State News : Kansas

EMPLOYERS/CARRIERS/TPAs WITH THIRD PARTY SUBROGATION CLAIMS IN KANSAS – PAY ATTENTION TO HOW THE THIRD PARTY CLAIM SETTLEMENT OR RECOVERY IS DOCUMENTED AND INTERVIENE IN THE THIRD PARTY ACTION WHERE NECESSARY TO DOCUMENT THAT DAMAGES RECOVERED IN THE THIRD PARTY CLAIM ACTION ARE DUPLICITOUS WITH THE WORKERS COMPENSATION BENEFITS RECEIVED, AND SEEK LEGAL ADVICE BEFORE CASHING THE SUBROGATION RECOVERY CHECK.

Case Caption: Rumbaugh v. DirecTV, 65 Kan. App. 2d 266, 564 P.3d 17 (Kan. Ct. App. 2025)

Case Facts:

Justin Rumbaugh sustained a compensable low back injury on the job in 2014 and received workers compensation benefits.

In 2016, he developed cauda equina syndrome (compression of nerve roots at the bottom of the spinal cord).  He presented to an emergency room, was misdiagnosed, experienced a deterioration of symptoms including urinary complications, obtained treatment, but experienced continuing urological complications.

In 2018, he settled out the disability compensation portion of his workers compensation claim against DirecTV, but he left open his right to future medical paid for by workers compensation.

In 2020, he settled his third-party malpractice claim of “misdiagnosis” of the cauda equina syndrome for a significant amount of money. Kansas workers compensation law entitles the employer to stand first in line to recover the “duplicitous” workers compensation benefits paid up to the date of the third-party recovery (the lien). Kansas law also allows the employer a “credit” against future workers compensation benefits sought for the work injury, up to the dollar amount of the third-party recovery, to the extent they are “duplicitous.”

After the third-party settlement, the injured worker’s attorney mailed a check from third party recovery funds to the employer’s third-party administrator arguing the check amount satisfied any lien against future medical benefits under the Kansas work comp act. The third-party administrator accepted the check and cashed it, not contesting or clarifying the “accord and satisfaction” type language written on the check.

In 2021, because his work comp future medical rights remained open, Rumbaugh sought post-award medical treatment seeking payment of medical bills incurred after the 2020 third party settlement.

The workers compensation administrative law judge and Appeals Board denied claimant’s request, ruling DirecTV held a workers compensation subrogation credit towards future medical expenses to the extent of Rumbaugh’s entire medical malpractice recovery amount, so the employer was not required by the work comp judge to pay any medical bills until Rumbaugh exhausted the entire third-party recovery amount.

The Kansas Court of Appeals Decision:

First, as to the Appeals Board denial of Rumbaugh’s claim that the employer entitlement to a “credit” against additional future medical expense after the third-party recovery, the Court of Appeals held that Rumbaugh’s “accord and satisfaction” argument that the adjuster cashed the check as written and thereby waived entitlement to future credit against post third-party settlement medical expenses incurred, fails.  Note this was a decision on the technicality that Rumbaugh’s attorney failed to properly reserve that argument on appeal. In short, the “accord and satisfaction” argument by claimant’s attorney failed, but the real question of whether the language on the check was sufficient to defeat the employer’s future subrogation credit was not addressed by the Court of Appeals.

Second, the Court of Appeals reversed the Appeals Board ruling for the employer but remanded the case back to the Appeals Board to decide whether the third-party recovery was “duplicitous” with the workers compensation claim benefits claimant was awarded in the compensation claim. What that question really comes down to is whether claimant’s original low back injury settlement included entitlement to future medical for the urinary tract problems resulting from the medical negligence because they are “duplicitous.”  If the Appeals Board finds that the that future medical benefit entitlements from the original work injury include treatment for the urinary tract problems arising from the cauda equina syndrome, then the full third-party recovery amount by claimant would be subject to the subrogation “credit” and the employer would not owe for the medical treatment cost reimbursement claimant was making in his “post-award” action, because the ongoing cauda equina syndrome treatment was a direct, natural and probable consequence of the original low back work injury.

Case Take Aways For Employers/Carriers/TPA’s:

► Carriers and Third-Party Administrators should always consult defense counsel before cashing any third-party subrogation lien recovery check to ensure it has no language directly or indirectly causing the waiver of the employer/carrier’s additional and future subrogation “credit” rights as arising out of the third-party recovery amount.

► Carriers and Third-Party Administrators should not ignore third-party suits; rather, they should maintain some involvement to ensure third-party settlement or recovery proceeds are not structured in a way as to deny the employer a subrogation lien or credit by claimant attorney cleverly structuring the tort suit settlement characterization of damages a “non-duplicitous” of workers compensation benefits.  The employer position should be in the tort case that the tort damages are “duplicitous” of the workers compensation benefits received by the injured workers, to the extent possible to maximize the subrogation recovery.

►This decision debunks a claimant attorney’s arguments that only the district court in the tort suit action has jurisdiction to determine the “duplication” of benefits issue. In the past, some claimant attorneys have alleged that only the tort suit district court has jurisdiction to make the duplication of benefits determination. Here the Kansas Court of Appeals remanded to the Workers Compensation Appeals Board (the State work comp agency) to make the determination of what damages are duplicitous and what were not.

 About the Author: This update was prepared by National Workers’ Compensation Defense Network Kansas member Kim R. Martens of the Wichita, KS firm MARTENS WORK COMP LAW LLC, a law firm dedicated to representing self-insured employers, insurance carriers, and third-party administrators in all matters related to workers compensation before the Kansas Division of Workers Compensation and the Kansas appellate courts. If you have any questions about this submission or Kansas workers compensation in general, please contact Mr. Martens by either e-mailing him at Kim@MartensWorkCompLaw.com or by calling him directly at 316-461-0135.

2025 Kansas Legislature: The 2025 Kansas legislative session has now ended.  There were no significant changes to Kansas workers compensation statutes in 2025. The Kansas workers compensation pro-employer 2011 reform laws remain in place through the 2025 legislative session. The significant 2024 legislative changes (see below) which increased benefits to claimants have now had one year to play out, and while we do not have any significant Kansas appellate court decisions interpreting those 2024 changes, on the employer/carrier claim handling ground level for new injury claims occurring after July 1, 2024, employers are seeing increased compensation payouts, particularly for high wage earners.

2024 Key Statutory Changes Recap:

1. Increased Caps (previous caps in parentheses):

               a. Death benefit cap increases to $500,000 ($300,000).

                               i. Benefits can exceed death benefit cap for dependent children until the

                                 later of

                                             1. age 18.

                                             2. age 19 or graduation if still in high school at age 18; or

                                             3. until age 23 if in vocational school or college.

               b. Permanent Total Disability Cap increases to $400,000 ($155,000).

                               i. To be eligible to pursue permanent total disability benefits, an injured worker must prove the work accident                 resulted in at least a 10% permanent partial impairment to the body as a whole or, if the injured worker has                 preexisting impairment, the injured worker’s total permanent partial impairment to the whole body must be at                 least 15%.

                                             ii. The injured worker must still prove they are realistically and essentially unemployable as a result of the                                accident. 

               c. Permanent Partial Disability Cap increases to $225,000 ($130,000).

                              i. Injured worker must prove permanent partial impairment to the whole body from the work accident of at least                 7.5% or, if the injured worker has preexisting impairment, the injured worker’s combined permanent partial                 impairment to the whole body must be at least 10%.

                              ii. Work disability is still determined by the average of wage loss, and task loss, related to the work injury.

               d. If the work accident results in only permanent partial impairment, an injured worker’s recovery is capped at $100,000. ($75,000).

               e. Caps will remain fixed until July 1, 2027, at which time a cost-of-living adjustment will kick in to raise caps on a yearly basis. The annual percentage increase will be based on a 5-year average of the percentage increase in the State’s average weekly wage.

2. Preliminary Hearings:

               a. Injured workers shall provide records to opposing counsel at least 20 days before a preliminary hearing.  If records are not provided at least 20 days before the preliminary hearing, the court can grant additional time for the employer to provide evidence which may controvert the employee’s records.

 3. Future Medical:

               a. The authorized treating physician’s opinion as to the need for future medical is presumed determinative on the issue of                 whether future medical will be awarded in cases where there have been no invasive procedures. This presumption can                 only be overcome with clear and convincing evidence.  What constitutes “invasive” will be the subject of litigation.

               b. If the injured worker had invasive treatment as a result of the work injury, the authorized treater’s assessment that no future treatment will be needed is still presumed determinative of the issue. However, that presumption may be overcome if claimant proves it is more likely than not that future medical will be needed.

4. Court-ordered independent medical examinations (COIME):

               a. The Administrative Law Judge may only order one COIME without agreement of the parties.

                              i. If the ALJ does order a COIME, the COIME must be done prior to Prehearing Settlement Conference.

                              ii. In addition, the COIME may not be used for the purposes of a rating, permanent restrictions, or opinions on                 permanent total disability.

               b. Parties are still free to agree to a joint IME.

5. Post award medical and attorney fees:

               a. The only procedure allowed to pursue post award medical treatment will be under the provisions of KSA 44-510k. An injured worker may not pursue post-award medical benefits under preliminary hearing procedures of K.S.A. 44-534a.

               b. If post-award benefits sought are provided within 30 days after an application for post award medical is filed, no attorney fees should be awarded without showing, by clear and convincing evidence, that the claimant attorney made significant legal effort.

6. Medical records:

               a. Upon receipt of notice from the Division of the setting of a Regular or Post-Award Hearing, the parties shall exchange medical reports including those by examining and treating health care providers. The exchange shall be at least 30 days before the hearing.

               b. The testimony of a treating or examining health care provider may be submitted into evidence without additional foundation by submission to the opposing side of a complete medical report that complies with procedural rules set forth in the statute.

               c. Upon receipt of a proposed complete medical report, a party has ten days to file a written objection to the offering party stating the grounds for the objection. The ALJ shall then conduct a hearing on the objections as to whether the proposal meets the requirements of a complete medical report.

7. Notice of injury:

               a. An injured worker must notify the employer of the accident within 30 days (was 20 days) from date of accident or 20 days (was 10 days) from last date of employment, whichever is earlier.

8. Stipulated awards:

               a. If the employee is represented by counsel, a settlement can be completed without the need for a settlement hearing. The Division created the appropriate stipulations and Award documentation. The Administrative law judge is given five days from receipt of the signed stipulation to approve the agreed award or settlement.  Note however, there are significant employer/carrier advantages to formalizing the settlement before a Special Settlement Judge.

9. Social security offset:

               a. An award of permanent partial or permanent total disability shall be subject to an offset equal to 50% of the claimant’s Social Security retirement benefits.

               b. An award of TTD and TPD benefits shall not be subject to an offset for Social Security Retirement benefits.

10. Average Weekly Wage Computation:

               a. The calculation of average weekly wage shall include vacation, sick leave and PTO paid during 26 weeks before accident.

               b. In addition, the average weekly wage calculation eliminates the first week of wages from

               calculations if the employee did not work a full week.

11. Unauthorized Medical Allowance:

               a. The allowance per case for unauthorized medical is raised to $800 (was $500).

12. Per Diem for medical trips:

               a. If an employee is required to be away from home all day to obtain medical treatment, the employer shall pay the employee a $30 (was $15) per diem.

               b. The employer shall be responsible for reimbursement of the reasonable expenses of overnight accommodation as needed to avoid undue hardship on the employee.  This is a completely new benefit that did not exist in previous law.

13. Transcription of Hearing:

               a. The Director may order hearings to be recorded by digital recording or other means and later transcribed by a certified shorthand reporter or notary public who shall attest to the transcription’s accuracy.

14. 2024 Rates Update (2025 rates come out after July 1, 2025):

               a.  The maximum weekly indemnity benefit rate increased to $835.00, effective for injuries occurring 7/1/2024 through 6/30/2025, based upon annual indexing to the state average weekly wage.  Likewise for the same period, the minimum weekly survivor benefit rate for fatalities increased to $556.71.  Effective for medical travel after July 1, 2024, the medical mileage reimbursement rate increased from $.655 cents per mile to $.67 cents per mile.

About the Author: This update was prepared by National Workers’ Compensation Defense Network Kansas member Kim R. Martens of the Wichita, KS firm MARTENS WORK COMP LAW LLC, a law firm dedicated to representing self-insured employers, insurance carriers, and third-party administrators in all matters related to workers’ compensation before the Kansas Division of Workers’ Compensation and the Kansas appellate courts. If you have any questions about this submission or Kansas workers’ compensation in general, please contact Mr. Martens by either e-mailing him at Kim@MartensWorkCompLaw.com or by calling him directly at 316-461-0135.

A.  Lifetime Benefit Caps Increases: SB 430 increases the following lifetime maximum benefits as follows:

1.   Death benefit cap will increase from current $300,000 to $500,000.  Benefits can exceed death benefit cap for dependent children until the later of:  1) Age 18; 2) If enrolled in high school, May 30^th of the senior year, or until such child becomes 19, whichever comes first; or 3) Until age 23 if enrolled in vocational school or college.

2.  Permanent Total Disability cap will increase from current $155,000 to $400,000.

a.         To be eligible pursue permanent total disability benefits, an injured worker must prove the work accident resulted in at least a 10% permanent partial impairment to the body as a whole or, if the injured worker has preexisting impairment, the injured workers total permanent partial impairment to the whole body must be at least 15%.

b.         The injured worker must still prove they are essentially and realistically unemployable as a result of the accident.

3.  Permanent Partial Disability cap will increase from $130,000 to $225,000 

a.         Injured worker must prove permanent partial impairment to the whole body from the work accident of at least 7.5% or, if the injured worker has preexisting impairment, the injured worker’s combined permanent partial impairment to the whole body must be at least 10%.

b.         Work disability is still determined by the average of wage loss and task loss related to the work injury.

4.  Functional Only Cap:  If the workers compensation accident results in only permanent partial impairment, an injured worker’s recovery cap is increased from $75,000 to $100,000.

5.  Built In Cap Modifier:  Caps will remain fixed until July 1, 2027, at which time a cost of living adjustment will kick in to raise caps on a yearly basis. The annual percentage increase will be based on a 5-year average of the percentage increase in the State’s average weekly wage.

B. Note:  This is a basic summary of some of the key SB 430 work comp law changes.  As of the date of this writing (April 2, 2024), SB 430 has passed both the Kansas House and Senate, but has not yet been signed into law by Governor Kelly.  Details concerning additional changes in SB 430 will be updated once Governor Kelly has signed SB 430 into law.  Effective date of these new law changes will be for work injuries occuring after July 1, 2024.