Vallejo, CA Declares Itself Bankrupt
National News
The Vallejo City Council has voted unanimously to declare the city bankrupt. The council cited falling property values and tax receipts and a $16 million budget deficit for the fiscal year that begins in July. Residents of Vallejo, a town of 120,000 in Santa Clara County, have a median income of $56,505.
Vallejo, 25 miles northeast of San Francisco, is the largest city in California to declare itself bankrupt, and the first major metropolitan area to do so since Orange County filed for bankruptcy in 1994 after a series of bungled investments.
"With Orange County there were identifiable bad guys," John Quigley, an economics profession at UC-Berkeley, told The New York Times. "This is different. Near as one can tell, this is more of a low-level infection everywhere."
Proposition 13 caps property taxes in California, and the Vallejo City Council was unable to wring salary concessions from its public employees, whose salaries account for 80 percent of the city budget.
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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.