Delaware’s Supreme Court shook up the workers comp playbook by saying insurers do get some room to subrogate injury claims tied to underinsured motorists, but that room stays tight and very specific.
The court’s ProAssurance Group v. Manz ruling lets carriers claw back only the boardable slice of a third party recovery, meaning medical bills and wage loss, according to the Delaware Compensation Rating Bureau.
Noneconomic awards stay off limits. Emotional distress, any harms an employee can’t sue a negligent driver for because Delaware’s personal injury protection statute blocks it, all of that sits outside the carrier’s reach. Strange boundary, though not surprising for anyone who has followed Delaware’s PIP rules.
The PIP carve-out creates another hard stop: insurers can’t chase an employee’s own UIM or other first party cover for these nonboardable costs.
The rating bureau warned carriers to slow down, review UM and UIM linked files with sharper eyes, and loop in counsel early if they want to hang on to any subrogation potential.
They also suggested revisiting reserves, recovery models, and workflow design, because this decision shifts the ground a bit.
The story behind the ruling centers on an Apis Services employee hit by an underinsured driver. ProAssurance paid $374,070 for medical expenses and wage losses, then tossed in an $80,000 lump sum to settle all future comp entitlements.
The worker collected only $8,571 from the negligent driver, nowhere near enough, so they filed a UIM claim under Apis’ policy with Philadelphia Insurance.
Arbitration later produced a $215,000 UIM award. That sparked ProAssurance to file a lien against the worker’s recovery, basically to assert subrogation rights. The worker countered with a request for a court order blocking the lien on the UIM payout.
At the Superior Court level, ProAssurance leaned on Horizon Servs. v. Henry (Henry II), arguing that decision opened the door for subrogation on UIM awards.
The court pushed back, saying Henry II came after the Apis claim wrapped, so it didn’t apply. And if it had applied, the court said ProAssurance would have had a guaranteed right to subrogate.
ProAssurance escalated the fight to the state’s high court. The Supreme Court upheld the end result but tossed the reasoning. It said Henry II does apply but the lower court read the case too broadly.
The ruling in Henry II gives subrogation rights only for boardable damages and draws a clear line separating them from nonboardable harms.
The justices also clarified that nonboardable damages include, but don’t stop at, anything covered by PIP benefits.
The Supreme Court sent the matter back to the Superior Court to sort out the actual math: which part, if any, of the worker’s $215,000 UIM award counts as boardable. The rest stays off limits.
