Written By: Patrick Johnson
For years, Louisiana had what was known as a “direct action” statute. This allowed suits to be brought against the liability or compensation carrier directly. As a beneficial side effect, the carrier would receive a copy of any lawsuit. For insureds, depending upon who receives the service copy of the lawsuit, they may, or may not, know what to do with it. So even if the insured did not bring it to the attention of the proper adjuster, the carrier would have been put on notice, or the carrier would have notified the handling third-party administrator.
However, on August 1, 2024, the law was changed removing the ability of the plaintiff/claimant from bringing a suit directly against a defendant’s carrier except in very limited situations which you will rarely see. There is admittedly a question regarding whether this change applies to workers’ compensation based upon the way the law is written, but whether it formally applies in workers’ compensation does not really change how we handle claims in compensation. But coupled with a relatively recent change in the way default judgments are handled, this may present a problem unless your insureds are prepared for it.
For years, if a 1008 was not timely answered, the claimant would move for a preliminary default. This is a necessary step before the court would confirm a final default judgment. As the insured and carrier (if named) would get notice of the preliminary default, they could then appear at the hearing to defend their position or file an answer. The problem would be solved. In January 2022, the law was changed to remove the preliminary default step. Now, if a 1008 is not timely answered, the claimant can move directly for a default judgment with the court. And in turn, the ability of your attorney to challenge the default is drastically reduced. If you have never had to deal with a default judgment, there are few things in the law that are more terrifying. If a claimant is successful in obtaining a default judgment, it has the same effect as an actual adverse judgment at trial in the claimant’s favor.
With the changes to the “direct action” statute no longer allowing a claim directly against the carrier, and assuming that this new rule applies to workers’ compensation, an employer who is not trained to recognize that a 1008 is a lawsuit the same as any Petition for Damages, or who has been lulled over the years into believing that the carrier or third-party administrator will be receiving a copy and will properly assign it to an attorney, that insured may well let that 1008 sit in an inbox. The next that you hear about it is when the insured calls or emails you asking what to do with a “Default Judgment.”
To forestall that email or phone call, make sure that your insureds know that a service copy of an LWC-WC-1008 which will contain a “CITATION” cover sheet and the words “YOU HAVE BEEN SUED” must be immediately sent to the adjuster. Attached is a redacted version of a citation received from an insured who has been thoroughly trained to bring all 1008’s to the immediate attention of the adjuster.
