Third-Party Recovery and Your Mod: What a $101M Verdict Reveals

A jury in Henderson County, North Carolina, returned a $101 million verdict in May 2026 after a concrete retaining wall collapsed onto a crew of masonry workers, killing one and seriously injuring three others (Insurance Journal, May 2026). Investigators found that 210 tons of backfill had been placed against the wall before the concrete cured. It's the largest personal injury award in the state's history.

The headlines focus on the payout. For the masonry contractor whose crew was buried, the question that follows is quieter but more expensive: what happens to the workers' comp claims on the experience rating worksheet, and when does a third-party recovery like this one actually fix the mod?

North Carolina's workers' comp subrogation statute (N.C.G.S. 97-10.2) allows injured employees to pursue a separate tort claim against a negligent third party while still collecting WC benefits from their employer's carrier. When that tort claim produces a recovery, the carrier holds an automatic subrogation lien and gets reimbursed for every dollar of benefits it paid. That reimbursement is supposed to flow back through the NCCI (National Council on Compensation Insurance) experience rating system and reduce the actual losses on the employer's worksheet.

In practice, "supposed to" and "does" are different things.

The claim hits your worksheet at full value first

When the wall collapsed in January 2021, Robert Crawford Masonry's workers' comp carrier began paying benefits immediately. One fatality claim. Three serious injury claims. NCCI's unit statistical reporting captured those losses at their full incurred value on the first report.

For a masonry contractor running $400,000 in annual payroll under NCCI class code 5022, a fatal claim valued at $500,000 changes the math fast. NCCI splits every claim at a dollar threshold (the "split point") into primary and excess losses. Primary losses carry roughly five to seven times more weight per dollar in the mod formula. The first $19,500 or so hits hardest. But even the excess portion, on a claim this size, pushes a small contractor's EMR (Experience Modification Rate) well past 1.00.

That inflated mod shows up on the worksheet for every rating period that includes the claim. NCCI uses three years of loss data. A claim from January 2021 appeared in the 2022, 2023, and 2024 mod calculations at its full gross value, with no offset for any recovery that hadn't happened yet.

The $101M verdict creates a recovery path

The injured workers and the deceased worker's family pursued a third-party tort claim against Hajoca Corporation, the property controller that hired the crew to rebuild the retaining wall. The jury awarded $45 million to each of two surviving workers and $11 million for loss of consortium (Insurance Journal, May 2026). Hajoca settled before the jury considered punitive damages.

Under N.C.G.S. 97-10.2, the WC carrier's subrogation lien attaches automatically once benefits are paid. The statute sets a clear distribution priority: court costs first, then attorney fees capped at one-third, then full reimbursement to the carrier for all WC benefits paid. The remainder goes to the injured workers. If the carrier paid $300,000 in total WC benefits across these claims, it recovers that amount from the settlement proceeds before anyone else sees the balance.

The case took more than five years to reach a verdict. An appellate ruling (Hernandez v. Hajoca Corp., NC Court of Appeals, 2024) blocked Hajoca's attempt to shift liability to the masonry subcontractor under the Workers' Compensation Act's exclusivity provision. That extended timeline matters for the mod, because every additional year of litigation is another year the claims sit on the worksheet at gross value.

How a third-party recovery corrects the mod

NCCI's unit statistical reporting instructions treat subrogation recoveries as a reduction to incurred losses. The formula: net incurred loss equals gross incurred loss minus recovery, plus recovery expenses (NCCI Experience Rating Plan Manual). A $500,000 claim with a $300,000 recovery drops to $200,000 in net incurred value. That changes the split point math and pulls the mod back toward 1.00.

The correction only happens when the carrier files a revised unit statistical report. We typically see a gap of 12 to 18 months between a recovery posting and the worksheet update in routine cases. The Henderson County case is far from routine. More than five years passed between the injury and the verdict. During those years, the WC claims sat on the worksheet at gross incurred value, inflating the mod for every rating period they touched.

The dollar cost isn't theoretical. For a contractor with $400,000 in payroll under class 5022, the difference between a $500,000 claim and a $200,000 claim on the worksheet can mean 15 to 25 points on the mod. At manual rates typical for masonry, that's tens of thousands of dollars in excess premium per year. NCCI doesn't recalculate prior years' mods retroactively. The employer paid the inflated premium during the delay, and that overpayment doesn't come back.

What an audit would check

An audit reviews open claims on the worksheet where a third-party recovery is pending or has been received, then compares the incurred values NCCI is using against the carrier's current claim records. If a recovery has posted but the corrected unit statistical report hasn't been filed, the audit identifies the gap and initiates the correction. Five years of litigation is unusual. Twelve to 24 months of delay between recovery and worksheet update is not.

If your worksheet carries claims where third-party recovery may apply, send us your NCCI worksheet and we'll check whether the recovery has reached your mod calculation.