Subrogation Interest of Workers’ Compensation Insurer Must Be Protected Under Texas Law

The Supreme Court said in Texas Mut. Ins. Co. v. Ledbetter, 251 S.W.3d 31 (Tex. 2008) :

“When an injured worker settles a case without reimbursing a compensation carrier, everyone involved is liable to the carrier for conversion – the plaintiffs, the plaintiffs’ attorney, and the defendants. As between those parties, we have held that generally those who received the funds unlawfully (the plaintiffs and their attorney) should disgorge them rather than making the tortfeasors pay twice.”

In this case, plaintiff’s attorney attempted to manipulate a settlement by dismissing all claims in a death case, except for the claims of the deceased’s estate. The Court ordered that the carrier’s intervention be reinstated. It also remanded the case with instructions for the trial court to protect the carrier’s subrogation interests.

 

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