Alabama House Bill HB497

Alabama 2023 Regular Session

• Introduced: 5/18/23
• Refer: 5/18/23

Caption

Relating to workers' compensation; to amend Section 25-5-11, Code of Alabama 1975, to further provide for the employer's right of subrogation against uninsured and underinsured motorist insurance; and to specify that in a settlement of claims against a third party, the employer's share of the employee's attorney fees does not include costs or expenses.

Impact

If enacted, HB 497 could significantly change the landscape of workers' compensation claims in the state, offering employers a pathway to recover costs that were traditionally absorbed as part of their liability. This legislation will provide clarity and a procedural mechanism whereby any recovery in a civil action that exceeds the employer's compensation can relieve the employer from further liability related to that specific incident. Furthermore, the bill outlines specific terms regarding the allocation of attorney fees that the employer would be responsible for in the case of a settlement with a third party.

Summary

House Bill 497 seeks to amend Section 25-5-11 of the Code of Alabama 1975 to expand an employer's rights regarding subrogation claims against uninsured and underinsured motorist insurance. Specifically, the bill allows employers to recover their workers' compensation obligations from insurance payouts in cases where employees are injured or killed in work-related vehicle accidents caused by third parties. This adjustment in law intends to ease the financial burden on employers by enabling them to recoup compensation previously paid to injured employees from insurance claims against at-fault parties.

Contention

Notably, the bill addresses potential contention regarding the allocation of attorney fees for settlements. It specifies that while the employer must cover a portion of the attorney fees involved in settlements with third parties, this does not include additional costs or expenses. Supporters of HB 497 view it as a necessary reform to allow employers to manage costs effectively and strengthen their financial position after such claims, while critics may argue it places an undue burden on employees by potentially limiting their recovery in complex cases where both workers’ compensation and third-party claims intersect.