Workers’ compensation.

Senator Grayson advances a targeted reform that ties a cap on third-party recoveries to the injuries of peace officers and firefighters employed by specified local entities, allowing the employer to recover no more than one-third of the third-party insurer’s policy limits when two conditions are met: the employee’s total damages exceed the net recovery after the employer’s claim, and the available policy limits are insufficient to fully compensate both parties. The authors state the measure aims to balance the interests of injured employees with the employer’s need to recover funds already paid on compensation.

Under the bill, the cap is exclusive of any lien or offset and takes precedence over other recovery claims. It applies to settlements and judgments, with any remaining proceeds handled according to existing lien and subrogation principles. The targeted group consists of peace officers and firefighters employed by local entities such as cities, counties, city and counties, and fire protection districts. The framework preserves the broader right of an employer to pursue third-party recovery, but constrains the amount recoverable in these specified cases.

To operationalize the cap, the bill adjusts how settlements and releases are structured and documented. Settlements involving eligible employees must reflect the allocation to the employer’s capped recovery, and notices and opportunities to recover remain part of the process. The employer’s right to reimbursement or subrogation is limited to the allocated portion, and the employer may not claim credits against future workers’ compensation benefits in these cases. The appeals-board and lien enforcement mechanisms are aligned with the allocation cap, requiring precise calculation and explicit language in settlements.

The proposal also contemplates broader fiscal and administrative implications, including the need for careful settlement drafting, lien tracking, and coordination among employers, employees, insurers, and the workers’ compensation system. The bill requests fiscal committee review without creating an new appropriation. Implementation questions highlighted by the authors include the definitions of who qualifies as a peace officer, which local entities are covered, and how the cap interacts with multi-defendant scenarios and multiple policy limits.