What is a Third-Party Claim?

Though not a lawsuit in and of itself, a workers’ compensation claim may produce a collateral civil action against someone other than the Claimant’s employer. This is commonly referred to as a “third-party claim.”

For example, if a compensable injury is caused by a fellow co-worker (non-supervisory), an injured worker may file a claim for workers’ comp against his/her employer, as well as a civil suit for damages against the third-party co-worker (regardless of whether the co-worker’s conduct was intentional or negligent).  However, a collateral lawsuit for negligence may not be maintained against a supervisory co-worker in his or her individual capacity, unless he or she personally owed and breached a duty of care to the Claimant.

Another example of a third-party claim would be where an employee is injured in a car accident during the course of one’s employment (but not merely during one’s commute).  The injured worker could sue the adverse driver for damages in a court of law, in addition to filing a claim with the Workers’ Compensation Commission.

With respect to third-party claims, it is important to note that the employer has a right to subrogation for all of the benefits that the employer or its insurer actually paid.  This includes medical expenses and any disability payments.  A right to subrogation functions as a statutory lien and simply means that the employer is entitled to reimbursement if the injured worker obtains a civil judgment in a third-party case.

If the civil judgment is less than the comp award, the employer is only reimbursed for the amount of the judgment.  If a civil judgment is in excess of a comp award, the employer is only reimbursed for the amount that they actually paid, with all leftover money to the employee.  Therefore, there is minimal risk in filing a third-party action, because despite the employer’s right to subrogation, a Claimant should not receive less workers’ comp on account of the additional lawsuit.

Another thing that an injured worker must keep in mind with respect to filing a third-party claim is the concept of “contributory negligence,” which bars recovery in a court of law if the Plaintiff (the person who filed the lawsuit) is found to have contributed to his or her injuries.  Thus, while workers’ compensation is awarded irrespective of personal fault, the same cannot be said for third-party claims.

Should I file for Workers’ Compensation before filing a Third-Party claim, or vice versa?

The order in which you file your comp claim and third-party lawsuit generally should not matter.  An injured worker may file for workers’ compensation before later suing a third-party, or an injured worker may institute a civil proceeding and then file for comp.

That said, where an injured worker files for comp and receives an award from the Commission before filing a third-party claim, the Claimant is precluded from bringing a subsequent civil suit until at least two months have elapsed from the date of the Commission’s award.  Only the employer or its insurer may bring a third-party action during the initial two-month period.  This is because the employer/insurer has a right to subrogation for all comp benefits paid to a Claimant, and therefore, temporarily enjoys the exclusive right to seek reimbursement.  After the two months have elapsed the Claimant can then initiate a third-party lawsuit, however the employer’s subrogation right would remain.

In the alternative, if a Claimant first files a third-party suit in a court of law, any subsequent claim for workers’ compensation must be made prior to the natural conclusion of the civil case.  If the civil case comes to an end before a comp claim is filed, then, regardless of the actual outcome of the third-party action, the employee may not thereafter pursue workers’ compensation.  See Central GMC, Inc. v. Lagana, 120 Md.App. 195 (1998) (discussing a “binding election of remedies”); cf. Franch v. Ankney, 341 Md. 350 (1996) (discussing the “impairment of subrogation interests”).

Talk to an attorney if you think that there may be a third-party aspect to your comp case.