Workers’ Compensation was developed as a legal protection for both workers and employers. Before workers’ compensation, when an employee was injured he could only attain compensation for his personal injury if he was able to bring suit in court against his employer. That is unless the employer voluntarily decided to take care of the worker’s injuries and associated damages. At that time, the employer could be sued for extraordinary and even bankruptcy-level amounts, as damages could go beyond medical bills and lost wages into pain and suffering and punitive damages. By state law, Workers’ Compensation Insurance is required of all employers employing four or more individuals, and the rules are governed by the state Workers’ Compensation Commission. Within Workers’ Comp rules, the liability of either the employer or employee is not a factor in coverage and amount of compensation, but compensation is limited to medical coverage and a certain amount of lost wages. For the worker, this can be a problem when the injury is substantial and severe and involves a great deal of pain and suffering and other non-medical or wage-related damages. A third-party claim can help remedy that problem.
A third-party claim in a Workers’ Compensation case is when a party separate from the employer (including employer’s corporation and agents) bears liability in an accident. If Workers’ Compensation is involved, the accident would have had to occur within the scope of an employee’s work and involve the employer’s workers’ comp insurance. In some cases, a third party can be liable, and that party(s) is not protected from a lawsuit the way an employer is with workers’ compensation. For example, if someone is hurt by faulty equipment owned by a third party (not the employer or his corporations/agents) while the employee is working within the scope of his work for the employer, he can make a Workers’ Compensation claim and then a third party claim against the liable third party. This sometimes happens when a worker is struck by another vehicle while driving under the scope of employment.
In order to make a third-party claim in a workers’ comp scenario, the worker must first resolve the workers’ comp claim first. The workers’ comp claim must be resolved before reaching a settlement or bringing a suit against the third party. Additionally, the workers’ compensation insurer will normally have some rights to recoupment in the event of a third-party settlement or jury award. The key difference between the two claims is the third-party liability claim can be substantially more than the workers’ comp claim, and better compensate the employee in bad accidents.
After a work-related accident, always analyze to see if you have a third-party claim. It is worth the effort.
