2017 ORS 656.593¹
Procedure when worker or beneficiary elects to bring action
  • release of liability and lien of paying agency in certain cases

(1) If a worker or the beneficiaries of the worker elect to recover damages from an employer or third person, the worker or beneficiaries shall give notice of the election to the paying agency by personal service or by registered or certified mail. The paying agency likewise must be given notice of the name of the court in which the action is brought, and a return showing service of the notice on the paying agency must be filed with the clerk of the court but is not a part of the record except to give notice to the defendant of the lien of the paying agency, as provided in this section. The proceeds of any damages the worker or beneficiaries recover from an employer or third person are subject to a lien of the paying agency for the paying agency’s share of the proceeds as set forth in this section. If the proceeds are paid in a series of payments, each payment must be distributed proportionately to each recipient according to the formula provided in this section, unless the parties otherwise agree. The total proceeds must be distributed as follows:

(a) Costs and attorney fees incurred must be paid, and the attorney fees may not exceed the advisory schedule of fees established by the Workers’ Compensation Board for such actions.

(b) The worker or the beneficiaries of the worker must receive at least 33-1/3 percent of the balance of the recovery.

(c) The paying agency must be paid and retain the balance of the recovery, but only to the extent that the paying agency is compensated for the paying agency’s expenditures for compensation, first aid or other medical, surgical or hospital service, and for the present value of reasonably expected future expenditures the paying agency makes for compensation and other costs of the worker’s claim under this chapter. Other costs include expenditures that the Department of Consumer and Business Services makes from the Consumer and Business Services Fund, the Self-Insured Employer Adjustment Reserve, the Self-Insured Employer Group Adjustment Reserve and the Workers’ Benefit Fund to reimburse the costs of the paying agency. Other costs also include assessments for the Workers’ Benefit Fund and any compensation that may become payable under ORS 656.273 (Aggravation for worsened conditions) or 656.278 (Board has continuing authority to alter earlier action on claim).

(d) The balance of the recovery must be paid to the worker or the beneficiaries of the worker forthwith. The board shall resolve any conflict as to the amount of the balance that the paying agency may retain.

(2) The amount the worker or the beneficiaries of the worker retain must be in addition to the compensation or other benefits to which the worker or beneficiaries are entitled under this chapter.

(3) A claimant may settle any third party case with the approval of the paying agency, in which event the paying agency may accept a share of the proceeds that is just and proper and the worker or the beneficiaries of the worker must receive the amount to which the worker would be entitled for a recovery under subsections (1) and (2) of this section. The board shall resolve any conflict as to what may be a just and proper distribution.

(4) As used in this section, “paying agency” includes the Department of Consumer and Business Services with respect to expenditures from the Consumer and Business Services Fund, the Self-Insured Employer Adjustment Reserve, the Self-Insured Employer Group Adjustment Reserve and the Workers’ Benefit Fund the department makes, together with the present value of any reasonably expected future expenditures from the funds or reserves that the department may make, to reimburse the costs of another paying agency and to compensate or pay other costs of a worker’s claim because of a self-insured employer’s or self-insured employer group’s insolvency, default or decertification.

(5) The department must be repaid for the department’s expenditures from the proceeds the paying agency recovered in an amount proportional to the amount of the department’s reimbursement of the paying agency’s costs. The department shall deposit all moneys the department receives under this section in the same fund from which the department’s expenditures originated.

(6) Before, and instead of, the distribution of proceeds described in subsection (1) of this section, if a worker or the beneficiaries of a worker are entitled to receive payment pursuant to a judgment or a settlement in a third party action in the amount of $1 million or more, the worker or the beneficiaries of the worker may elect to release the paying agency from all further liability on the workers’ compensation claim, thereby canceling the lien of the paying agency as to the present value of the paying agency’s reasonably expected future expenditures for workers’ compensation and other costs of the worker’s claim, if all of the following conditions are met as part of the claim release:

(a) The worker or the beneficiaries of the worker are represented by an attorney.

(b) The release of the claim is presented in writing and is filed with the Workers’ Compensation Board, with a copy served on the paying agency, including the Department of Consumer and Business Services with respect to the department’s expenditures from the Consumer and Business Services Fund, the Self-Insured Employer Adjustment Reserve, the Self-Insured Employer Group Adjustment Reserve and the Workers’ Benefit Fund.

(c) The claim release specifies that the worker or the beneficiaries of the worker understand that the claim release means that no further benefits of any nature whatsoever will be paid to the worker or the beneficiaries of the worker.

(d) The release of the claim is accompanied by a settlement stipulation with the paying agency, outlining terms of reimbursement to the paying agency, covering the paying agency’s incurred expenditures for compensation, first aid or other medical, surgical or hospital service and for expenditures from the Consumer and Business Services Fund, the Self-Insured Employer Adjustment Reserve, the Self-Insured Employer Group Adjustment Reserve and the Workers’ Benefit Fund to the date the release becomes final or the order of the board becomes final. If the payment of such incurred expenditures is in dispute, the release of the claim must be accompanied by a written submission of the dispute by the worker or the beneficiaries of the worker to the board for resolution of the dispute by order of the board under procedures allowing for board resolution under ORS 656.587 (Paying agency must join in any compromise), in which case the release of the claim is not final until such time as the order of the board becomes final. In such a case, the only issue to be decided by the board is the amount of incurred expenses by the paying agency.

(e) If a service, item or benefit has been provided but a bill for that service, item or benefit has not been received by the paying agency before the release or order becomes final, the reimbursement payment must cover the bill in accordance with the following process:

(A) The paying agency may maintain a contingency fund in an amount reasonably sufficient to cover reimbursement for the billing.

(B) If a dispute arises as to reimbursement for any bill first received by the paying agency not later than 180 days after the date the release or order became final, the dispute must be resolved by order of the board.

(C) Any amount remaining in the contingency fund after the 180-day period must be paid to the worker or the beneficiaries of the worker.

(D) Any billing for a service, item or benefit that is first received by the paying agency more than 180 days after the date the release or order became final is unenforceable by the person who issued the bill.

(f) The settlement or judgment proceeds are available for payment or actually have been paid out and are available in a trust fund or similar account, or are available through a legally enforceable structured settlement agreement if sufficient funds are available to make payment to the paying agency.

(g) The agreed-upon payment to the paying agency, or the payment to the paying agency ordered by the board, is made within 30 days of the filing of the withdrawal of the claim with the board or within 30 days after the board has entered a final order resolving any dispute with the paying agency.

(7) If a release of further liability on a claim, as provided in subsection (6) of this section, has been filed, and if payment to the paying agency has been made, the effect of the release is that the worker or the beneficiaries of the worker have no further right to seek benefits under the original claim, or any independent workers’ compensation claim regarding the same circumstances, and the claim may not be reasserted, refiled or reestablished through any legal proceeding. [Formerly 656.322; 1977 c.804 §16; 1979 c.839 §12; 1981 c.540 §1; 1985 c.600 §12; 1987 c.373 §35b; 1993 c.445 §1; 1995 c.332 §47; 1995 c.641 §8; 1997 c.639 §4; 2017 c.69 §3]

Note: See notes under 656.202 (Compensation payable to subject worker in accordance with law in effect at time of injury).

Notes of Decisions

“Damages recovered” means settle­ment amount less any benefits paid to insurer as per­sonal injury protec­tion reimburse­ment. Northwestern Pacific Indemnity v. Canutt, 280 Or 375, 570 P2d 1182 (1977)

Where insurer paid claim of employee injured while working in Oregon for Washington corpora­tion, settle­ment agree­ment for pay­ment by Washington to reimburse Oregon insurer was not recovery of damages and therefore not subject to distribu­tion pro­vi­sions. McCutchen v. Workers’ Comp. Dept., 35 Or App 697, 582 P2d 56 (1978)

In indemnifica­tion ac­tion by chemical supplier against employer whose employee was killed by chemical, supplier was not entitled to relief from employer’s worker’s compensa­tion lien against damages recovered from supplier by worker’s estate, because employer’s culpability in worker’s death was irrelevant. Boldman v. Mt. Hood Chemical Corp., 288 Or 121, 602 P2d 1072 (1979)

Attorney fees claimant recovers against insurer after prevailing in hearing on insurer’s denial of claim are not recoverable by insurer as “other cost” of claim. Schlecht v. SAIF, 60 Or App 449, 653 P2d 1284 (1982)

After third party recovery, when insurance carrier retained no amount for estimated future medical expenditures, it gave up its right to reimburse­ment from the proceeds. SAIF v. Parker, 61 Or App 47, 656 P2d 335 (1982)

No por­tion of proceeds of claimant’s third party damage ac­tion can be distributed to per­son who has separate claim outside workers’ compensa­tion system. SAIF v. Cowart, 65 Or App 733, 672 P2d 389 (1983)

Reserve for future expenses must be reduced to actuarial present value of amounts to be expended, not current cost of anticipated services. Denton v. EBI Companies, 67 Or App 339, 679 P2d 301 (1984)

Recovery in ac­tion on policy against insurance company of third per­son was distributable as arising out of “negligence or wrong of third per­son.” Shipley v. SAIF, 79 Or App 149, 718 P2d 757 (1986), Sup Ct review denied

SAIF’s lien against proceeds of recoveries by injured workers in third-party ac­tions does not attach to pay­ments to worker by Oregon Insurance Guarantee Associa­tion acting in place of insolvent insurer. Corvallis Aero Service v. Villalobos, 81 Or App 137, 724 P2d 880 (1986), Sup Ct review denied

Claimant and paying agency have right to rely on each other’s pertinent representa­tions in negotiating settle­ment with third party. Estate of Troy Vance v. Williams, 84 Or App 616, 734 P2d 1372 (1987)

Paying agency’s right to lien on third-party recovery attaches only to share distributed to workers’ compensa­tion claimant. Scarino v. SAIF, 91 Or App 350, 755 P2d 139 (1988), Sup Ct review denied; Worthen v. Lumbermen’s Underwriting, 137 Or App 368, 904 P2d 1088 (1995)

Where claimant brought third party ac­tion combining compensable injury claim with other tort claims, paying agent’s lien was limited to recovery on compensable injury claim. Robertson v. Davcol, Inc., 99 Or App 542, 783 P2d 43 (1989)

Notwithstanding fact that worker was injured or killed in jurisdic­tion that does not allow such reimburse­ment, paying agency is entitled to reimburse­ment from proceeds of any settle­ment for amounts it paid on behalf of injured or deceased workers. Allen v. American Hardwoods, 102 Or App 562, 795 P2d 592 (1990), Sup Ct review denied

Board has authority to determine whether insurer qualifies as “paying agency.” SAIF v. Wright, 312 Or 132, 817 P2d 1317 (1991)

Distribu­tion of settle­ment proceeds is to beneficiaries as class, not to individuals, so recovery on lien is against total award. Liberty Northwest Ins. Corp. v. Golden, 116 Or App 64, 840 P2d 1362 (1992), Sup Ct review denied

Workers’ Compensa­tion Board has authority to determine whether defendants in suit are “third parties.” Toole v. EBI Companies, 314 Or 102, 838 P2d 60 (1992)

Paying agency had lien against ac­tion for attorney malpractice based on attorney’s neg­li­gent failure to recover compensa­tion for injured worker directly from responsible third party. Toole v. EBI Companies, 314 Or 102, 838 P2d 60 (1992)

Pay­ment received under claim disposi­tion agree­ment was “compensa­tion” and therefore subject to determina­tion of reimbursibility. Turo v. SAIF, 131 Or App 572, 888 P2d 1043 (1994)

Board can use tort law principles to determine that just and proper distribu­tion limits insurer recovery to benefits paid only to certain parties. Liberty Northwest Ins. Corp. v. Urness, 138 Or App 388, 909 P2d 893 (1996), Sup Ct review denied

Law Review Cita­tions

32 WLR 217 (1996)

Law Review Cita­tions

55 OLR 432-445 (1976); 16 WLR 519 (1979); 22 WLR 559 (1986)

Chapter 656

Notes of Decisions

Party having af­firm­a­tive of any issue must prove it by preponderance of evidence unless legislature fixes some different quantum of proof. Hutcheson v. Weyerhaeuser Co., 288 Or 51, 602 P2d 268 (1979)

Amend­ments to existing statutes and enact­ment of addi­tional statutes by 1995 legisla­tion generally apply to pending cases and to orders still ap­pealable on June 7, 1995, effective date. Volk v. America West Air­lines, 135 Or App 565, 899 P2d 746 (1995), Sup Ct review denied

Amend­ments to existing statutes and enact­ment of addi­tional statutes by 1995 legisla­tion do not extend or shorten procedural time limita­tions with regard to ac­tions taken prior to June 7, 1995, effective date. Motel 6 v. McMasters, 135 Or App 583, 899 P2d 1212 (1995)

Atty. Gen. Opinions

Benefit unavailability for inmates engaged in prison work programs, (1996) Vol 48, p 134

Law Review Cita­tions

24 WLR 321, 341 (1988); 32 WLR 217 (1996)

1 Legislative Counsel Committee, CHAPTER 656—Workers’ Compensation, https://­www.­oregonlegislature.­gov/­bills_laws/­ors/­ors656.­html (2017) (last ac­cessed Mar. 30, 2018).
 
2 Legislative Counsel Committee, Annotations to the Oregon Revised Stat­utes, Cumulative Supplement - 2017, Chapter 656, https://­www.­oregonlegislature.­gov/­bills_laws/­ors/­ano656.­html (2017) (last ac­cessed Mar. 30, 2018).
 
3 OregonLaws.org assembles these lists by analyzing references between Sections. Each listed item refers back to the current Section in its own text. The result reveals relationships in the code that may not have otherwise been apparent.