§ 65-01-09 — Injury through negligence of third person - Option of employee - Organization subrogated when claim filed - Lien created

Organization subrogated when claim filed - Lien created.
When an injury or death for which compensation is payable under provisions of this title has
been sustained under circumstances creating in some person other than the organization a
legal liability to pay damages in respect thereto, the injured employee, or the injured employee's

dependents may claim compensation under this title and proceed at law to recover damages
against such other person.
1. The organization is subrogated to the rights of the injured employee or the injured
employee's dependents to the extent of fifty percent of the damages recovered up to a
maximum of the total amount the organization has paid or would otherwise pay in the
future in compensation and benefits for the injured employee. The organization also
has a lien to the extent of fifty percent of the damages recovered up to a maximum of
the total amount the organization has paid in compensation and benefits. The
organization's subrogation interest or lien may not be reduced by settlement,
compromise, or judgment. The action against such other person may be brought by
the injured employee, or the injured employee's dependents in the event of the injured
employee's death. Such action shall be brought in the injured employee's or in the
injured employee's dependents' own right and name and as trustee for the
organization for the subrogation interest of the organization. However, if the director
chooses not to participate in an action, and the decision is in writing, the organization
has no subrogation interest and no obligation to pay fees or costs under this section
and no lien.
2. If the injured employee or the injured employee's dependents do not institute suit
within sixty days after date of injury, the organization may bring the action in its own
name and as trustee for the injured employee or the injured employee's dependents
and retain as its subrogation interest the full amount it has paid or would otherwise pay
in the future in compensation and benefits to the injured employee or the injured
employee's dependents and retain as its lien the full amount the organization has paid
in compensation and benefits. In the alternative, the organization may bring an action
against a third party to recover its lien for benefits paid to the injured employee. Within
sixty days after both the injured employee and the organization have declined to
commence an action against a third person as provided above, the employer may
bring the action in the employer's own name or in the name of the injured employee, or
both, and in trust for the organization and for the injured employee. The party bringing
the action may determine if the trial jury should be informed of the trust relationship.
3. If the action is brought by the injured employee or the injured employee's dependents,
or the employer as provided in subsection 2, the organization shall pay fifty percent of
the costs of the action, exclusive of attorney's fees, when such costs are incurred as
the action progresses before recovery of damages. If there is no recovery of damages
in the action, this shall be a cost of the organization to be paid from the organization's
general fund. After recovery of damages in the action, the costs of the action,
exclusive of attorney's fees, must be prorated and adjusted on the percentage of the
total subrogation interest of the organization recovered to the total recovery in the
action. The organization shall pay attorney's fees to the injured employee's attorney
from the organization's general fund as follows:
a. Twenty-five percent of the subrogation interest recovered for the organization
before judgment; and
b. Thirty-three and one-third percent of the subrogation interest recovered for the
organization when recovered through judgment entered as a result of a trial on
the merits or recovered through binding alternative dispute resolution.
4. The above provisions as to costs of the action and attorney's fees are effective only
when the injured employee advises the organization in writing the name and address
of the injured employee's attorney, and the injured employee has employed such
attorney for the purpose of collecting damages or of bringing legal action for recovery
of damages. If an injured employee fails to pay the organization's subrogation interest
and lien within thirty days of receipt of a recovery in a third-party action, the
organization's subrogation interest is the full amount of the damages recovered, up to
a maximum of the total amount it has paid or would otherwise pay in the future in
compensation and benefits to the injured employee or the injured employee's
dependents, no costs or attorney's fees will be paid from the organization's

subrogation interest and the organization's lien is the full amount of the damages
recovered up to a maximum of the total amount it has paid.
5. The organization's lien is created upon first payment of benefits. The lien attaches to
all claims, demands, settlement proceeds, judgment awards, or insurance payable by
reason of a legal liability of a third person. If the organization does not receive
payment of its lien amount within thirty days of the payment of any recovery and if the
organization has served, by regular mail, written notice of its lien upon the injured
employee or the injured employee's dependents and upon the third person, the insurer
of the third person, the injured employee or injured employee's dependents, and the
attorney of the injured employee or injured employee's dependents are liable to the
organization for the lien amount. A release or satisfaction of any judgment, claim, or
demand given by the injured employee or the injured employee's dependents is not
valid or effective against the lien. An action to collect the organization's lien amount
must be commenced within one year of the organization first possessing actual
knowledge of a recovery.
6. Upon receipt of its subrogation interest, the organization shall credit the medical
expense assessment paid by the employer under section 65-04-04.4 to the employer's
account.
7. If the organization's lien is not recognized by another jurisdiction, the organization may
issue a decision, including a decision demanding repayment from the injured
employee, of all benefits and compensation the organization has made on behalf of
the injured employee, including costs and administrative fees.