Workers' compensation insurers paying out benefits to employees on an employer's behalf may sue the third party responsible for the injuries in order to recover the loss, according to a Connecticut Supreme Court ruling.

The ruling overturns a trial court decision that tossed a lawsuit brought by Pacific Insurance Co., which sought to recover compensation from those responsible for an employee's injuries.

"In sum, we conclude that, under the common law, an insurer that has indemnified the loss of an insured under circumstances in which a third party is legally liable for such loss, has the right to be subrogated to the insured's rights against the liable third party," wrote Justice Peter Zarella in the unanimous ruling.

The ruling did not determine that Pacific was entitled to repayment, just that the company deserves the opportunity to bring their claim in court in an effort to be reimbursed for their loss.

According to court documents, James Doughty worked as a welder for Connecticut Reliable Welding. On May 17, 2011, Doughty was working at a construction site with employees and representatives of defendants Champion Steel, Shepard Steel Co., and the general contractor Dimeo Construction Co.

While working on an elevated platform, Doughty fell to the ground and sustained severe injuries, which left him permanently disabled. Pacific, a subsidiary of The Hartford Financial Services Group, paid workers' compensation benefits to Doughty on the welding company's behalf.

A question of workplace safety

Pacific then later brought a lawsuit against Champion Steel, Shepard Steel and Dimeo, alleging that they negligently failed to provide an adequate fall protection system and supplied defective fall arrest gear to Doughty, and as such sought to recover the money they paid out to Doughty.

The defendants all filed a motion to dismiss, arguing that Pacific did not have standing because a workers' compensation insurance carrier cannot bring such a claim under Connecticut statutes. They argued that it is up to the employer to bring such a claim and not the insurance companies.

In 2014, Superior Court Judge Peter Wiese agreed with the defendants and dismissed the case. Pacific then appealed and the state Supreme Court agreed to take up the case and ultimately agreed with the insurer.

Pacific, through its lead attorney, Jonathan Freiman, of Wiggin and Dana in New Haven, argued that the state's Workers' Compensation Act does not prevent an insurer's right to seek reimbursement from responsible third parties.

Freiman, who did not respond to an interview request by press time, said in court documents that the effect of Wiese's ruling was that "the tortfeasors walk away scot-free, unjustly enriched by the amount of the benefits that Pacific paid to the employee."

Sylvia Ho, of Farmington, served as lead counsel for the defendants. Although disappointed with the result, Ho said it was the justices' "prerogative" to decide.

Christian Nolan is a reporter for the Connecticut Law Tribune. He can be reached at cnolan@alm.com.

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Connecticut Supreme Court sides with insurer suing third parties in workers' comp case

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