On May 31, Nevada Gov. Joe Lombardo signed into law Senate Bill 258, a bipartisan effort that marks a pivotal turning point in the evolution of workers’ compensation subrogation rights in the Silver State.

Matthew T. Fricker

It also presents a unique approach among all 50 states to resolving the tensions that exist between plaintiffs’ lawyers and the insurance industry in workers’ compensation subrogation. The resulting subrogation statute is now unlike any other in America. This legislation — preceded by weeks of debate, negotiation and compromise among competing interests — culminated in a rare 21–0 Senate vote on April 22 and an overwhelming Assembly passage on May 19.

SB 258’s successful passage represents a recalibration of Nevada’s long-standing subrogation framework and comes in the wake of both confusion and clarity handed down by the state’s judiciary. SB 258 became effective on the date of signing, so Nevada subrogation professionals must quickly become familiar with its dramatic effect.

At the heart of SB 258 lies a significant modification to Nevada’s § 616C.215. The bill introduces a new subsection (7), which caps the workers’ compensation insurer’s lien recovery to the lesser of:

• The full amount of the workers’ compensation lien.
• Or one-third of the total amount recovered by the injured worker in a third-party action.

This is not just a surface-level update; it injects a structured formula into a previously murky area of law and restores predictability for subrogation professionals operating in Nevada.

In practical terms, SB 258 requires that the total amount of an employee’s recovery from which a lien can be taken includes all proceeds from a third-party case, whether cash, real or personal property, securities or intellectual property. This ensures that creative settlement structuring and vague designations such as “noneconomic damages” cannot escape the reach of the lien.

However, if the one-third limitation is triggered, that amount must be reduced by 50% of the reasonable litigation costs borne by the injured worker. These costs must be detailed in a verified memorandum, and insurers retain the right to challenge the calculation through judicial review. Notably, the statute does not force the carrier to pay any portion of attorneys’ fees — only half of the verified litigation expenses. For large liens, this shift can significantly favor carriers; for smaller liens, the cost exposure can still be significant.

But one thing is certain: It could have been a lot worse.

Critically, the bill delivers a nuanced, yet decisive, blow to those who have long sought to erode the subrogation rights of compensation carriers under the guise of equitable doctrines. Under SB 258, carriers are no longer forced to bear the weight of a plaintiff’s attorneys’ fees. This is an especially welcome change in light of the Nevada Supreme Court’s questionable and recently repudiated opinions in Breen v. Caesars Palace and Poremba v. Southern Nevada Paving, both of which effectively neutralized a carrier’s lien through judicial fiat, ignoring the plain language of § 616C.215. The judiciary’s encroachments reached their apex when Poremba allowed claimants to apply post-settlement “personal living expenses” as offsets against the future credit owed to the carrier. That era is now officially closed.

Nevada’s new law signals the Legislature’s commitment to honoring the Grand Bargain. This century-old compromise obligates carriers to swiftly provide no-fault benefits while ensuring that employees cannot double-dip when third-party liability is at play. The new statutory framework clearly delineates the extent of the carrier’s reimbursement rights and introduces a standardized cost-sharing approach while restoring a narrow but equitable boundary around what the carrier must contribute toward litigation expenses.

Subsection (7)(c) of the bill clarifies how a carrier’s future credit application will function as well. It specifies that a carrier’s future credit may not be applied to “accident benefits,” and “accident benefits” are defined elsewhere in Nevada statute as medical, surgical and hospital treatments. This means medical benefits are now shielded from the credit, and the offset can reduce only the payment of non-accident benefits (i.e., indemnity benefits).

Unless the workers’ compensation claim is settled or closed, medical benefits are now owed for life, notwithstanding any third-party tort recovery by the employee or the carrier. The amount of each offset applied to each future payment is limited to only one-third of the amount actually owed. In other words, the future indemnity benefits are reduced by a maximum of one-third of each such future indemnity payment that is owed to the employee.

This appears to be a well-structured compromise, balancing the employee’s right to future indemnity with the carrier’s right to avoid overpayment following a third-party recovery.

Importantly, SB 258 does not address loss-of-consortium recoveries, a soft spot in Nevada law that remains untouched. Historically, Nevada has lacked clear precedent on whether a carrier’s lien extends to a spouse’s consortium claim, and while it is generally assumed that no lien attaches, the Legislature’s silence in SB 258 leaves this question open for future debate and judicial interpretation.

The passage of SB 258 follows on the heels of the Nevada Supreme Court’s decision in AmTrust North America Inc. v. Vasquez, a 2024 ruling that dismantled decades of anti-subrogation case law and reinstated a straightforward lien model. The court in Vasquez not only overruled Breen and Poremba, but also emphasized the need for a simple, statutory interpretation of § 616C.215. SB 258 effectively codifies this call for clarity, boding well for the prospect that future courts do not resurrect the Breen formula or similar equitable doctrines that had long haunted subrogation professionals. But that hasn’t stopped them in the past.

Crucially, the effective date of SB 258 was May 31, the date on which Lombardo signed the bill. SB 258 provides that its amendments to § 616C.215 apply to actions that are already pending. Specifically, the amendments apply to actions “in which a final judgment, settlement or disposition has not been entered by the effective date.”  Consequently, it is vitally important that file handlers ensure that settlements currently being negotiated account for the effect of SB 258.

In sum, SB 258 is more than a legislative fix; it is a blueprint for balanced reform. It is a compromise forged through rare bipartisan collaboration, a repudiation of judicial activism and a restoration of the workers’ compensation grand bargain with society. By imposing a predictable cap, requiring cost verification and clarifying credit application, the Nevada Legislature resolved the long-standing subrogation civil war pitting the insurance industry against trial lawyers.

Not everyone comes away a winner. But for subrogation professionals, the message is clear: Nevada’s subrogation climate has shifted dramatically compared to the dark days of Breen and Poremba — and shifted favorably for subrogation professionals.

Matthew T. Fricker is a senior litigating attorney with the Matthiesen, Wickert & Lehrer law firm in Hartford, Wisconsin. This blog post is reprinted with permission.