97A.14A Liability of third parties — subrogation.
1. If, on or after July 1, 2002, a member receives an injury or dies for which benefits are payable under section 97A.6, subsection 3, 5, 8, or 9, or section 97A.14, and if the injury or death is caused under circumstances creating a legal liability for damages against a third party other than the system, the system, the member, or the member’s dependent or the trustee of the dependent may maintain an action for damages against the third party as provided by this section. If a member, the member’s dependent, or the trustee of the dependent commences such an action, the plaintiff member, dependent, or trustee shall serve a copy of the original notice upon the system not less than ten days before the trial of the action, but a failure to serve the notice does not prejudice the rights of the system, and the following rights and duties ensue:
a. The system shall be indemnified out of the recovery of damages to the extent of benefit payments made by the system, with legal interest, except that the attorney fees and expenses of the plaintiff member, dependent, or trustee may be first allowed by the district court.
b. The system has a lien on the damage claim against the third party and on any judgment on the damage claim for benefits for which the system is liable. In order to continue and preserve the lien, the system shall file a notice of the lien within thirty days after receiving a copy of the original notice in the office of the clerk of the district court in which the action is filed.
2. If a member, the member’s dependent, or the trustee of the dependent fails to bring an action for damages against a third party within ninety days after the system, through the board of trustees, requests the member, the member’s dependent, or the trustee of the dependent in writing to do so, then the system is subrogated to the rights of the member and may, by action of the board of trustees, maintain the action against the third party, and may recover damages for the injury or death to the same extent that the member, the member’s dependent, or the trustee of the dependent may recover damages for the injury or death. If the system recovers damages in the action, the court shall enter judgment for distribution of the recovery as follows:
a. A sum sufficient to repay the system for the amount of such benefits actually paid by the system up to the time of the entering of the judgment.
b. A sum sufficient to pay the system the present worth, computed at the interest rate provided in section 535.3 for court judgments and decrees, of the future payments of such benefits for which the system is liable until the member attains the age of fifty-five, but the sum is not a final adjudication of the future payment which the member is entitled to receive.
c. Any balance of the recovery remaining after distribution of the recovery pursuant to paragraphs “a” and “b” shall be paid to the member or the member’s beneficiary.
3. Before a settlement is effective between the system and a third party who is liable for any injury, the member, the member’s dependent, or the trustee of the dependent must consent in writing to the settlement; and if the settlement is between the member, the member’s dependent, or the trustee of the dependent and a third party, the system must consent in writing to the settlement; or on refusal to consent, in either case, the workers’ compensation commissioner must consent in writing to the settlement.
4. For purposes of subrogation under this section, a payment made to an injured member, the member’s guardian, or the member’s legal representative, by or on behalf of a third party or the third party’s principal or agent, who is liable for, connected with, or involved in causing the injury or death to the member, shall be considered paid as damages because the injury or death was caused under circumstances creating a legal liability against the third party, whether the payment is made under a covenant not to sue, compromise settlement, denial of liability, or is otherwise made.
5. All funds recovered by the system under this section shall be deposited in the retirement fund created in section 97A.8.
2002 Acts, ch 1135, §4; 2008 Acts, ch 1171, §15