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.