48-118.04. Third-party claims; settlement; requirements.

(1) A settlement of a third-party claim under the Nebraska Workers' Compensation Act is void unless:

(a) Such settlement is agreed upon in writing by the employee or his or her personal representative and the workers' compensation insurer of the employer, if there is one, and if there is no insurer, then by the employer; or

(b) In the absence of such agreement, the court before which the action is pending determines that the settlement offer is fair and reasonable considering liability, damages, and the ability of the third person and his or her liability insurance carrier to satisfy any judgment.

(2) If the employee or his or her personal representative or the employer or his or her workers' compensation insurer do not agree in writing upon distribution of the proceeds of any judgment or settlement, the court, upon application, shall order a fair and equitable distribution of the proceeds of any judgment or settlement.

Source

Annotations

1. Fair and equitable distribution

2. Miscellaneous

1. Fair and equitable distribution

A distribution of the proceeds of a judgment or settlement under subsection (2) of this section must be fair and equitable to both the employee and the employer or its insurer. Kroemer v. Omaha Track Equip., 296 Neb. 972, 898 N.W.2d 661 (2017).

The phrase "fair and equitable distribution," as used in this section, was not intended to permit the subrogation interest of an employer or workers' compensation insurer to be subject to equitable defenses. Burns v. Nielsen, 273 Neb. 724, 732 N.W.2d 640 (2007).

The purpose of this section is to prevent a fair and reasonable settlement between an employee and third-party tort-feasor from being delayed because the parties cannot agree on how the proposed settlement should be distributed. Burns v. Nielsen, 273 Neb. 724, 732 N.W.2d 640 (2007).

This section does not adopt a "made whole" doctrine, nor does it adopt any other specific rule for making a fair and equitable distribution, but instead leaves the distribution to the court's discretion. Turco v. Schuning, 271 Neb. 770, 716 N.W.2d 415 (2006).

Statutory subrogation under this section requires a fair and equitable distribution to be determined by the trial court under the facts of each case. Sterner v. American Fam. Ins. Co., 19 Neb. App. 339, 805 N.W.2d 696 (2011).

This section does not require an injured worker to be "made whole" before a subrogated compensation carrier is entitled to a portion of the settlement. Sterner v. American Fam. Ins. Co., 19 Neb. App. 339, 805 N.W.2d 696 (2011).

2. Miscellaneous

Although the trial court did not abuse its discretion in approving an injured employee's settlement of his third-party suit for $150,000, the court's allocation of zero to an employer who had a subrogation interest exceeding $200,000 was untenable. Kroemer v. Omaha Track Equip., 296 Neb. 972, 898 N.W.2d 661 (2017).

Because this section should be read along with sections 48-118 through 48-118.03, the use of the term "the court" in this section refers to the district court. In re Estate of Evertson, 295 Neb. 301, 889 N.W.2d 73 (2016).

District courts have exclusive subject matter jurisdiction over proceedings for the fair and equitable distribution of settlement proceeds from third-party tort-feasors subject to subrogation in workers' compensation cases. In re Estate of Evertson, 295 Neb. 301, 889 N.W.2d 73 (2016).

This section does not authorize the district court to punish an employer beyond the penalties expressly prescribed by the workers' compensation statutes. Burns v. Nielsen, 273 Neb. 724, 732 N.W.2d 640 (2007).

Third-party settlements are void unless agreed to in writing by the employee, or the employee's personal representative, and the employer, or the employer's insurer. Sterner v. American Fam. Ins. Co., 19 Neb. App. 339, 805 N.W.2d 696 (2011).