What does "subrogation" refer to in workers' compensation?

Subrogation in the context of workers' compensation pertains to the legal principle that allows an insurance company to seek repayment from a third party who may be responsible for the injuries sustained by an employee. When an employee files a workers' compensation claim, their employer's insurance carrier covers the medical expenses and lost wages. If it is later determined that someone else (for example, another driver in a motor vehicle accident or a contractor on a job site) was at fault for the accident or injury, the insurer has the right to pursue that third party for reimbursement of the costs it has already paid on behalf of the injured worker.

This mechanism is essential in ensuring that costs associated with workplace injuries are fairly allocated. Essentially, it prevents the same loss from being paid for by multiple parties and allows the insurer to recover funds that can then be used for other claims or to keep premiums more stable for employers. The practice of subrogation helps to control insurance costs and can influence the dynamics of risk management in workplace settings.