Kansas Court Of Appeals Does About-Face Allowing Workers’ Compensation Subrogation Against UM/UIM Policies

On the same day as the Alabama Court of Appeals issued its ruling in O’Brien v. Mobile Public Library, attempting to curtail the rights of a workers’ compensation carrier against UM/UIM benefits, the Kansas Court of Appeals was doing exactly the opposite.

For years, Kansas has not allowed a workers’ compensation carrier to subrogate or recover its lien from benefits paid by an uninsured or underinsured motorists’ (UM/UIM) carrier. However, that position has been questioned and some argue it had been overruled based on recent case decisions.

In a 2001 case of first impression, an UIM’s carrier’s ‘substitute payment’ to an injured worker as a substitute for liability coverage limits was a ‘recovery’ under the statute entitling the workers’ compensation carrier to a lien against the amount of this recovery.

The ruling in Loucks, therefore, was that a workers’ compensation subrogation lien does attach to such a ‘substitute payment’ made by the UM’s carrier in order to preserve the UIM’s carrier’s subrogation rights in response to settlement of the tort claim.

The logic here was that a substitute payment was not a payment of UIM benefits but was a consequence of the remedy pursued by the injured worker against those having legal liability to the worker.