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When someone is hurt at work, their only remedy against the employer is to file a claim for workers’ compensation benefits. However, if the accident was caused by the negligence of someone outside of the employment relationship, or where the law makes another party responsible, then the injured worker can bring a personal injury lawsuit in addition to filing for workers’ compensation. In this situation, the personal injury case is called a “third-party lawsuit” because the worker is suing someone who is a “third party” to the employment relationship.

Some examples of “third-party lawsuits” would include a bus operator or truck driver who is involved in a motor vehicle accident with a stranger while at work, a construction worker who falls off a ladder on a construction site, or an office worker who trips and falls in the parking lot of the building her employer rents space in.

It is important to know that when a worker brings a third-party lawsuit, the employer or insurance company who is responsible for the workers’ compensation claim has a lien against that lawsuit. In many ways, the injured worker and the workers’ comp insurer are essentially partners in the third-party lawsuit.

As a result, the worker cannot settle a third-party lawsuit without written permission from the workers’ comp insurer. If they do, then their right to any future wage loss or medical treatment from workers’ comp are forfeited.

In addition, the workers’ comp insurer has a lien against the lawsuit, which means it is entitled to be repaid out of the settlement or verdict for some of the money it paid in workers’ comp benefits. The exact amount of the repayment depends on a number of factor, and a knowledgeable lawyer can often negotiate a significant reduction in the lien. Finally, the workers’ comp insurer also has a credit for its future responsibility against the injured worker’s net recovery from the third-party lawsuit. Again, this may be subject to negotiation and it is important for the worker to be represented by counsel who is familiar with all of the intricacies of workers’ comp and third-party litigation.


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