Yes. In California, if you’ve been hurt at work because of someone else’s negligence, you usually have the right to make two claims: a workers’ compensation claim through your employer and a personal injury claim against the responsible third party. However, the law does not allow you to recover the same loss twice using both systems.
When there’s a third-party settlement or judgment, your workers’ compensation benefits may be affected. Employers and insurers may be entitled to be reimbursed for benefits already paid, and they may also get a credit against some payments still owed in the future. Reach out to our work injury lawyer in Los Angeles if you believe you have a third-party settlement after your accident.
What Is a Third-Party Claim in a California Work Injury Case?
A third-party claim in a workplace injury case may arise when your injury is caused by someone other than your employer or a coworker. Some examples include:
- A delivery driver struck by another vehicle while driving for work.
- A construction worker harmed by a malfunctioning lift, where the equipment was manufactured or serviced by an outside company.
- An employee hurt due to dangerous conditions on someone else’s property, such as a warehouse owned by another business.
- Cases where one subcontractor’s actions hurt workers from a different business on the same site.
In these situations, the third party (such as a driver, property owner, or contractor) is separate from your employer. California workers’ compensation covers employees generally regardless of fault, while a third-party personal injury claim typically requires proving the third party was negligent or legally responsible for the injury.
What Happens to Workers’ Comp Benefits That Were Already Paid?
When you recover money from a third-party lawsuit or settlement, workers’ compensation benefits you already received usually come into play. Here’s what can happen.
Workers’ Compensation Lien
Once your injury claim is resolved with a third party, either through settlement or a court judgment, the employer’s insurance company will often assert a lien for the benefits it already provided. Under California law (Labor Code § 3856 for judgments and § 3860 for settlements), the insurer can seek repayment from your third-party recovery. The types of benefits involved in a lien generally include past medical costs covered by workers’ compensation, temporary disability benefits paid during recovery, and permanent disability payments that were already issued before your third-party settlement.
Does the Insurance Company Get Back Everything It Paid?
The insurance company does not always get back everything it paid for your medical bills and wage replacement. When the settlement is obtained through your attorney’s efforts, attorney’s fees and necessary litigation expenses may be deducted from the settlement before the insurance company receives reimbursement.
There are some other limitations as well. If your employer was partly responsible for your injury, for example, by failing to follow required safety procedures, the insurance company’s right to reimbursement from your third-party recovery may be reduced or eliminated. The amount depends on factors including the employer’s share of fault and the total damages caused by the injury.
Can My Third-Party Settlement Reduce Future Workers’ Comp Benefits?
Yes, it can. If you recover money from a third-party lawsuit or settlement that is more than what the workers’ compensation insurance company already paid, the insurance company may be allowed to take a “credit” against future workers’ compensation benefits. This means that, if you still need benefits such as ongoing wage replacement or future medical treatment, the carrier can use part of your remaining settlement amount to offset what they would otherwise have to pay next.
Here’s how it typically works.
First, the insurance company can seek reimbursement from your settlement for benefits it already covered, such as medical expenses or disability payments made before you received your third-party settlement. After those past payments are reimbursed, if you have money leftover, the insurance company can use that to cover future workers’ compensation payments. They can then pause or reduce your future benefits until that part of your settlement is “used up” for those same expenses.
If you’re considering a third-party claim, or if you have questions about how a settlement might affect your workers’ compensation benefits, it’s important to understand your legal options and financial interests. A Los Angeles personal injury attorney can review your case, explain the likely impact on your benefits, and handle the details with the insurance company. To discuss your situation with an experienced attorney, contact our office for a confidential consultation.