Suing a Third Party – Reimbursement (Subrogation) to Employer

In some cases an employee may be able to sue a third party (someone other than the employer) for a workplace injury. For example, if a worker is injured while operating a forklift, the employee might be able to sue the manufacturer of the forklift for faulty design. In this scenario, the employee should pursue workers’ compensation benefits against the insurance carrier for the employer. The employee will also sue the forklift manufacturer. In the suit against the forklift manufacturer, the employee will ask for lost wages, payment of medical bills, and damages for pain and suffering. If the employee collects comp benefits from the employer’s insurance company and has his medical bills paid by the employer’s insurance company – and gets his/her full lost wages and medical bills paid by the forklift manufacturer – then the employee is getting a double benefit.

Virginia has a law to address this situation.

When an employee, his/her personal representative, or any other person rightfully brings a lawsuit against a third party, the court hearing the new action will:

  • Figure the amount of compensation paid and expenses for medical, surgical, and hospital attention, and supplies, and funeral expenses incurred by the employer through workers’ compensation
  • If the employee/plaintiff wins against or settles with the third party:
    • Then the employer shall be reimbursed for what it paid under the Workers’ Compensation Act
    • Since the employee/plaintiff has to pay attorney’s fees and expenses, an adjustment is made to make sure the lawyer gets paid and the expenses get paid. Basically, if the employee hires a lawyer to file a claim against a manufacturer or third party, the employee is doing the employer a favor. The employer gets paid what he/she advanced but that’s all. The employer doesn’t get a freebie at the expense of the employee – the employer has to pay part of the employee’s legal bills and expenses.

Sometimes, the right of the employer to be reimbursed (after the expenses and attorney’s fees are paid) is called the right of subrogation.

This issue comes up frequently with regard to car accidents. If one is injured due to the negligence of another party, and the injured person was also on the job at the same time, that injured worker can make a workers’ compensation claim as well as a third party claim against the other driver, but the workers compensation insurance carrier is going to be entitled to subrogation.

As a practical matter, when it comes to these kinds of ‘third party’ claims, the most important thing to remember is NEVER to settle your third party claim without first obtaining the permission of the workers’ compensation carrier. If you do settle your claim without obtaining permission, then according to the law, you may have forfeited any additional benefits you might be entitled to in your workers’ compensation case. What’s worse, you may have given up any advantage to receiving a discount on the subrogation claim for attorney’s fees.

If the employer then obtains a credit against future benefits for your failure to give them notice or obtain permission to settle, if you are ever hurt again on the job, you’ll have to pay that money back first before receiving a penny for workers’ comp benefits.

Contact a Workers’ Comp Attorney in Norfolk to Learn More

If you’ve been hurt on the job, you need an experienced workers’ compensation attorney who will fight for you. Attorney Joe Miller at Joe Miller Law, Ltd., has been helping Virginia workplace accident victims for more than 25 years, and he knows what it takes to get injury victims the compensation they need. Learn more about what he can do for you by calling (888) 694-1671 today.