Callaghan v. Car Parts Int'l, LLC, 329 Conn. 564

Patrick Callaghan was injured in a work-related auto accident, received ~$74,000 in workers’ compensation from his employer (Car Parts International, LLC), and settled a third-party claim for $100,000 with net proceeds of ~$66,000 after fees.
Under General Statutes § 31-293(a), an employer has a reimbursement claim against third-party recovery for benefits it paid; Connecticut case law recognized an implicit moratorium (credit) that delays employer liability for postjudgment benefits until the employee’s third-party recovery is exhausted.
Public Act 11-205 amended § 31-293(a) to reduce the employer’s claim by one-third when the employee, rather than the employer, brings the third‑party action, providing that the one-third reduction “shall inure solely to the benefit of the employee.”
Callaghan reimbursed the employer two-thirds (~$44,000) and retained one-third (~$22,000). Afterward he required additional treatment; the employer denied payment claiming a moratorium that should apply to the one-third retained by Callaghan.
A workers’ compensation commissioner and the Compensation Review Board upheld the moratorium; Callaghan appealed to the Connecticut Supreme Court.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the moratorium (employer credit against future WC benefits) applies to the one‑third portion of third‑party proceeds reserved for the employee by P.A. 11‑205	Callaghan: the statute’s language that the reduction “shall inure solely to the benefit of the employee” means the one‑third is not subject to the moratorium and must remain available to the employee	Car Parts: P.A. 11‑205 did not address the moratorium; moratorium should continue to apply so the employer gets a credit against future benefits until employee’s third‑party proceeds are exhausted	Court held the moratorium does not apply to the one‑third reduction; the one‑third is solely for the employee’s benefit and cannot be used to offset future employer liability
Whether P.A. 11‑205’s purpose and legislative history permit an exception to moratorium precedent	Callaghan: legislative text and history show intent to incentivize employees to pursue third‑party claims by guaranteeing them one‑third of net proceeds	Car Parts: allowing employee to keep one‑third while employer continues to pay benefits risks duplicative recovery	Court: legislative text and history show clear intent to benefit the employee; risk of duplication does not override the statute or intent; the moratorium remains applicable to other (non‑one‑third) proceeds

Enquist v. General Datacom, 218 Conn. 19 (recognition of employer moratorium/credit against future WC benefits)
Rosenbaum v. Hartford News Co., 92 Conn. 398 (early articulation of avoiding double recovery by employer reimbursement from third‑party proceeds)
Thomas v. Dept. of Developmental Services, 297 Conn. 391 (moratorium ends once postjudgment WC benefits exceed employee’s recovery)
Goodyear v. Discala, 269 Conn. 507 (employer’s failure to pursue third‑party claim can affect double recovery analysis)
Weinberg v. ARA Vending Co., 223 Conn. 336 (legislative language creating potential duplication can justify allowing duplication)
Cruz v. Montanez, 294 Conn. 357 (employer’s reimbursement claim can include amounts attributable to noneconomic damages recovered by employee)