compensation benefits payable to the employee ($41,000). Id. The employee (here the trustee) should then reimburse the employer pursuant to § 176.061, subd. 6(c). Id. In Raske the amount of reimbursement equaled the amount of workers’ compensation benefits paid ($41,000), and as a result no money will change hands. Id.
In sum, the at-fault party pays the entire verdict to the employee, less the employee’s comparative fault. Next the employer multiplies its percentage of fault by the entire verdict and pays the sum to the at-fault party. This amount cannot exceed benefits paid to the employee. Finally the employee will distribute the funds pursuant to the statutory formula in Minnesota Statute § 176.061, subd. 6(c).
Please contact us with any questions regarding employer’s liability exposure as it relates to injured employees who assert claims against at-fault third-party tortfeasors.