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Comp insurer can’t collect on third-party award: Texas Supreme Court

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The Supreme Court of Texas ruled Friday that a workers compensation insurer cannot collect pending settlement proceeds from an injured worker who won an award on a third-party claim stemming from a compensated injury.

The ruling in Wausau Underwriters Insurance Co. v. James Wedel and Michele Wedel affirms a 2017 Court of Appeals of Texas El Paso ruling that stated while Texas grants the right of an insurer to seek reimbursement after an injured worker collects after suing a third party related to the compensable injury, the insurer waived that right.

James Wedel, a truck driver for Cactus Transport, Inc., was injured in 2012 while he was loading asphalt at an El Paso, Texas, terminal owned by Western Refining Co. L.P., according to court documents. Mr. Wedel, who suffered brain and spinal cord injuries, received workers comp benefits from Cactus’ insurer, Wausau Underwriters Insurance Co. He separately sued Western Refining for alleged negligence contributing to his accident, according to court documents. Settlement negotiations came to a halt when Boston-based Wausau Underwriters announced its intention to seek reimbursement if Mr. Wedel won the case against Western Refining, documents state.

The Texas Supreme Court ruling highlights the insurer’s specific policy with Cactus Transport.

“The (workers compensation) policy in this case includes an endorsement waiving the carrier's right to recover from the third party sued by the employee. The carrier concedes it can't recover directly from the third party but insists it can recover indirectly from any settlement the third party pays to the employee. Standing on over twenty years of unanimous case law to the contrary, as well as Texas Department of Insurance rulings consistent with that case law, we disagree,” the ruling states.

A spokesman with Liberty Mutual Holding Co. Inc., the parent company of Wausau Underwriters, said the insurer does not discuss litigation publicly.