Workers' comp money dispute ties up Legislature

By Fred Knapp , Senior Reporter/Producer Nebraska Public Media

Feb. 26, 2026, midnight ·

Sen. Dunixi Guereca in debate Thursday (Fred Knapp/Nebraska Public Media News) — Sen. Dunixi Guereca. (Fred Knapp/Nebraska Public Media News)

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A dispute about proposed changes to workers’ compensation law tied up the Legislature Thursday and led to further disagreements about the direction senators are heading.

Thursday’s focus was “subrogation” – a legal doctrine that affects how the money received in settlements if a third party was at fault should be divided up between injured workers, their employers and insurance companies.

Currently, judges are supposed to make sure that division is “fair and equitable.” But Sen. Bob Hallstrom, sponsor of the bill (LB455) to change the law, says that produces uncertainty.

Nebraska State Sen. Bob Hallstrom. (Photo courtesy of Nebraska Legislature)

“That's the very uncertainty that this bill would address, with a certain formula that gives the employee the first third, after their attorney fees and reasonable expenses are taken care of, and then we move on from there to reimburse the insurer for these medical expenses and benefits that have been advanced. And if there's anything left over, it all goes to the employee,” Hallstrom said.

Sen. John Cavanaugh objected, saying that would be unfair to employees. He gave the example of someone who had paid extra for insurance against uninsured or underinsured motorists.

“If you are driving your personal vehicle for work… and somebody T-bones you and they don't have insurance, under this bill, the employer and the workers' comp insurance would be able to access your personal automotive insurance for coverage for underinsured or uninsured motorist," he said. "And what that means is you in your private life, private capacity, are paying to mitigate the exposure of your employer when you are working for them."

Sen. Danielle Conrad also objected to changing the status quo.

“The status quo ensures a case-by-case determination of how we handle subrogation in this context, and requires that it be handled in a manner that is fair and equitable, and the decision is made by conservative judges appointed by conservative governors,” Conrad said.

But Hallstrom argued the current system doesn’t always work well. He cited a case where, of a $250,000 settlement, a county court awarded $208,000 to the employee, $42,000 to attorneys’ fees, and nothing to the employers’ insurance company, even though it had already paid $36,000 in expenses. That decision was upheld by the state’s Court of Appeals.

“No criticism of the Court of Appeals, but if they are the ‘conservative judges appointed by the conservative governors’ that Senator Conrad noted in her comments, I don't think they did the fair and equitable thing in that particular case,” he said.

Hallstrom said the state’s Supreme Court later overturned that decision but did not specify what the right division should be, thereby continuing the uncertainty.

Teresa Ibach is the state senator for Nebraska’s 44th District. (Courtesy of the Nebraska Legislature)

Sen. Teresa Ibach, who originally proposed a separate bill to change the law, defended the proposed new formula.

“Right now it's ‘fair and equitable.’ We're just seeking to define what is ‘fair and equitable,’” Ibach said.

But Sen. Dunixi Guereca said the proposed formula would be unfair.

“I'm doing my job, showing up to work. Out of nowhere, I get sideswiped, and now my employer's insurance company could go after my auto insurance that I have to pay for out-of-pocket, so that they're made whole. Colleagues, make that make sense,” Guereca said.

Conrad likened the proposal to what she said were other anti-worker measures in the Legislature, including scaling-back voter-approved increases in the minimum wage and paid sick leave.

“Each and every day, our only objective in the Legislature is to punch down on the poor and kids and to give easier latitude to the wealthiest and the biggest corporations," she said. "And that's again, what we have before us in (LB)455. You say you want people to work, but you cut their wages. You say you want people to work, but you take their sick leave. You say you want people to work, you diminish their ability to get back to work in the workers' compensation system."

Sen. Jane Raybould, who sponsored the bill authorizing a lower minimum wage for teen workers, took exception.

“I really am troubled by some of the comments, when they talk about paid sick leave and the minimum wage and how we are not pro-employees, pro-working families,” Raybould said.

Raybould said Nebraska has one of the 15th highest minimum wages among the states, but is among the 12th lowest in the cost of living.

But Conrad said opponents would continue to fight the proposed changes, and chastised her colleagues for supporting them.

“These very proposals have been rejected by those who sat in your chair for almost decades before you, because they had the common good sense to understand balance in policymaking. So we're going to talk about it, and we're going to talk about it, and we're going to talk about it, as long as we have the time to do so,” she said.

Debate on the measure as of Thursday afternoon had consumed just over five hours, leaving just under three hours to go before a possible first-round vote on the bill.