Court shoots down Yakama tobacco company lawsuit
Headline Legal News
A federal judge has ruled that a tobacco manufacturer owned by a Yakama Nation tribal member must pay into an escrow account established under a 1998 settlement with big tobacco companies.
The 1998 settlement required big tobacco companies to pay money to 46 states each year to offset public health costs from their products. Smaller companies are required to pay into an escrow account, but that money could be returned eventually if no health claims are made.
King Mountain Tobacco claims it should be exempt from paying into the escrow accounts under the Yakama Nation's 1855 treaty with the federal government. King Mountain is owned by Yakama tribal member Delbert Wheeler.
U.S District Judge Lonny Suko ruled against the company on Friday.
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Workers’ Compensation Subrogation of Administrative Fees and Costs
When a worker covered by workers’ compensation makes a claim against a third party, the workers’ compensation insurance retains the right to subrogate against any recovery from that third party for all benefits paid to or on behalf of a claimant injured at work. When subrogating for more than basic medical and indemnity benefits, the Texas workers’ compensation subrogation statute provides that “the net amount recovered by a claimant in a third‑party action shall be used to reimburse the carrier for benefits, including medical benefits that have been paid for the compensable injury.” TX Labor Code § 417.002.
In fact, all 50 states provide for similar subrogation. However, none of them precisely outlines which payments or costs paid by a compensation carrier constitute “compensation” and can be recovered. The result is industry-wide confusion and an ongoing debate and argument with claimants’ attorneys over what can and can’t be included in a carrier’s lien for recovery purposes.
In addition to medical expenses, death benefits, funeral costs and/or indemnity benefits for lost wages and loss of earning capacity resulting from a compensable injury, workers’ compensation insurance carriers also expend considerable dollars for case management costs, medical bill audit fees, rehabilitation benefits, nurse case worker fees, and other similar fees. They also incur other expenses in conjunction with the handling and adjusting of workers’ compensation claims. Workers’ compensation carriers typically assert, of course, that, they are entitled to reimbursement for such expenditures when it recovers its workers’ compensation lien. Injured workers and their attorneys disagree.