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Workers’ Compensation Claim Vs. Third-party Liability

What’s the difference between workers’ comp and a third party claim?

What is a third party claim?

A third party in a workers’ compensation case is an individual or entity, other than the employer, who may have contributed to the employee’s injuries. When the employee makes a claim against a third party to seek compensation for work related injuries, the employee is seeking to establish third-party liability. For example, if a delivery truck driver is hit and injured by a reckless driver, he can receive workers’ compensation benefits because the injuries occurred during the scope of employment. However, he also has a third party liability claim against the reckless driver. Another example is an employee who is using a product in the course of employment. If the product harms the employee, she has a workers’ compensation claim with the employer’s insurance, as well as a product liability claim against the third party manufacturer of the product.

The Difference Between the Two

The purpose of workers’ compensation is to provide financial compensation and medical coverage for injuries related to work. In exchange for these benefits, the employee agrees not to file suit against the employer. Workers’ compensation solely covers current medical expenses and income loss. It does not cover permanent medical conditions, long term losses of income. However, when applicable, the employee has the option of filing a lawsuit against a third party. This claim differs from the workers’ compensation claim and any resulting payment is completely separate from workers’ compensation benefits.

The Process

To pursue a third party liability claim, you must institute a claim against the at-fault party’s insurance company or institute a lawsuit in the appropriate court. The case proceeds just as it  would if there was no pending workers’ compensation claim.

You must prove negligence on the part of the third party. This requires proof that the third party owed you a duty that was breached. You must also prove that the breach proximately caused your injuries and that suffered some type of damages. Failure to prove these elements result in the loss of your claim.

Subrogation

If you are receiving workers’ compensation benefits and you decide to pursue a third party claim for liability, the state of North Carolina allows the employer’s insurance company to seek a subrogation claim for the purpose of recouping payments made for the employee’s medical treatment and lost wages. As the employee seeks damages, the employer essentially maintains a lien on any compensation from a settlement or a lawsuit.  Generally, when a potential settlement agreement is reached, both the employee and the employer must agree to the settlement amount. If both parties are in agreement, the employer receives compensation for all workers’ compensation reimbursements and payouts before the employee receives any part of the awarded damages. Once the employer is completely reimbursed, the employee can keep any remaining portion of the award.

Third party liability cases can prove extremely challenging particularly in situations where the employee is pursuing subrogation. The interests of the employee and the employer can become adversarial quickly. The services of an experienced workers’ comp attorney can prove valuable in these cases.

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