Delaware—Employer/Workers Compensation Carrier Right to Assert a Subrogation Lien

On September 1, 2023, the Supreme Court of Delaware, in Horizon Services, Inc. v. Henry, reversed its previous precedent and held that the state’s workers compensation (WC) law allows an employer/carrier (E/C) to assert a subrogation lien against benefits paid to an employee under an employer’s underinsured motorist (UIM) policy.

In this case, an employee obtained WC benefits after sustaining injuries in a car accident that was caused by a third-party tortfeasor when the employee was traveling in the employer’s vehicle. The employee filed a lawsuit and recovered damages under the employer’s UIM policy. Thereafter, the E/C sought reimbursement from the UIM proceeds paid to the employee for the WC benefits the E/C provided.

The lower court, relying on the supreme court’s 2013 decision in Simendinger v. National Union Fire Insurance Co., ruled that under Delaware statute 2363(e), the E/C was precluded from asserting a lien against the employee’s recovery of benefits under the UIM coverage.

The court reviewed Delaware statute 2363(e), which governs an insurer’s right of reimbursement when there is recovery against a liable third party. The statute provides that except for items of expense that are precluded from being introduced into evidence at trial by Delaware statute 2118, reimbursement shall be limited to the maximum amount available under the liable third party’s policy. The court clarified that “items of expense” refers to personal injury protection (PIP) expenses that are payable by a PIP policy. Thus, the court ruled, except as to PIP eligible expenses, Delaware statute 2363(e) expressly allows an E/C to assert a subrogation lien against an employee’s recovery of benefits under an employer’s UIM policy.

With this ruling, the court overruled its prior decision in Simendinger reasoning that the case mistakenly interpreted the statute as eliminating an employer’s ability to obtain a lien against benefits paid under an employer’s UIM policy.

Kentucky—Time Limitation for the Submission of Medical Bills

On August 24, 2023, the Supreme Court of Kentucky, in Farley v. P&P Construction, Inc., ruled that workers compensation (WC) law requires medical providers to submit their invoices to the insurer within 45 days of service regardless of whether a determination of liability has been made.

In December 2018, a medical provider invoiced a WC insurer for treatment rendered to a claimant on five separate occasions, the last of which took place on October 10, 2018. The WC insurer denied payment on the basis that the invoices were sent more than 45 days after treatment was provided and cited Kentucky statute 342.020—which states that the provider of medical services shall submit the statement for services within 45 days of the day treatment is initiated. However, the medical provider argued that the 45 days’ time limitation only applies after an award has been made on a claim (post award).

The supreme court affirmed the court of appeals decision finding that the 45 days’ time restriction is unambiguous and requires a provider to submit billing statements within 45 days after treatment has been provided. The court held that nothing in the statute limits the application of the 45-day rule to a period of time post award, and further noted that the date of treatment is the determinative factor and is the date that triggers the start of the 45-day period for a provider to submit its billing to the employer or insurer.

For more information on other cases monitored by NCCI’s Legal Division, visit previous Court Case Updates and Court Case Insights under the Legal section of INSIGHTS on ncci.com.

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