Although worker's compensation is the exclusive remedy against an injured worker's employer, there are some cases in which the injured worker can also pursue a claim against the at-fault.
This means that the injured worker may be able to pursue a recovery from both workers' compensation and the at-fault third party.
There is some overlap in the benefits that an injured worker can collect from workers' compensation and the at-fault, which means that the injured worker may recover twice for the same injury. To prevent this from happening, the South Carolina Workers' Compensation Act provides that the workers' compensation provider has a right of "subrogation" and get paid back for the benefits it paid from any liability recovery from the at-fault third party.
What is subrogation in Workers' Compensation? How does the right to recovery work in these situations? Let's take a closer look.
What is Subrogation in Workers' Compensation?
In short, subrogation is a Workers' Compensation insurance company's right to legally pursue a third party that caused an insurance loss to the employer. This is done in order to recover the amount of the claim paid by the worker's compensation insurance carrier to the injured worker.
This allows the employer and Workers' Comp insurance provider to potentially recover costs that the at-fault party is deemed responsible for.
For example: an employee driving a company vehicle at work who is hit by another driver.
The Workers' Compensation provider may pay out the injured employee's claim, and the injured worker may also choose to file suit against the at-fault driver (and the driver's insurance company) to recover damages. The injured worker, or her attorney, must provide notice to the worker's compensation provider that the lawsuit has been filed and also obtain written permission from the workers' compensation provider to resolve for the proposed amount. Once the funds are recovered from the third party, the workers' compensation provider has a right to recover the amount it paid on the workers' compensation claim from the third party recovery less its share of attorney fees and costs.
Depending on the circumstances of the claim, it may be possible to compromise or reduce the amount of the third party recovery that has to be repaid to the workers' compensation provider in satisfaction of its subrogation interest.
What Types of Workplace Injuries Might Involve Subrogation?
Generally speaking, there are three types of Workers' Compensation claims potentially caused by a third party:
- The direct action or inaction of a third party (see: the car wreck example)
- Defective or malfunctioning machinery, equipment, or products owned or maintained by a third party (see: some manufacturing injuries)
- A claim involving a workplace injury on property owned by a third party (see: a construction employee who slips and falls at a third-party worksite)
In each of these claims, whether it's a defective product, third-party property, or direct action or inaction by a third party, subrogation may be used to help the Workers' Compensation insurance provider recoup the costs of an injured employee's claim.
Does Subrogation Affect the Injured Workers' Claim?
If the workers' compensation claim is still ongoing at the time of the resolution of the third party claim, the workers' compensation provider may assert a subrogation claim to recover for the amounts it has already paid as well as assert a claim for monies it may pay into the future. The only way to fully and finally resolve a workers' compensation subrogation claim is by fully and finally resolving a workers' compensation claim. That can become very complicated in cases involving ongoing medical treatment and consultation with an attorney is strongly recommended.
If the third party claim is resolved prior to the resolution of the workers' compensation claim, without the written permission of the workers' compensation provider, the workers' compensation provider may claim the injured worker elected a remedy and has forfeited the right to ALL workers' compensation benefits. Extreme caution and consultation with an attorney is strongly recommended before resolution of a third party case while a workers' compensation matter is pending.
Filing for Workers' Compensation in Columbia, SC?
Bluestein Attorneys has experience working with employees suffering from an on-the-job injury or illness and helping injured workers navigate pursuit of a third party claim simultaneously with a workers' consultation claim.
Request your free consultation with a legal representative, and we'd be happy to speak with you about your workplace injury and what steps you may need to take next.
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