Say you are injured in a rear-end motor vehicle collision while driving for your job. Assume that your medical care, wage compensation, and even a workers' compensation settlement seems to just happen without much effort. But at some point, before the statute of limitations, you make a claim against the at-fault driver's insurance. Assume that the maximum insurance coverage is $50,000. Assume further that they want to settle with you for the full $50,000. Sounds like a good problem to have, right? Actually, the above scenario is much, much more complicated than you may think, and it is frought with pitfalls that can be avoided with proper guidance.
Many people who would be eligible to make what is referred to as a "third party claim," become overwhelmed with the details and just give up on making a third party claim at all. Though this is their decision, from a legal stand point, not making a third party claim (when a valid claim exists) is nearly always a mistake.
Complicating Factor #1
A. Workers Compensation Will Want Their Money Back
If you recover workers' compensation benefits and make no additional efforts to seek recovery from some other source (i.e. the negligent driver), you have no obligation to repay Workers' Compensation the money they spent for your medical care and wage loss compensation. If, however, you elect to pursue a claim against, in our example, the driver who rear-ended you, then Worker's Compensation will assert a lien for the amount of money they paid you (including the cost of the medical care provided).
How Much Money is Worker's Compensation Entitled to If I Pursue a Third Party Claim?
This is a very complicated matter which usually requires consultation with an attorney familiar with the interplay of worker's compensation claims with general personal injury laws.
1) Economic versus Non-Economic Recovery
In virtually every personal injury case that goes to trial, a jury is asked to award economic losses as well as non-economic losses. Economic damages are past or future economic based claims such as medical bills or wage loss. Non-economic damages include what is commonly referred to as "pain and suffering," emotional distress, etc.
With respect to the money you receive from a third party claim, Workers' Compensation is technically entitled to reimbursement for that part of your settlement (or jury verdict) related to your economic damages. The rationale is that Workers Compensation paid for past medical bills, past wage loss, future wage loss, and possibly future medical care. Accordingly, those benefits are essentially identical to the claims that could be brought in the third party action under the umbrella of economic recovery. However, as to recovery that the jury awards for pain, emotional upset, aggravation, sleepless nights, anxiety, suffering, loss of enjoyment of life, etc., there is no comparable workers' compensation benefit. In fact, the Worker's Compensation laws do not recognize these types of damages. Accordingly, non-economic recovery does not have to be repaid to Worker's Compensation. However, Workers' Compensation subrogation people will often boldly claim that they are entitled to be repaid their full lien amount before you get a penny from the settlement. This is a gross distortion of the law.
Furthermore, assuming that you get a clear jury verdict for economic benefits that fully cover what they paid, Workers' Compensation should still reduce their lien amount by the attorney's fees you paid to pursue the recovery of these benefits. After all, Worker's Compensation sat back and let you pursue this money for them. They should at least reduce their lien by the percent of attorney fees you paid your lawyer.
This process is pretty clear cut when the third party case is resolved at trial but is much more complex when these cases settle prior to trial. However, with proper guidance, you can end up receiving more of the settlement proceeds than you may have thought possible.
Complicating Factor #2
B. The "Exclusive Remedy" Provisions of the Workers' Compensation Laws
One of the main reasons many people forego bringing a valid "third party" claim against the party who caused their work injury is due to a misunderstanding of the law. The first incorrect assumption is based on a misunderstanding of the "Exclusive Remedy" laws. The second incorrect assumption is based on a misunderstanding as to the amount of money Worker's Compensation can rightfully demand to be repaid from an eventual settlement. These mistakes are not just made by victims, but sadly, in our experience, also by their lawyers. I hope to clarify both of these general misunderstandings.
What "Exclusive Remedy" means:
There is language in Colorado's Worker's Compensation Act stating that a worker's exclusive remedy is the Worker's Compensation system. Simply stated, it means that if you are injured on the job, you are barred from bringing a third party claim against your EMPLOYER. You are limited to benefits available under the law through your employer's workers compensation insurance. Basically, as long as the employer had worker's compensation insurance in place for his employees, regardless of how negligent the employer was, you cannot sue the employer. This also means that if the person who caused your injury was a co-employee of your employer, no third party claim can be brought against that co-employee either. Finally, if your employer is a sub-contractor, you cannot bring a third party claim against your employer's general contractor.
What "Exclusive Remedy" Does NOT mean:
There are exceptions to the "Exclusive Remedy" rule. For instance, you can take worker's compensation benefits and still sue for additional compensation against any driver on the road that caused your injury, (provided that person is not your co-employee or an employee of your employer's contractor while acting within the course and scope of employment). You may also bring claims against other companies and their employees on a job site. You can also bring claims for product liability against equipment manufacturers that caused your injury. Basically, you can usually bring a claim against any member of the general public who in any way caused or contributed to your injury.
A creative lawyer will be able to help you discover third party claims that may be brought in addition to worker's compensation recovery.
At Anderson, Hemmat, & McQuinn we do not view the system as being stacked against the injury victim. We will be happy to give you a free consultation to help you determine whether you have a valid third party claim, and if you do, we can help you keep more of the money at the conclusion of the case.