ALLOCATE SETTLEMENT PROCEEDS WHEN DEALING WITH WORKER’S COMPENSATION (A REVIEW OF POREMBA V. SOUTHERN NEVADA PAVING, 388 P.3D 232)

The Nevada Supreme Court in Poremba v. Southern Nevada Paving, 133 Nev. 12, 388 P.3d 232 (2017), came out with new guidelines when address worker’s compensation liens as applied to personal injury settlements. In this case, Poremba, an employee of Southern Nevada Paving, was injured when the truck he was driving was struck by a backhoe. Poremba suffered injuries and filed a worker’s compensation claim. The case settled for $63,500.00 with a significant amount of the proceeds paid to cover medical liens. Poremba received $34,631.51 spending an additional $14,000.00 for additional medical treatment. The settlement agreement did not specify how the settlement funds were to be allocated. Poremba sought to reopen his worker’s compensation case when he could not return to work. The insurer denied his request. The appeals officer granted the insurer’s motion for summary judgment. The district court denied Poremba’s petition and the matter was appealed to the Nevada Supreme Court.

At issue on appeal was, among other things, whether the allocation of settlement funds included payment for damages outside of NRS 616A.090 and, therefore, precluded the insurer applying settlement funds as an offset to future workers’ compensation benefits. Nevada law allows the insurer to claim an offset for future benefits when the claimant receives money from a lawsuit against the party at fault. However, the court concluded that the insurer is only entitled to an offset for monies paid to the insured for injuries covered by worker’s compensation. For example, since pain and suffering is not compensable under worker’s compensation, the insurer would not be entitled to an offset for monies paid to the insured for pain and suffering.

When a person is injured, he or she may sue the responsible party for payment to cover a variety of costs. Restsatement (Second) of Torts § 924 (Am.Law Inst. 1979). While medical treatment is certainly among those costs, a plaintiff may also recover damages for pain and suffering, lost wages if the defendant’s actions prevented the plaintiff from working,a nd harm to property. Id. These damages include and exceed the compensation as defined in NRS 616A.090.

S&C is correct that the policy behind NRS 616C.215 is to prevent a double recovery. Chandler, 117 Nev. At 426, 23 P.3d at 258. S&C, however, mischaracterizes double recovery. Double recovery is characterized based not on the event necessitating the compensation, but on the nature of the compensation provided. S&C cites to Tobin v. Department of Labor & Industries, 145 Wash.App. 607, 187 P.3d 780 (2008), for the proposition that a claimant should not receive a double recovery as well. Tobin, however, explains that double recovery prevents the claimant from receiving compensation from the insurer and “retain[ing] the position of damages which would include those same elements.” . . .. . .

We agree with C&C insofar as a worker should not receive funds from two sources to pay for the same expenses. The worker, however, may spend settlement funds allocated for expenses beyond NRS 616A.090’s definition of workers’ compensation on those designated expenses without fear that the insurer will forever be able to deny or refuse to reopen claims for future expenses that are within the scope of workers’ compensation.

Poremba at 17, 18, 237, 238.

The court finally concluded that the insurer is not entitled to reimbursement from settlement funds that were designated for anything outside of workers’ compensation defined in NRS 616A.090. Id. at 10, 238. The court remanded the case back to district court to hold an evidentiary hearing concerning as to how much of an offset the insurer was entitled to.

In light of Poremba, it is important that Plaintiff’s counsel request how settlement funds are to be allocated to preserve to clients those monies paid for damages outside of NRS 616A.090.