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SB 2739

AN ACT RELATING TO LABOR AND LABOR RELATIONS -- WORKERS' COMPENSATION -- PROCEDURE

2026 Regular Session Introduced by Sam Bell and 9 co-sponsors

SB 2739 clarifies how third-party recoveries interact with workers’ comp, allowing subrogation, partial reimbursement, possible benefit suspension, and defined timelines.

04/29/2026 Committee recommended measure be held for further study
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Bill Summary · SB 2739

Summary of Bill SB 2739 (Rhode Island, 2026)

Title

AN ACT RELATING TO LABOR AND LABOR RELATIONS -- WORKERS' COMPENSATION -- PROCEDURE

Purpose and Intent

  • The bill amends Rhode Island’s workers’ compensation framework, specifically the provisions governing the reimbursement and subrogation rights when a third party is liable for damages arising from a work-related injury.
  • The goal is to modify how damages recovered from a third party interact with workers’ compensation benefits, including timing, scope of reimbursement, and procedures for disputes.

Key Provisions

1) Third-Party Damages and Reimbursement (28-35-58)

  • When an employee’s injury is caused under circumstances creating a legal liability in a third party to pay damages (beyond workers’ compensation), the employee can pursue both:
    • Damages from the third party, and
    • Workers’ compensation benefits from the employer/insurer.
  • The employee may reimburse the compensation payer (employer/insurer) from the third-party damages to the extent of the compensation paid up to the date of judgment/settlement.
  • Receiving damages from the third party does not bar future workers’ compensation benefits.
  • If damages recovered exceed the total compensation paid to date, the insurer may suspend ongoing workers’ compensation benefits for the duration of the suspension. The suspension length is calculated as:
    • Excess damages divided by the employee’s weekly compensation rate.
    • During suspension, the employee remains eligible for all medical and hospital benefits.

2) Subrogation and Indemnity

  • If the employee has already received workers’ compensation, the entity that paid compensation (employer/insurer) is entitled to indemnity from the third party to the extent of the compensation paid, and is subrogated to the employee’s rights to recover the damages.
  • When money is recovered (judgment or settlement) by the employee, the amount to be reimbursed may be reduced by a proportionate share of the employee’s costs, witness expenses, and attorney fees, aligned with the portion of the reimbursement.

3) Damages Not Reimbursed

  • Any portion of money recovered that includes damages for past or future pain and suffering, loss of consortium, loss of society, loss of wages/earning capacity, or other non-compensable damages under workers’ compensation shall not be reimbursed.
  • The reimbursement amount may also be reduced by a percentage reflecting the employee’s comparative negligence.
  • Disputes over the appropriate reimbursement amount are to be heard in the court that has jurisdiction over the underlying third-party claim.

4) Time Limits and Subrogation Notice (2-year-8-month window)

  • If the employee (or administrator, in the case of death) fails to sue the third party within 2 years and 8 months after the injury, the self-insured employer or insurer may proceed with the subrogation and be subrogated to the employee’s rights.
  • Before such a subrogation action can commence, the employer/insurer must notify the employee (or estate administrator) at least 26 weeks prior to the expiration of the 2 years and 8 months, by personal service or certified mail, that failure to sue will operate as an assignment of the right of action to the employer/insurer.
  • Upon filing the lawsuit, the employer/insurer must notify the employee in writing, and the employee has 30 days to join the action as a plaintiff; if not, the right to join abates.
  • The employee’s right to full compensation under (a) remains preserved.

5) Excess Recovery

  • If the self-insured employer or insurer recovers more than the lien amount after costs, the excess is paid to the injured employee (or estate administrator) for distribution.

6) Dispute Resolution

  • If there is a dispute over reimbursement or suspension period, the court, by agreement of the parties (and upon petition by either side), may refer the dispute to the workers’ compensation court’s mediation program, per the court’s rules and procedures.

7) Effective Date

  • The act takes effect upon passage.

Who Would Be Affected

  • Employees receiving workers’ compensation who also pursue (or might pursue) third-party damages.
  • Employers and their workers’ compensation insurers (including self-insured employers) who pay benefits and potentially seek subrogation.
  • Attorneys representing employees, employers, and third-party defendants in related claims.
  • Courts handling workers’ compensation cases and subrogation disputes, including mediation programs.

Procedural and Timeline Aspects

  • Timeframe for filing third-party actions: generally within 2 years and 8 months after injury; potential assignment if not timely filed, with a 26-week notice requirement.
  • Notification requirements for joinder and for subrogation actions.
  • Suspension of workers’ compensation benefits may occur during periods of third-party damage recovery, based on excess damages.
  • Mediation option available for disputed reimbursement or suspension periods.

Summary

SB 2739 clarifies and tightens the relationship between workers’ compensation benefits and third-party recoveries. It preserves employee access to compensation and medical benefits, introduces structured subrogation rights for employers/insurers, refines reimbursement calculations (including exclusions for certain non-economic damages and adjustments for comparative negligence), and provides procedural safeguards and timelines to pursue or preserve subrogation rights, including mediation mechanisms for disputes. The act is effective upon passage.

Compiled from official sources — confirm details with the bill’s official record.

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