Arizona Supreme Court says law of state where Workers' Comp was paid determines assignment rights

By Charmaine Little | Jan 9, 2019

PHOENIX (Legal Newsline) – Because a woman was awarded Workers’ Compensation benefits in a different state that doesn’t have automatic assignment provision, on Jan. 2, the Supreme Court for the State of Arizona reversed the decisions of two lower courts.

“We hold that Arizona’s automatic assignment provision in A.R.S. 23-1023(B) does not apply when an employee receives Workers’ Compensation benefits under another state’s law,” the Supreme Court said in its decision. 

Instead, the law from the state where the employee was awarded Workers’ Compensation is the state that decides the assignment rights of both the worker and the employer. In this case, that other state is Nebraska.

Justice Andrew Gould wrote the court's opinion while Chief Justice Scott Bales and justices John Pelander, Ann Scott Timmer, Clint Bolick, John Lopez IV and Judge Peter Eckerstrom concurred.

Justice Scott Bales  

Stephanie Jackson, who actually lives in South Carolina, worked for Nebraska Co. Drivers Management LLC (DM), as a semi-truck driver. She was riding in the passenger seat of a truck driven by an Eagle KMC LLC worker when the truck was involved in an accident in 2014 while driving in Arizona. 

Jackson was receiving training from Eagle at the time of the accident. She then requested and earned Workers’ Compensation in Nebraska, and DM paid her allotted benefits.

Jackson later sued Eagle and others in Arizona, just a few days before the state’s two-year statute of limitations ran out over allegations of strict liability, negligence and statutory violations. She also named DM as a defendant since DM had a claim against any third-party recovery.

While Eagle filed a motion to dismiss, it was later turned to a motion for summary judgment, which the Mohave County Superior Court granted in favor of Eagle, stating that rule 23-1023(B) was relevant in this case and Jackson didn’t have a legal interest. 

The Court of Appeals, Division One reversed and said the rule actually does not apply since Jackson’s Workers’ Compensation benefits were paid in Nebraska, so Nebraska law should be assigned this lawsuit.

As for the Supreme Court, it agreed and said the rule does not apply against Jackson. 

“Because Jackson received Workers’ Compensation in Nebraska, that state’s law regarding assignment applies to her claims against Eagle in this action. Thus, because Nebraska does not have an automatic assignment provision, Jackson has a legal interest in those claims,” the Supreme Court pointed out.

With this in mind, the Supreme Court vacated the appeals’ court decision and reversed the Superior Court’s grant of summary judgment for Eagle and remanded the case back to the Superior Court.

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