 
What is a "Third Party?"
A normal workers' compensation case consists of two parties. The injured worker
and the employer. Workers' Compensation is a "no fault" system which means that
it does not matter how you got hurt at work so long as you were hurt at work.
However, if you are injured through the negligence of a "third party" (someone
other then your employer or yourself), then you may still have a claim against
that third party based on that party's fault. If the other party has caused you
injury and caused your employer to have to pay for your medical care or pay you
benefits, then the employer has also been damaged by the third party and also
has a claim against that other person or entity.
An easy example is that you are driving as part of your work and you have an
accident with another vehicle through the negligence of the driver of that other
vehicle. Since you were injured at work, you are entitled to all of the benefits
of a workers' compensation case. However, since you are also injured through the
negligence of another driver who is not employed by your employer, (a "third
party"), you and your employer may make a claim against that other driver. If
that other driver is also driving in the course of her employment and she is
working for a company, then you and your employer also have a claim against the
company which employs the other driver.
Is the "Third Party" Part of My Workers' Compensation Case?"
The short answer is no. The workers' compensation case and the "third party"
case are separate. Your workers' compensation case, like all workers'
compensation cases, is heard before the workers' compensation court called the
Workers' Compensation Appeals Board. The "third party" case is handled in civil
court just like every other car accident case. Sometimes you will have two
different attorneys and sometimes one attorney will handle both cases. If you
have two attorneys, you should make sure that they are communicating and
cooperating with each other.
Can't I Just Drop the Workers' Compensation Case and Go After the Other Driver?
Yes, you can waive your rights under workers' compensation and pursue the claim
strictly as a negligence case. But that means that you will not be accepting any
of the benefits which you could have through the workers' compensation claim
such as temporary disability, medical benefits, and vocational rehabilitation.
Some attorneys who handle civil cases and are not familiar with workers'
compensation might recommend that you do this. However, most attorneys who are
familiar with the benefits available under workers' compensation would not
suggest that you give them up.
Another thing to consider is that the attorneys fees in a civil case are usually
anywhere from thirty-three and one-third percent to forty percent or more. The
attorneys fees in a workers' compensation case are usually not more than fifteen
percent.
What Happens if I Pursue Both Claims?
If you pursue both the workers' compensation case and the civil case, your
employer will have a right to claim a lien on the recovery from the "third
party." Here's a simple example. You have an automobile accident with a party
who has $15,000.00 insurance. Your workers' compensation carrier pays doctor
bills, mileage, and other benefits totalling $5,000.00. You settle your
automobile accident case for $15,000.00. Your attorney takes one-third or
$5,000.00. For this example, we will assume there are no costs. However, usually
your attorney will be entitled to reimbursement of costs of litigation. The
workers' compensation insurer has a lien on your case which means it is entitled
to be reimbursed for the $5,000.00 which they have already expended. That leaves
$5,000.00 for you.
That sounds good so far. However, what if you still need medical attention or
are entitled to some permanent disability benefits which the workers'
compensation carrier would be paying in the future. The workers' compensation
insurance has a right to claim credit for the money which you have obtained
($5,000.00). Even though the workers' compensation might be ordered to pay
future medical bills, they will not have to pay until you spend the entire
$5,000.00 on doctors. If you were entitled to $2,000.00 for permanent disability
which has not been paid and to your future medical care, then you would only
have to pay the first $3,000.00 for medical care before the insurance company
had to start paying for your doctor bills again.
Some personal injury attorneys who are not familiar with workers' compensation
might tell you that you should go ahead and settle your case and not to worry
because the workers' compensation will cover your future medical bills. If this
happens, make sure that your third party attorney understands "credit rights" as
well as "lien rights" of the insurance company.
Another problem with settling your personal injury case too early is that there
is no money left for the workers' compensation carrier to pay and therefore,
nothing from which to deduct a fee for your workers' compensation attorney. This
is another reason for the attorneys to cooperate.
Can I Work Out a Deal with the Carrier?
Sometimes, the workers' compensation insurance carrier is willing to give up
some of the credit rights and/or lien rights in order to resolve the "third
party" case and get some of their money back. Using the same example as before,
except now assuming that the workers' compensation had paid $10,000.00 rather
than $5,000.00, you can see that if the workers' compensation carrier took
everything to which they were entitled ($10,000.00) and your attorney took
one-third ($5,000.00), there would be nothing left for you. Why would you want
to settle your "third party" case just so that your attorney and the workers'
compensation carrier could get paid and not you? That's what your attorney will
tell the workers' compensation insurance carrier and sometimes they will see the
value of reducing their lien in order for you to obtain a recovery too. In that
example, the workers' compensation insurance might reduce their lien to
$5,000.00 even though they are entitled to $10,000.00 just so that the
settlement will be worth it to you. Otherwise, if you refuse to enter into a
settlement and walk away from the "third party" case, the workers' compensation
insurance company would have to sue the other driver and subpoena you as a
witness. However, remember, that even though the workers' compensation insurance
company reduced their lien from $10,000.00 to $5,000.00 to settle the case,
unless they specifically state that they are also waiving their right to credit,
you still would have to spend the first $5,000.00 before you could get any more
money from workers' compensation.
Is There Any Way to Get Out of Reimbursing the Employer?
If the employer is also negligent then you may not have to reimburse your
employer from your "third party" claim. So, using the same example, if the party
who hit you is negligent but part of your damages came from the fact that your
employer negligently maintained the seat belt or air bags in the car you were
driving, then you may not have to reimburse the employer, at least to the extent
of the employer's negligence.
It can get very complicated if there is a workers' compensation lien and
employer negligence. It is difficult calculating the amount which you will
recover. It is important that you have a "third party" attorney who understands
the intricate relationship between workers' compensation and a personal injury
case. You will have to work closely with both attorneys. You should definitely
keep each attorney informed if the other case is nearing settlement.
As usual, you should contact your attorney for any questions you have about your
case.
© Robert S. Havens, 2009
This article is for general information, and not meant as
specific legal advice. You should always see an attorney for specific legal
questions.
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