Workers' Compensation: TTD to TPD, Third-Party Subrogation Math, and Suing Others
Marcus, a 42-year-old roofer with an average weekly wage of $1,200, was struck by a delivery truck driven by a third-party carrier while carrying shingles across a job-site parking lot in Jefferson County, Alabama. He was totally disabled for eight weeks, then returned to light duty at $600 per week. The comp carrier paid indemnity benefits and $61,000 of medical, and $48,000 of indemnity had been paid when the tort case settled. Marcus sued the trucking company; the case settled for $300,000. His attorney's fee is one-third of the gross recovery plus $10,000 of case expenses. The carrier's actuary values future medical and indemnity exposure at $150,000. The general contractor controlled site traffic and safety, and Marcus wants to sue it as well.
1. Calculate Marcus's weekly benefits during total disability and after his light-duty return, noting the waiting period.
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TTD: the comp rate is 66 2/3% of the average weekly wage, subject to the statutory maximum (which is above $800 here, so the cap does not bite):
- 2/3 x $1,200 = $800 per week for the eight weeks of total disability, about $6,400.
TPD: after returning at $600, the benefit is 66 2/3% of the difference between the AWW and the post-injury wage, again subject to the maximum:
- $1,200 - $600 = $600; 2/3 x $600 = $400 per week while he remains on light duty.
Waiting period: compensation is not payable for the first three days of disability unless the disability extends beyond 21 days, in which case benefits are paid retroactively from day one. With eight weeks of total disability, the three days are recovered.
Do not pay the full $800 after the light-duty return - that would double-count the $600 he is earning, and the carrier is entitled to credit for wages actually earned.
2. Compute the carrier's net recovery from the $300,000 settlement using Alabama's statutory lien and pro rata sharing of attorney fees and costs.
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Step 1 - lien amount. Compensation and medical paid plus the present value of future exposure:
- Past: $48,000 indemnity + $61,000 medical = $109,000
- Future: $150,000
- Total lien = $259,000
Step 2 - employee's litigation costs. Fee $100,000 + expenses $10,000 = $110,000; net proceeds to Marcus before the lien = $190,000.
Step 3 - pro rata share. The carrier bears the same fraction of fees and costs that its lien bears to the gross recovery:
- $259,000 / $300,000 = 86.33%
- 86.33% x $110,000 = $94,967
- Carrier's net lien = $259,000 - $94,967 = $164,033
Step 4 - application. The carrier is reimbursed $109,000 in cash for benefits already paid, leaving a credit of $55,033 against future benefits. Marcus keeps $190,000 - $164,033 = $25,967, and any future benefits beyond the credit are payable in the normal course.
Marcus should compare this pro rata result with arguing the settlement is inadequate to make him whole; the allocation between past and future damages in the settlement agreement drives the credit.
3. Can Marcus sue the general contractor that controlled site traffic? And can he sue a co-employee? Explain the barriers.
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General contractor: yes, in principle. The GC is not Marcus's employer, and workers' compensation immunity is limited to the employer and those who qualify as statutory employers of the injured worker. A site-controlling GC that is not his employer is a third party, so Marcus may sue it in tort. Two consequences: the GC will tender to its CGL carrier and will argue immunity if it can show Marcus was covered under its own comp program; and the comp carrier's lien and credit attach to any recovery from the GC just as they did to the trucking settlement, so a second recovery does not produce a double recovery.
Co-employee: barred by the exclusive-remedy doctrine unless the co-employee's conduct meets the statutory "willful conduct" standard under Ala. Code §25-5-11(c) - for example, the intentional removal of a safety guard. Negligence, even gross negligence, is not enough. Actions against the employer itself are barred absent an intentional tort.
Practice point: preserve the third-party action early, put the carrier on notice, and negotiate the past/future allocation before the release is signed.