The Advocate, Journal of the Nevada Trial Lawyer’s Assoc., Jan. 2007 issue.

On December 21, 2006, the Nevada Supreme Court issued an opinion in the case of American Home Assurance Company vs. Eighth Judicial District Court (122 Nev. Adv. Op. 104).  This opinion surely strikes a blow for common sense and helps to clear up what had become a rather messy, nasty situation in “real life.”  The decision denies the right of workmen’s compensation insurers to intervene in litigation absent extraordinary circumstances.  (Of course, the injured victim and his attorney will still have to pay back the work comp carrier on the subrogation lien, but now a fair discount will have to be allowed for the efforts of the injured worker’s attorney in securing the settlement funds.)
 
If you have practiced personal injury law long enough, you have encountered the following situation.  You have a client who was injured on the job, but whose injuries were proximately caused by a third-party tortfeasor.  There are oftentimes very tough liability facts, and, there are oftentimes tough facts on the damages.  Even though your client suffered grievous injuries, there may have been  a large pre-existing component; and the workmen’s compensation insurer sent your client to their own “hatchet man” doctors who wrote reports inferring that your client was malingering, etc.  So, you have to file suit, and it is  involved, nasty litigation.  You are spending thousands of dollars on depositions, experts, etc.  Because your client was injured seriously, there is a very large workmen’s compensation lien.  You may think to yourself that even though you are having to spend lots of money on costs, and are working extremely hard to get a recovery, there will be some justice because the workmen’s compensation lien will have to be adjusted in accordance with the formula in Breen v. Caesars Palace.
 
Then, well into the litigation, the workmen’s compensation insurer hits on what it thinks is a bright idea.  They file a motion to intervene in the case, stating that they have an absolute right to do so under the case of SIIS v. District Court, 111  Nev. 28.  Indeed, the SIIS v. District Court case does appear to give them an absolute right to intervene.
 
Once in the case, the workmen’s compensation insurer furnishes zero real help. They do not contribute any of the costs to hiring experts, etc.  Participation in discovery is token.  Then, to make matters worse, now their name is in the caption of the case as one of the parties seeking compensation; and if there is a trial on the matter, the jury is going to be poisoned against your case because it looks like it’s one insurance company suing another to get money back.  
 
Then, at the end of the case, the workmen’s compensation carrier says that since they intervened in the case and did their own work, they don’t have to give your client any discount at all under Breen v. Caesars Palace.
 
It becomes clear to all involved  that the whole business of intervening in the case was just a legal facade  to get out of sharing  their fair share of the attorneys’ fees and costs (as is required by the common-fund doctrine in Breen v. Caesars Palace.) Even worse, the participation in the case by the insurer might  lessen the value of the overall  claim, as the caption is changed in a way that would negatively influence jurors.
 
That was  a situation that defied both justice and common sense.  Wisely, the Nevada Supreme Court decided to act. 
 
In the American Home Assurance opinion, the Court decided to revisit its opinion in SIIS v. District Court.  The Court states “because our 1995 decision (in SIIS v. District Court) is unsupportable under the law . . . we overrule it.”
 
In the case, the injured worker asserted that American Home Assurance Company was trying to intervene in the case “merely to avoid paying its proportionate share of the litigation costs.”  (No kidding!) 
 
The Nevada Supreme Court, per Justice Hardesty, did a very detailed analysis of the underlying law, and reasoned out that no right of intervention should be allowed to workmen’s compensation carriers absent a showing that it would suffer an impairment of its ability to protect its interest without said intervention.
 
Although the opinion is necessarily couched in terms of legal analysis, I suspect  that the members of the Nevada Supreme Court who decided this opinion (all of whom were previously trial judges in the Eighth Judicial District Court) saw firsthand how the prior decision was abused and utilized as a legal facade by some (not all) workmen’s comp insurers to avoid fair sharing of the attorneys’ fees and costs of the injured worker.
 
Now that intervention is, for most intents and purposes, prohibited, does this mean that plaintiff’s counsel should just automatically insist on “breening” all the work comp liens?  No.  The fact is, the larger the Breen discount, the larger the future offset on work comp benefits.  If you have a badly hurt client, he’s likely going to need future care; you do not want to put him in the position of having no future medical coverage, for example, if he needs another surgery down the road; the solution is to negotiate a pre arranged discount rate, in exchange for waiver of future offset on medical benefits.   There has grown to be some standard arrangements in such situations that have proven acceptable to both sides over the years; the Nevada Supreme Court’s opinion will serve to encourage further widespread  adoption of what the marketplace has already worked out.