The May 2025 signing into law of Senate Bill 258, by Senator Rochelle Nguyen and a bipartisan coalition, is a milestone legislative victory for crossover cases of workers' compensation (WC) and personal injury (PI) in Nevada. Often termed the “Breen formula” in Nevada based on the landmark case Breen v. Caesars Palace in 1986, the bill specifically amends NRS 616C.215 which governs third-party recovery and subrogation rights when an injured employee pursues a tort action while on workers' compensation benefits. The amendments introduce clarity, fairness, and improved balance between injured workers and industrial insurers.

What Was the Problem?

Before this law, if a worker got hurt on the job because of someone else’s fault (not their employer or coworker), they could sue that person while getting workers’ comp benefits. But the workers’ comp insurance company could take the entire lawsuit payout to cover their costs, leaving the worker with little or nothing, even if they won their case. This simply wasn’t fair.

How the New Law Helps

Senate Bill 258 fixes this with changes that protect injured workers. Here’s what’s new:

1. Insurance Companies Get Less of Your Lawsuit Money
   • The workers’ comp insurer can only take the lesser of:
     • The full workers’ compensation lien, or
     • One-third of the total third-party recovery
   • Previously, workers’ comp insurers could take the entire payout, leaving workers with nothing. Now, workers retain at least two-thirds of their lawsuit settlement.
2. Mandatory Cost-Sharing by the Insurer

• Workers’ comp insurers must also cover half of the worker’s legal costs for pursuing the third-party claim. For instance, if legal fees total $30,000, the insurer must contribute $15,000.
• This prevents workers’ comp insurers from benefiting from the worker’s legal efforts without contributing financially.

   

3. Protections for Future Benefits
   • Before the law, workers’ comp insurers could reduce (off-set) all future workers’ compensation benefits, including medical and income payments, until their costs were fully recovered. The new rules state:
     • Workers’ comp insurers cannot reduce future medical benefits as offsets are not permitted.
     • Reductions to income benefits (e.g. disability or death benefits) are limited to one-third of each payment and stop once the worker’s “net recovery” is offset.
   • “Net recovery” is defined as the total tort recovery minus the amount the workers’ comp insurer may recover under its lien and attorney’s fees.
   • This approach acknowledges that the injured worker should not be penalized for successfully pursuing a tort claim and ensures they benefit from both systems—workers’ comp and third-party actions.
4. Who Benefits from the Law
   • One of the most important elements of SB258 is its retroactive application. The revised provisions apply to:
     • All open and ongoing PI/WC crossover cases as of the effective date
     • New cases initiated after the law’s enactment
     • Any case without a final judgment, settlement, or other disposition on the date of passage
   • This ensures that many pending cases will benefit from the new, more equitable rules—not just future plaintiffs.
5. New Rules for Notices and Payments
   • The legislation places particular procedural obligations on injured workers and their lawyers:
     • Pre-litigation notice must be given to the workers’ comp insurer before third-party proceedings are issued.
     • Any owed lien must be paid within 15 days of receiving the lawsuit settlement, including a breakdown of how the settlement is distributed.
   • If the lien is not paid, the worker’s attorney and the third party’s insurer are held responsible.
   • These steps keep things clear and avoid delays.
6. Extra Protections
   • Insurers can’t sell their lien to someone else unless the injured party refuses to cooperate.
   • Juries are told workers’ comp isn’t based on fault, and they don’t reduce your award during the trial (offsets happen later).
   • Employers get a discount on their insurance premiums based on what the insurer recovers after legal cost deductions.

Why This Is a Big Deal for Nevada’s Injured Workers

The revised NRS 616C.215 is a significant victory for Nevada’s injured workers. It ensures they:

• Retain a larger portion of their lawsuit settlements
• Receive access to future medical care
• Stop workers’ comp insurers from taking too much of an employee’s money or benefits
• Have their attorneys’ efforts and costs acknowledged

The law was supported by lawmakers from both parties, defense lawyers, insurers, the gaming industry, and the Nevada Justice Association, showing it’s a fair solution for everyone.

Endnotes:

Nevada Legislature. Senate Bill 258 - 83rd Session (2025). Retrieved from: leg.state.nv.us ↩

Breen v. Caesars Palace, 715 P.2d 1070 (1986). Retrieved from: law.justia.com ↩

Nevada Justice Association. Retrieved from: nevadajustice.org↩