Fifth Circuit Court of Appeals Examines Workers’ Compensation Benefits and Subrogation Rights

/ 12/09/2011

Following a collision that rendered him paraplegic, an employee was paid workers’ compensation benefits. He and his wife sued several third parties for causing the wreck. His employer intervened to protect its subrogation rights for the workers’ compensation benefits it had paid to the employee. Following a vacated jury verdict, the parties settled. The trial court then allocated the settlement proceeds between the employee and his wife. The employer appealed this allocation, and the Fifth Circuit Court of Appeals addressed it in Hodges v. Indiana Mills & Manufacturing Inc., No. 10-41152 (5th Cir. Nov. 29, 2011), available at


Texas law requires that the first money recovered by an injured worker from a tortfeasor go to the workers’ compensation carrier. The trier of fact must allocate a settlement according to the relative merits and worth of the claims involved. Here, the district court found that the plaintiffs’ claims were of equal merit but that the wife’s claims were worth approximately one-fourth as much as the employee’s claims. The employer argued that the vacated jury verdict awarding the wife zero damages should trump the district court’s evaluation of other evidence. The Court disagreed and concluded there was sufficient evidence to support the district court’s finding. It affirmed the settlement allocation.


To speak to Dallas employment law specialists about workers’ compensation benefits, contact the Dallas employment law firm of Clouse Dunn LLP at [email protected]

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