Workers’ Compensation and Third-Party Claims

In California, an employer is required to carry workers’ compensation insurance to make sure that injuries suffered by employees in work-related incidents will be covered. However, there are some situations in which an employer may not be completely responsible for an employee’s injuries. For example, if an employee is injured because of a scaffolding collapse, and the scaffolding company negligently produced the product, then there is an additional issue in the case of the scaffolding company’s liability. This is called a third-party claim, and provides options for both the employer as well as the injured employee.

If an employee’s injuries were influenced by the actions or negligence of a third-party, then the employee has a cause of action against that third-party. The employee has the right to bring a case against the third party for their actions at the same time the workers’ compensation claim is pending. The employee would bring a personal injury lawsuit against the third party, which is obviously different than a workers’ compensation claim against an employer. This is called a “cross over case”. In the personal injury case, the employee will need to prove that the third party’s negligence or actions contributed to the injury.

In the event the employee wins the suit against a third party for the personal injury, then the employer has the right to be reimbursed from the money award received by the employee for any workers’ compensation benefits already paid by the employer. The reason for this is to prevent an employee from “double dipping,” i.e. receiving an award from the employer and also an award from the third party for the same injuries.

In order to recover any amounts under this theory, an employer has several options. The first would be to settle with the third party out of court. If this is not an option, the employer can also directly sue the third party. The employer may also join in the action already filed by the employee. Finally, there is also a possibility for the employer to file a lien against an award. If the employer takes the option of filing a lien against the employee’s award, the employer will only get paid after the employee’s attorneys’ fees and litigation expenses have been paid out of the settlement.

If your business has the potential of a third party case, you need an experienced attorney on your side. Call me today at (714) 516-8188 for an appointment to discuss your business’s third party claim.

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