When an employee is injured at work, they are usually entitled to workers’ compensation benefits. These benefits allow injured employees to maintain an income as they recover and protect employers from lawsuits. Workers’ comp is a no-fault system, meaning that the injured employee doesn’t need to prove that there was any negligence on the part of the employer. It’s a popular, necessary safety net that keeps things stable.

While workers’ comp is intended to avoid lawsuits, they can still arise. In case’s where a third party’s actions cause injury at the workplace, the injured party may have an opportunity to file a lawsuit in order to hold someone accountable. Does filing a lawsuit while receiving workers’ comp benefits hurt or help the situation? What are the legal avenues available to employees if the injury was caused by a third party?

The Nature of Workers' Compensation and Personal Injury Claims

Workers’ comp and personal injury claims operate under different legal frameworks and serve very different purposes. One is mandated by the state as a means of maintaining stability for employees and employers. The other is not mandated, rather a right people can pursue if they feel they need to fight for compensation.

Workers’ compensation is an insurance system that is mandated by state and federal laws, though the details can vary state-by-state. This system provides benefits to employees or workers injured at their workplace. Benefits typically include coverage of medical expenses, a percentage of lost wages (often about two-thirds of the average weekly wage, depending on the state or company policies), and vocational rehabilitation costs such as physical or talk therapy. In exchange for this coverage, employees waive their right to sue their employer in order to be made whole.

Personal injury claims, on the other hand, are legal efforts for an injured party to seek damages based on the principle of fault. Think car accidents where one person is at fault, or a lack of signage on a wet floor that results in a slip-and-fall. These damages include pain and suffering, emotional distress, and/or wage replacement.

If a worker is injured on the job and that injury is caused by a third party, the employee may be able to receive workers’ comp benefits and seek a personal injury lawsuit. Any benefits not covered by workers’ comp can be sought through a lawsuit.

Third-Party Claims and Workers' Compensation

If a third party’s negligence is responsible for a work-related injury, the injured employee has the right to pursue a personal injury lawsuit while also receiving workers’ comp benefits. These scenarios can arise in situations involving delivery driver accidents, construction site accidents involving subcontractors, or injuries caused by defective machinery made by another company.

The logic behind receiving benefits while pursuing a lawsuit for compensation can be rooted in that workers’ comp benefits are usually limited and do not fully compensate for injured employees for all of their losses. Rather, they tend to cover only a percentage of their losses. By pursuing a lawsuit with an Indianapolis personal injury lawyer, injured workers have a chance at being made whole.

Subrogation and Reimbursement

One thing to understand when filing both workers’ comp claims and personal injury lawsuits is subrogation. The concept of subrogation is the legal right of the workers’ compensation insurer to be reimbursed for the benefits paid out if the injured workers recovers damages from a third-party lawsuit. In short, if you receive workers’ comp and then win or settle a lawsuit from a third party, the workers’ comp insurer would have the right to seek reimbursement.

This is to prevent what is known as double recovery - receiving compensation twice for the same injury, once from workers’ comp and again from a successful lawsuit or settlement. The amount an insurer can seek in subrogation varies depending on jurisdiction and depends on a variety of factors such as the severity of the injury, the amount of a settlement, or state laws.

Coordination of Benefits and Settlements

It can quickly get very complicated while navigating the interplay between workers’ comp and personal injury claims. A Lancaster workplace injury lawyer is very helpful in determining how to best negotiate these two complicated situations. If you settle a personal injury lawsuit, you need to consider the potential impact on any benefits you may be receiving. In some jurisdictions, a judge may rule that a portion of the settlement has to be allocated specifically for reimbursing the workers’ comp insurer.

You may need to have both a workers’ comp attorney and a personal injury attorney coordinate in order to ensure that the settlement is structured in a way that maximizes not just your overall compensation, but their own legal bills. If, of course, you can afford two attorneys. Coordination between two expert attorneys can make a big difference in avoiding any potential pitfalls like having your benefits reduced or forfeiting your right to certain benefits.

Both Workers’ Comp Benefits and a Lawsuit Might Be Too Much

It’s true that an injured employee can seek both workers’ comp benefits and a personal injury lawsuit if the situation allows. But pursuing both of these simultaneously can quickly get complicated and create situations where you may lose more than if you just stuck with receiving benefits. These legal paths are difficult to navigate and may end up backfiring. That’s not to say you should be discouraged from pursuing both of these avenues, but it may be smart to think more strategically about the endeavor.