Short answer: In a 2026 decision, the Utah Supreme Court held that when a workers’ compensation carrier wants to use an injured worker’s settlement with a third party both to repay benefits it already paid and to cover benefits it will owe later, its share of the lawyer fees and costs has to be measured by both. Future benefits count, not only past ones. And if the worker paid all the fees out of the settlement, the carrier must pay back its share before it can use the rest of the settlement as a credit against future benefits.
When someone is hurt at work because of another company’s carelessness, two systems run side by side: workers’ comp from the employer’s carrier, and an injury claim against the outside company. The carrier gets a share of any third-party recovery, but it also has to help pay for the lawsuit that produced it. This case is about how big that share is.
The Two Claims After a Work Injury
Workers’ compensation is usually the only remedy against your own employer and co-workers (Utah Code 34A-2-105). But when the injury is caused by “the wrongful act or neglect of a person other than an employer, officer, agent, or employee of the employer,” the worker can collect comp and also sue that third person (Utah Code 34A-2-106(1)). We cover how those claims fit together in construction site injuries in Utah and hurt in a car crash while working.
Section 34A-2-106(5) then sets the order for splitting a third-party recovery. First, “the reasonable expense of the action, including attorney fees, shall be paid and charged proportionately against the parties as their interests may appear.” Next, the carrier is reimbursed for what it has paid, less its share of those expenses. The balance goes to the worker and is applied against benefits “thereafter accruing,” which means the carrier can stop paying until that balance is used up.
What Happened
The case is HB Construction and/or Auto Owners Insurance Co. v. Labor Commission, 2026 UT 3, decided February 26, 2026. In 2013, Eduardo Narciso was knocked off a nine-foot concrete form and landed headfirst. He was left permanently and totally disabled and in need of constant monitoring.
He sued the other companies involved in the accident and settled in 2018 for $5 million. Attorney fees and expenses of $2,149,618.89 were paid from the settlement. By then, his employer’s carrier, Auto Owners, had paid $1,578,095.60 in benefits. When the settlement came in, the carrier stopped paying. A medical panel later estimated his future medical and care costs at more than $7 million over a forty-year life expectancy.
The Fight Over the Fee Share
The statute says expenses are split by the parties’ interests “as their interests may appear.” The two sides read that phrase differently.
- The carrier’s view: count only benefits already paid. That made its interest about 31.6% of the $5 million, so it would bear about 31.6% of the fees, roughly $679,000.
- The worker’s view: count past benefits plus the future benefits the carrier planned to offset. That total was more than the entire settlement, so the carrier’s share came to more than 100%, making it responsible for all of the fees.
The Labor Commission sided with the worker. Because the carrier’s share of the fees ($2,149,618.89) was larger than the $1,578,095.60 it was owed for past benefits, it had to pay Narciso the difference, $571,523.29, before it could use the recovery as a credit against future benefits. After that adjustment, the carrier would not owe further benefits until $3,421,904.31 had been used up on benefits for the work injury.
What the Supreme Court Held
The Supreme Court upheld the Commission on both points.
Future benefits count. The court read “may appear” as language that “contemplates and tolerates some uncertainty” rather than demanding precise figures. Because the statute gives the carrier two rights, repayment of past benefits and a credit against future ones, the carrier’s “interests” include both when it claims both. The court relied on its earlier decision in Esquivel v. Labor Commission (2000), which accounted for future liability in the same calculation.
Uncertainty is not a way out. The carrier argued that a worker’s future care costs are too speculative, since he might not live as long as expected. The court answered that when an employer wants to recoup from a third-party recovery, “the legislature has chosen to hold the employer accountable for its share of the expenses incurred to secure that recovery.” Disagreement with that choice belongs with the legislature.
Paying its share is not an “advance” of benefits. The carrier called the $571,523.29 payment an advance of benefits it did not yet owe. The court disagreed. It was reimbursement for fees the worker had already paid on the carrier’s behalf. In the court’s words, the employer or insurer “must first bear [its] proportionate share of the expenses for obtaining the recovery.”
Why It Matters
For a worker with a serious, long-term injury, future benefits can be many times larger than what has been paid so far. Counting them can shift a much larger part of the fees onto the carrier. Less of the worker’s settlement then goes to paying the carrier’s share of the cost of winning it, and more is left for the worker’s care. How much difference it makes depends on the numbers in each case.
Limits of the Ruling
- It turns on what the carrier claims. The holding applies “where, as here,” a carrier seeks both reimbursement and a future offset. The share would be figured differently if a carrier claimed only one.
- The fees were not disputed. The carrier stipulated that the fees and expenses were reasonable, so the court did not address a challenge to reasonableness.
- Employer fault was not at issue. The statute separately reduces the carrier’s reimbursement when employer-side fault is 40% or more (34A-2-106(5)(b)). That rule played no part here.
- The settlement must overlap the work injury. In a separate 2026 decision, Granite School District v. Young, 2026 UT 29, the court upheld the Commission’s refusal to give an employer an offset against a teacher’s settlement with debt collectors, because the Commission found that money paid for the collectors’ misconduct, not for the work injuries.
- Later history. The current version of 34A-2-106 took effect May 5, 2021, and as of September 2026 we found no amendment or later decision changing this ruling.
Practical Points for Injured Workers
- Before proceeding against a third party, give written notice of your intent to the carrier and anyone else paying compensation (34A-2-106(3)).
- If the carrier claims both reimbursement and a future credit, ask how it calculated its share of fees and costs. Under this decision, future benefits belong in that math.
- Get a realistic estimate of future care. That number now affects the fee split, not only the value of the claim.
- Get the carrier’s figures in writing before agreeing to any settlement. A comp carrier that holds the third-party claim as trustee may not settle and release it without the Labor Commission’s consent (34A-2-106(2)(b)).
Serious injuries of this kind are discussed further in catastrophic injury claims in Utah.
Talk to a Utah Injury Attorney
A third-party claim after a work injury is really a three-way negotiation among you, the at-fault company and the comp carrier. We handle these cases on a one-third contingency fee, and the firm advances case costs, which are repaid from the recovery.
Hurt in Utah? Call (801) 921-5134 or send us your case for a free consultation. No attorney fees unless we win. Hablamos Español.