Friday, May 27, 2016

3rd Party Liability

Blog Post By:
Dennis R. Kurth, Attorney
Snow, Carpio & Weekley

The workers’ compensation law, besides being an important constitutionally-mandated insurance plan for injured workers, can also be a trap for the unwary in certain situations.  One of those situations is third-party cases.

When a worker is injured because of the negligence of a third-party (someone who does not work for the same employer), the worker can file a claim for and collect workers’ compensation benefits from his/her employer’s insurance carrier and sue the negligent third-party within one year from the date of the accident.  The workers’ compensation law gives the compensation carrier a statutory lien against the injured worker’s third-party recovery to the extent of all of the medical and indemnity benefits it has paid to or on behalf of the injured worker.
Where the settlement of any third-party claim is for less than the amount of the carrier’s lien, however, the injured worker must obtain the compensation carrier’s written approval to settle.  The purpose of this requirement is to protect the workers’ compensation carrier’s subrogation interest which could be extinguished by an inadequate settlement. 

Failure to obtain such written approval can trigger significant penalties including, at the extreme, forfeiture of all future workers’ compensation benefits, both medical and indemnity.  In other words, even if the injury was serious and the worker might need surgery in the future, he/she could never reopen the case.  Although the appellate courts in Arizona, over the years, have backed off on strict forfeiture in these situations, most workers’ compensation carriers, uninformed about case law developments, still try to impose forfeiture where the statute is violated.

Injured workers who have third-party cases, especially if they are pursuing these claims without an attorney, should get legal advice from a workers’ compensation attorney before settling such cases so that they do not run the risk of violating the statute and forfeiting future benefits.  These problems can often arise where the third-party, in an auto accident for example, has only a minimum liability policy which is quickly tendered to the injured worker.  It can also happen in the context of a third-party lawsuit where several defendants are sued and a small settlement is reached with a minimally-liable defendant.  In such situations, it is well worth consulting an experienced workers’ compensation attorney to make sure that the settlement complies with the workers’ compensation law and that the injured worker does not forfeit future benefits.

If you or someone you know has been hurt on the job or has an disability that could prevent them from working for at least one year, contact Snow, Carpio & Weekley for a free consultation by calling toll-free at 855-325-4781. You may also visit our website at:

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