§ 97-10.2. Rights under Article not affected by liability of third party; rights and remedies against third parties. - North Carolina Statutes

§ 97‑10.2.  Rights underArticle not affected by liability of third party; rights and remedies againstthird parties.

(a)        The right tocompensation and other benefits under this Article for disability,disfigurement, or death shall not be affected by the fact that the injury ordeath was caused under circumstances creating a liability in some person otherthan the employer to pay damages therefor, such person hereinafter beingreferred to as the "third party." The respective rights and interestsof the employee‑beneficiary under this Article, the employer, and theemployer's insurance carrier, if any, in respect of the common‑law causeof action against such third party and the damages recovered shall be as setforth in this section.

(b)        The employee, orhis personal representative if he be dead, shall have the exclusive right toproceed to enforce the liability of the third party by appropriate proceedingsif such proceedings are instituted not later than 12 months after the date ofinjury or death, whichever is later. During said 12‑month period, and atany time thereafter if summons is issued against the third party during said 12‑monthperiod, the employee or his personal representative shall have the right tosettle with the third party and to give a valid and complete release of allclaims to the third party by reason of such injury or death, subject to theprovisions of (h) below.

(c)        If settlement isnot made and summons is not issued within said 12‑month period, and ifemployer shall have filed with the Industrial Commission a written admission ofliability for the benefits provided by this Chapter, then either the employeeor the employer shall have the right to proceed to enforce the liability of thethird party by appropriate proceedings; either shall have the right to settlewith the third party and to give a valid and complete release of all claims tothe third party by reason of such injury or death, subject to the provisions of(h) below. Provided that 60 days before the expiration of the period fixed bythe applicable statute of limitations if neither the employee nor the employershall have settled with or instituted proceedings against the third party, allsuch rights shall revert to the employee or his personal representative.

(d)        The person in whomthe right to bring such proceeding or make settlement is vested shall, duringthe continuation thereof, also have the exclusive right to make settlement withthe third party and the release of the person having the right shall fullyacquit and discharge the third party except as provided by (h) below. Aproceeding so instituted by the person having the right shall be brought in thename of the employee or his personal representative and the employer or theinsurance carrier shall not be a necessary or proper party thereto. If theemployee or his personal representative shall refuse to cooperate with theemployer by being the party plaintiff, then the action shall be brought in thename of the employer and the employee or his personal representative shall bemade a party plaintiff or party defendant by order of court.

(e)        The amount ofcompensation and other benefits paid or payable on account of such injury ordeath shall be admissible in evidence in any proceeding against the thirdparty. In the event that said amount of compensation and other benefits isintroduced in such a proceeding the court shall instruct the jury that saidamount will be deducted by the court from any amount of damages awarded to theplaintiff. If the third party defending such proceeding, by answer duly servedon the employer, sufficiently alleges that actionable negligence of theemployer joined and concurred with the negligence of the third party inproducing the injury or death, then an issue shall be submitted to the jury in suchcase as to whether actionable negligence of employer joined and concurred withthe negligence of the third party in producing the injury or death. Theemployer shall have the right to appear, to be represented, to introduceevidence, to cross‑examine adverse witnesses, and to argue to the jury asto this issue as fully as though he were a party although not named or joinedas a party to the proceeding. Such issue shall be the last of the issuessubmitted to the jury. If the verdict shall be that actionable negligence ofthe employer did join and concur with that of the third party in producing theinjury or death, then the court shall reduce the damages awarded by the juryagainst the third party by the amount which the employer would otherwise be entitledto receive therefrom by way of subrogation hereunder and the entire amountrecovered, after such reduction, shall belong to the employee or his personalrepresentative free of any claim by the employer and the third party shall haveno further right by way of contribution or otherwise against the employer,except any right which may exist by reason of an express contract of indemnitybetween the employer and the third party, which was entered into prior to theinjury to the employee. In the event that the court becomes aware that there isan express contract of indemnity between the employer and the third party thecourt may in the interest of justice exclude the employer from the trial of theclaim against the third party and may meet the issue of the actionablenegligence of the employer to the jury in a separate hearing.

(f)        (1)        Ifthe employer has filed a written admission of liability for benefits under thisChapter with, or if an award final in nature in favor of the employee has beenentered by the Industrial Commission, then any amount obtained by any person bysettlement with, judgment against, or otherwise from the third party by reasonof such injury or death shall be disbursed by order of the IndustrialCommission for the following purposes and in the following order of priority:

a.         First to the paymentof actual court costs taxed by judgment and/or reasonable expenses incurred bythe employee in the litigation of the third‑party claim.

b.         Second to thepayment of the fee of the attorney representing the person making settlement orobtaining judgment, and except for the fee on the subrogation interest of theemployer such fee shall not be subject to the provisions of G.S. 97‑90but shall not exceed one third of the amount obtained or recovered of the thirdparty.

c.         Third to thereimbursement of the employer for all benefits by way of compensation ormedical compensation expense paid or to be paid by the employer under award ofthe Industrial Commission.

d.         Fourth to thepayment of any amount remaining to the employee or his personal representative.

(2)        The attorney feepaid under (f)(1) shall be paid by the employee and the employer in directproportion to the amount each shall receive under (f)(1)c and (f)(1)d hereofand shall be deducted from such payments when distribution is made.

(g)        The insurancecarrier affording coverage to the employer under this Chapter shall besubrogated to all rights and liabilities of the employer hereunder but thisshall not be construed as conferring any other or further rights upon suchinsurance carrier than those herein conferred upon the employer, anything inthe policy of insurance to the contrary notwithstanding.

(h)        In any proceedingagainst or settlement with the third party, every party to the claim for compensationshall have a lien to the extent of his interest under (f) hereof upon anypayment made by the third party by reason of such injury or death, whether paidin settlement, in satisfaction of judgment, as consideration for covenant notto sue, or otherwise and such lien may be enforced against any person receivingsuch funds. Neither the employee or his personal representative nor theemployer shall make any settlement with or accept any payment from the thirdparty without the written consent of the other and no release to or agreementwith the third party shall be valid or enforceable for any purpose unless bothemployer and employee or his personal representative join therein; provided,that this sentence shall not apply:

(1)        If the employer ismade whole for all benefits paid or to be paid by him under this Chapter lessattorney's fees as provided by (f)(1) and (2) hereof and the release to oragreement with the third party is executed by the employee; or

(2)        If either partyfollows the provisions of subsection (j) of this section.

(i)         Institution ofproceedings against or settlement with the third party, or acceptance ofbenefits under this Chapter, shall not in any way or manner affect any otherremedy which any party to the claim for compensation may have except asotherwise specifically provided in this Chapter, and the exercise of one remedyshall not in any way or manner be held to constitute an election of remedies soas to bar the other.

(j)         Notwithstandingany other subsection in this section, in the event that a judgment is obtainedby the employee in an action against a third party, or in the event that asettlement has been agreed upon by the employee and the third party, eitherparty may apply to the resident superior court judge of the county in which thecause of action arose or where the injured employee resides, or to a presidingjudge of either district, to determine the subrogation amount. After notice tothe employer and the insurance carrier, after an opportunity to be heard by allinterested parties, and with or without the consent of the employer, the judgeshall determine, in his discretion, the amount, if any, of the employer's lien,whether based on accrued or prospective workers' compensation benefits, and theamount of cost of the third‑party litigation to be shared between theemployee and employer. The judge shall consider the anticipated amount ofprospective compensation the employer or workers' compensation carrier islikely to pay to the employee in the future, the net recovery to plaintiff, thelikelihood of the plaintiff prevailing at trial or on appeal, the need forfinality in the litigation, and any other factors the court deems just andreasonable, in determining the appropriate amount of the employer's lien. Ifthe matter is pending in the federal district court such determination may bemade by a federal district court judge of that division. (1929, c. 120, s. 11; 1933,c. 449, s. 1; 1943, c. 622; 1959, c. 1324; 1963, c. 450, s. 1; 1971, c. 171, s.1; 1979, c. 865, s. 1; 1983, c. 645, ss. 1, 2; 1991, c. 408, s. 1; c. 703, s.2; 1999‑194, s. 1; 2004‑199, s. 13(b).)