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Court backs employer’s immediate recovery from third-party settlement - Business Insurance Skip to content Register for free Search Search Log In Risk Management Cyber Risks Pricing Trends Mergers & Acquisitions Technology Sponsored Content WSIA RISKWORLD Workers Comp & Safety Workers Comp Cost Control Pain Management Workplace Safety International EMEA Asia-Pacific Latin America People Events BI Intelligence Top 100 Agents & Brokers Best Places to Work 2025 Lists Directories Insurance Pricing BI Stock Index Magazine Current Issue Past Issues Subscribe Women to Watch ALL INsurance Resources Risk Perspectives Sponsored Content Webinars White Papers Risk Management Cyber Risks Pricing Trends Mergers & Acquisitions Technology Sponsored Content WSIA RISKWORLD Workers Comp & Safety Workers Comp Cost Control Pain Management Workplace Safety International EMEA Asia-Pacific Latin America People Events BI Intelligence Top 100 Agents & Brokers Best Places to Work 2025 Lists Directories Insurance Pricing BI Stock Index Magazine Current Issue Past Issues Subscribe Women to Watch ALL INsurance Resources Risk Perspectives Sponsored Content Webinars White Papers Risk Management Cyber Risks Pricing Trends Mergers & Acquisitions Technology Sponsored Content WSIA RISKWORLD Workers Comp & Safety Workers Comp Cost Control Pain Management Workplace Safety International EMEA Asia-Pacific Latin America People Events BI Intelligence Top 100 Agents & Brokers Best Places to Work 2025 Lists Directories Insurance Pricing BI Stock Index Magazine Current Issue Past Issues Subscribe Women to Watch ALL INsurance Resources Risk Perspectives Sponsored Content Webinars White Papers Risk Management Cyber Risks Pricing Trends Mergers & Acquisitions Technology Sponsored Content WSIA RISKWORLD Workers Comp & Safety Workers Comp Cost Control Pain Management Workplace Safety International EMEA Asia-Pacific Latin America People Events BI Intelligence Top 100 Agents & Brokers Best Places to Work 2025 Lists Directories Insurance Pricing BI Stock Index Magazine Current Issue Past Issues Subscribe Women to Watch ALL INsurance Resources Risk Perspectives Sponsored Content Webinars White Papers Court backs employer’s immediate recovery from third-party settlement by Louise Esola Claims Disputes , Workers Comp Coverage , Workplace Safety Aug 20, 2026 The Kentucky Supreme Court on Thursday unanimously ruled that an employer can immediately recoup workers compensation benefits already paid when an injured worker also obtains a third-party recovery covering the same damages, after accounting for the employer’s share of the worker’s legal costs. In K-VA-T Food Stores Inc. v. Blackburn , the unanimous state high court clarified how a 2018 amendment to Kentucky’s workers comp subrogation statute applies to third-party recoveries, reinstating the Workers’ Compensation Board’s decision and remanding the case to correct a mathematical error. Chantella Blackburn was injured in February 2022 while working for K-VA-T Food Stores when she fell from a stepladder onto a third-party vendor’s cart, injuring her right wrist and other body parts. She was awarded workers comp benefits based on a 6% impairment rating, including temporary total disability benefits, permanent partial disability benefits and future medical expenses. Ms. Blackburn separately sued the vendor for negligence and settled for $295,000. Because the settlement did not allocate the damages, an administrative law judge determined that one-third represented pain and suffering, which is not recoverable through workers comp, leaving $196,666.66 in damages that duplicated workers comp benefits. After accounting for attorney fees and legal expenses, the ALJ determined that K-VA-T could immediately recover $25,246.43 it had already paid in medical and income benefits and receive a credit against future benefits. The Workers’ Compensation Board largely affirmed but identified an error in the calculation of legal expenses. The Kentucky Court of Appeals disagreed, ruling that K-VA-T could begin recovering only after the benefits it paid exceeded its pro rata share of Ms. Blackburn’s legal fees and expenses. The Supreme Court reversed that portion of the ruling. The justices said Kentucky law contains no “fee-first” requirement that would force an employer to continue paying benefits until those payments exceed its share of the employee’s litigation costs. Instead, the amount of a third-party recovery duplicating workers comp damages must first be identified and then reduced by the employer’s proportional share of attorney fees and expenses. The remaining amount is available for subrogation, allowing an employer or insurer to immediately recoup benefits already paid and, when applicable, take a credit against benefits payable in the future, the court said. The court said the approach gives effect to the Legislature’s 2018 amendment of the statute, which was intended to preserve employers’ subrogation rights while requiring them to bear their proportional share of an injured worker’s costs in obtaining a third-party recovery. 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