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Attorney Rich Ruohonen Successfully Argues
Minnesota Court of Appeals Case

Pritzker | Ruohonen recently won an appeal on behalf of a client injured in a motorcycle accident.  Rich Ruohonen, lead attorney for the case (Damian Salib, Respondent, vs. Allstate Insurance Company, Appellant) argued that the district court was correct in ruling that Allstate was not entitled to a reduction of the damages award for the amount of workers’-compensation benefits that Mr. Salib received.   The Minnesota Court of Appeals agreed with Mr. Ruohonen and affirmed the district court award of $50,000 to Mr. Salib. 

Below is a summary of the appellate court’s decision.  You may also read the full text of the Minnesota Court of Appeals ruling in the case of Salib vs. Allstate.

FACTS
Mr. Salib was injured in a motor-vehicle accident that occurred during the course and scope of his employment. He retained Pritzker | Ruohonen to represent him, with Mr. Ruohonen as the lead attorney for the case.  On behalf of Mr. Salib, we pursued claims against three parties, the workers’-compensation carrier for Mr. Salib’s employer, the driver of the other vehicle involved in the accident, and Allstate Insurance Company for underinsured-motorist benefits (the limit of the other driver’s insurance policy was $100,000).  

Mr. Ruohonen negotiated settlements with the driver of the other vehicle ($100,000, the limit of the insurance policy) and the worker’s compensation carrier for benefits above the amount the carrier had initially paid.   Under the terms of the settlement agreement with the workers’-compensation carrier, the carrier assign to Mr. Salib its subrogation rights against the other driver and reduce the payment to Mr. Salib. As a result, Mr. Salib was allowed to keep the full amount of the $100,000 settlement with the other driver, and he received an additional amount from the workers’-compensation carrier. The settlement agreement between Mr. Salib and the workers’-compensation carrier provided that it constituted a “full, final, and complete settlement” of Mr. Salib’s “past, present or future” claims against his employer and the workers’-compensation carrier.

The underinsured-motorist action against Allstate Insurance Company went to trial, and a jury returned a verdict awarding Mr. Salib $186,312.50.

Allstate moved for a determination of collateral sources under Minn. Stat. § 548.36 (2006). The parties agreed that the $100,000 settlement with the other driver was a collateral-source payment, and the district court reduced the damages award for underinsured-motorist benefits by that amount. But the district court concluded that Allstate was not entitled to a reduction of the damages award for the workers’-compensation benefits that Mr. Salib had received. After deducting the $100,000 settlement with the other driver, the damages award was $86,312.50, and thus, the district court ordered judgment for Mr. Salib in the amount of $50,000, which was the limit of his underinsured-motorist coverage. Allstate appealed from the district court’s collateral-source determination.

D E C I S I O N
The workers’-compensation act provides an exclusive, no-fault remedy against an employer for an employee who is injured during the course and in the scope of employment. Minn. Stat. § 176.021, subd. 1 (2006). The employee, however, is generally free to pursue claims against a third-party tortfeasor who caused the employee’s injuries. Minn. Stat. § 176.061, subd. 5(a) (2006). And when an employer’s workers’-compensation carrier pays benefits to an employee, the carrier is subrogated to the employee’s rights of recovery against third-party tortfeasors. Id.; see also Backhauls, Inc. v. Thake, 393 N.W.2d 427, 429 (Minn. App. 1986) (referring to the right of an employer or an employer’s workers’-compensation carrier to subrogation), review denied (Minn. Nov. 19, 1986). Thus, when the employee is compensated for his injuries by his employer’s workers’-compensation carrier, the carrier becomes entitled to reimbursement from the tortfeasor.

On occasion, and in this case, the workers’-compensation carrier, in connection with a settlement of workers’-compensation benefits, will assign its subrogation rights to the employee. Thus, in exchange for accepting a set and usually discounted amount of benefits, the employee not only receives those benefits but also retains (or regains) the right to pursue recovery from a third party. In other words, the employee is afforded the opportunity to make up the shortfall of workers’-compensation benefits by pursuing a claim that the workers’-compensation carrier, by virtue of subrogation, would have had against the third party.

The collateral-source statute generally requires a district court to deduct from an award of personal-injury damages the amount of certain payments—including workers’-compensation benefits—already received by the plaintiff in connection with the injury at issue. Minn. Stat. § 548.36 (2006). The statute excepts from this general rule payments “for which a subrogation right has been asserted.” Minn. Stat. § 548.36, subd. 2(1). 5
Allstate argued that the $50,000 judgment against it should be reduced by workers’-compensation benefits that Mr. Salib received before the settlement with the workers’-compensation carrier.  This would mean that Allstate would not have to pay anything to Mr. Salib.
Attorney Rich Ruohonen argued that by its express terms, the collateral-source statute excludes workers‟-compensation benefits paid in connection with an assignment of subrogation rights (See Buck v. Schneider, 413 N.W.2d 569, 571-72 (Minn. App. 1987)) and that the district court correctly followed Buck and concluded that the collateral-source statute does not require deduction of workers’-compensation benefits paid from the damages award.

Mr. Ruohonen further argued that in this case, as in Buck, Mr. Salib paid valuable consideration, in the form of foregone benefits, for the subrogation rights of the workers’-compensation carrier. Accordingly, here, as in Buck, the workers’-compensation benefits that Mr. Salib received should not be deducted from the damages award.

The Minnesota Court of Appeals agreed with Mr. Ruohonen and affirmed the $50,000 amount awarded to Mr. Salib by the district court.

To contact Rich Ruohonen, please call toll-free at 1-888-377-8900 or email Rich at rar@pritzkerlaw.com.

Pritzker | Ruohonen & Associates, P.A.
Plaza VII, Suite 2950
45 South Seventh Street
Minneapolis, MN 55402-1652

Telephone: 612-338-0202
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Pritzker | Ruohonen & Associates, P.A.: Minnesota personal injury lawyers with a national
reputation for excellence in the areas of personal injury and wrongful death.

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