What is a Third Party Liability?
You can suffer from a work-related injury which simultaneously creates both a third party liability claim and a workers’ compensation claim. A third party liability claim arises from the negligent actions of a third party, other than your employer, while you are acting within the scope of your employment. Generally, in the states of Massachusetts, Connecticut, and Rhode Island, an individual cannot sue their employer for negligence while acting in the scope of their employment. In each] of these states, an individual can have both a worker’s compensation claim and a third party liability claim arising out of the same injury. However, resolving a worker’s compensation lien differs across these states.
If an individual institutes a claim for worker’s compensation in the State of Rhode Island, as described under the general provisions in Title 28 of the Rhode Island General Laws, then the worker’s compensation insurance carrier has a statutory lien against any third party liability claim arising out of the same injury. The worker’s compensation insurance carrier has in this case paid out benefits in the form of medical bills and/or lost wages stemming from the injury which occurred while the employee was acting in the scope of his or her employment.
In other words, the worker’s compensation carrier is a lienholder entitled to subrogate against a third party who compensates this same employee for the same injuries. In the State of Rhode Island, if you are involved in an incident which simultaneously creates a worker’s compensation claim and a third party liability claim and you have received worker’s compensation benefits, you will have a lien on your third party claim, unless the lienholder waives its subrogation interest. This does not mean the worker’s compensation carrier will not negotiate on its lien. In fact, worker’s compensation liens are often reduced through negotiation in order for the injured employee to have an incentive to resolve the third party liability claim.
In the State of Connecticut, the worker’s compensation carrier’s lien in a subsequent third party liability claim arising from the same injury is not automatic. In order for the worker’s compensation carrier to establish a lien against the employee’s third party liability claim, written notice stating intent of subrogation must be presented to the negligent third party prior to settlement.
If the employee files a court action against the responsible third party, the employee’s attorney must send notice of this filing to the employer. The notification forwarded to the employer must include language explaining the 30 day timeline to intervene. See Worsham v. Greifenberger, 242 Conn. 432(1997). The employer has 30 days to intervene in the action or institute its own action against the third party or else such actions are forever waived.
In the Commonwealth of Massachusetts, worker’s compensation carriers have a statutory lien against an employee’s third party liability claim arising out of the same injury. This lien is always in effect regardless of whether notice is provided to the party or parties involved. There is another layer of approval in regards to resolving worker’s compensation liens which is not present in Rhode Island.
In order for a third party liability claim to resolve when worker’s compensation liens are present against the claim, approval must be granted by the Industrial Accident Board of Massachusetts. In order to obtain this approval, a Section 15 petition must be filled out and sent in for a determination. The section 15 petition provides a breakdown of the proposed settlement with the responsible third party. If the action is already in court because suit has been filed, then often the presiding judge can approve the settlement and avoid the process of waiting for the Industrial Accident Board of Massachusetts’s approval.
Rob Levine & Associates helps workers in all three states resolve their workers’ compensation and third party claims, so call us today: 800-LAW-1222.