Chemical Co. Settles Lawsuit for $1.8 Billion

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Chemical Co. Settles Lawsuit for $1.8 Billion

W.R.Grace, a specialty chemical company that operated plants inMassachusetts and Montana, agreed to a settlement yesterday forasbestos claims brought against the company in a class action lawsuit.

More than 100,000 claims have been brought against W.R.Grace by individuals who claimed to have been injured by exposure toasbestos. Pending approval by U.S. Bankruptcy Judge Judith Fitzgerald,the settlement would allow W.R. Grace to make steps towards moving outof bankruptcy, which the company filed for in 2001, and startcompensating the plaintiffs in the lawsuit.

If the settlement is allowed, the company would immediately deposit$250 million into a trust for victims. Starting in 2019, the companywould contribute an additional $110 million to the trust for fivesuccessive years followed by ten annual payments of $100 million. Theagreement would also make public 10 million shares of W.R. Grace stockthat plaintiffs would be able to purchase for $17 a share for up to oneyear after the company’s reorganization.

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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.

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