Arizona: Comp Carrier’s Lien May Be Equitably Reduced Even When Worker’s Dependents Settle for Less than Policy Limits of Third-Party’s Coverage

Where an injured worker (or the worker’s dependents) have accepted workers’ compensation benefits and have further sought to recover over against one or more third parties that are responsible for the worker’s injuries, that worker—or his or her dependents—may obtain a judicial determination of whether the lien should be reduced to account for the employer’s comparative fault, even when the worker (or dependents) settle for less than the limits of the third party’s insurance, held an Arizona appellate court. Here a window washer plunged three stories to his death in a scaffolding accident. The employer accepted the claim and, over time, will pay monthly benefits that will total some $575,000. The dependents sued various third parties, including the City of Glendale, which owned the building. All but one of the dependents paid the limits of their insurance coverage. The exception, the City of Glendale, was an additional insured on two of the other defendants' policies. It settled the claim without having to draw on its own insurance coverage, and without objection by the comp carrier. Noting that Arizona was now a comparative negligence state, the appellate court stressed that the purpose of the lien statute—Ariz. Rev. Stat. § 23-1023—was to promote fairness among all parties. That goal would not be served by allowing an employer to benefit from his own wrong.

Thomas A. Robinson, J.D., the Feature National Columnist for the LexisNexis Workers’ Compensation eNewsletter, is the co-author of Larson’s Workers’ Compensation Law (LexisNexis).

LexisNexis Online Subscribers: Citations below link to Lexis Advance.

See Twin City Fire Ins. Co. v. Leija, 2017 Ariz. App. LEXIS 163 (Aug. 31, 2017)

See generally Larson’s Workers’ Compensation Law, § 120.02.

Source: Larson’s Workers’ Compensation Law, the nation’s leading authority on workers’ compensation law