Suing Third Parties on Workers’ Comp: Know Your Rights

Estimated reading time: 15 minutes

Key Takeaways

• You can sue a third party while receiving workers’ compensation benefits, allowing for recovery beyond what workers’ comp covers.
• Workers’ compensation provides medical treatment and partial wage replacement but does not cover pain and suffering or full lost wages, which third-party claims can include.
• Gathering strong evidence and working with an experienced attorney are critical to successfully pursuing third-party negligence work injury claims.
• Third-party settlements often involve liens from workers’ comp insurers, so understanding reimbursement and legal fees is important to maximize your net recovery.
• Meeting legal deadlines and coordinating claims effectively prevents loss of rights and ensures the best possible outcome.

Suing Third Party While on Workers Comp: What You Need to Know About Your Rights and Claims

Introduction: Suing Third Party While on Workers Comp and Third Party Negligence Work Injury

Workers’ compensation is a no-fault insurance system that offers employees medical treatment and partial lost wages after a workplace injury or illness. Under this system, you usually cannot sue your employer directly—even if their actions contributed to your injury—because your rights and benefits are determined by workers’ comp laws.

But what if someone else—not your employer—was negligent and caused your workplace injury? That’s where “suing third party while on workers comp” comes into play. This means taking legal action against a person or company other than your employer, such as a manufacturer of faulty equipment, a property owner, or a contractor, whose carelessness contributed to your injuries (source).

Why does this matter? Workers’ comp benefits have limitations. For example, workers’ comp almost never covers pain and suffering, full wage loss, or other non-economic damages. You may find that your injuries lead to greater financial stress and personal hardship than your basic workers’ comp benefits cover. In situations where a third party’s negligence caused your accident, the law allows you to seek additional compensation by bringing a separate claim against that third party (source).

This guide will make clear:

• When and why you may have a right to a third-party claim,
• The mechanics of pursuing third party negligence work injury cases while on workers’ comp,
• How combining both types of claims works,
• Practical strategies to maximize your recovery without jeopardizing your benefits.

Understanding Workers’ Compensation vs. Personal Injury Claims

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What Is Workers’ Compensation?

• Provides medical treatment, partial wage replacement, and certain long-term disability benefits after a job-related injury or illness.
• Operates under a no-fault rule. You don’t need to show who caused your injury to get benefits. Learn more here.
• Does not allow recovery for pain and suffering, emotional distress, full lost wages, or loss of enjoyment of life.

What Is a Personal Injury Claim?

• Requires you to prove negligence or wrongful action by someone else—typically a person or entity not your employer. Learn more here.
• The scope of compensation is much broader than workers’ comp. You can seek:
  • Economic damages, such as full medical bills and lost wages,
  • Non-economic damages, such as pain and suffering, psychological harm, and diminished quality of life (source).

Main Differences – Personal Injury vs Workers Comp

• Fault: Workers’ comp pays out regardless of fault; personal injury requires proof another party was at fault.
• Types of Compensation: Workers’ comp is limited; personal injury can include pain, suffering, and additional losses.
• Applicability:
  • Workers’ comp applies to job-related injuries caused by your job, employer, or co-workers.
  • Personal injury claims apply if a third party caused your work injury (source).
• Interaction: It is possible to have both claims at the same time—a worker can receive benefits from workers’ comp and pursue a lawsuit against the responsible third party for additional damages (source).

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See also

What is Third Party Negligence in a Work Injury?

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What Exactly Is a “Third Party” in a Work Injury Context?

A third party means any person, company, or entity other than your employer or coworkers who caused or contributed to your workplace injury. In legal terms, “third party” simply refers to anyone not protected by your employer’s workers’ comp immunity.

Common Third Parties in Work Injury Cases

• Equipment or Product Manufacturers:
  If a defective tool or machine injured you, the product manufacturer or designer may be the third party.
• Property Owners/Managers:
  If you got hurt because of unsafe property conditions at a job site owned by someone else, the property owner could be liable.
• Subcontractors or Vendors:
  In multi-employer worksites (like construction), another company’s negligence may have caused your harm (source).

Examples of Third Party Negligence Work Injury Cases

• A carpenter is injured due to a faulty nail gun that fires unexpectedly. The manufacturer could be sued as a third party.
• A delivery driver slips and falls on an icy sidewalk outside a building managed by a property company. The property manager/owner becomes the third party.
• A warehouse employee is struck by a forklift operated by a contractor from another company. The contractor’s business can be considered the third party (source).

Assigning Fault and Building a Case

• To win a third party negligence work injury claim, you must prove the third party’s actions or inaction directly caused your injury and that they failed to meet reasonable safety obligations.
• This usually means gathering evidence, such as:
  • Accident reports and OSHA investigations,
  • Eyewitness statements,
  • Photos/videos of the hazard or defect,
  • Expert testimony (engineers, safety professionals),
  • Maintenance and inspection records (source).

Why Are These Claims Separate From Workers Comp?

Because workers’ comp is designed to work only between employee and employer, any claim against an outside or unrelated party falls outside the exclusive remedy of workers’ comp. This legal distinction allows additional recovery.

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More examples
Case-building basics

Can You Sue a Third Party While Receiving Workers Comp Benefits?

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The Short Answer: Yes

It is both legal and fairly common to sue a third party at the same time you’re collecting benefits from your workers’ compensation claim (source; source).

How Does the Process Work?

• Concurrent Claims:
  You do not need to wait until your workers’ comp claim is finished to start legal action against a third party.
• Burden of Proof:
  For the third-party case, you must show (with evidence) that the outside party’s negligence or wrongful act was a primary cause of your injury. View resource.
• Legal Timelines:
  Note that there are separate statutes of limitations for workers’ comp claims and third-party lawsuits. It’s possible to lose your right to sue the third party if you wait too long, even if your comp claim is still open.

Pitfalls and Legal Complexities

• More Complex Lawsuits:
  Third-party personal injury cases often involve litigation, negotiations, and more substantial evidence-gathering efforts than workers’ comp claims alone.
• The Workers’ Comp Lien:
  If you receive money from the third party, your employer’s workers’ comp insurance may place a lien—a legal claim to repayment—on your personal injury settlement for all or part of the benefits they previously paid. This prevents “double recovery.”
• Interaction Cautions:
  A misstep (such as inconsistent statements or poor evidence) might reduce or even jeopardize both your claims, so having the right legal strategy is vital (source).

Key Takeaways

• You can file a lawsuit against a responsible third party—while you also get, or have received, workers’ comp benefits.
• Both claims may proceed together, but strict legal and evidentiary rules apply.

Combining Personal Injury and Workers Comp Claims

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Is It Possible to Have Both Claims?

Yes. If a third party caused your work injury, combining personal injury and workers comp claims is not just allowed—it is often the optimal solution (source).

Why Combine Claims?

• Workers’ comp offers basic medical/salary benefits, but doesn’t pay for:
  • Pain and suffering,
  • Emotional damages,
  • Full future earning losses,
  • Punitive damages (in rare cases).
• The third-party lawsuit fills these gaps and can dramatically increase your overall recovery.

How Do Settlements Interact?

• When you settle or win your third-party case, the workers’ comp insurer usually has a lien for what they already paid. However:
  • Attorney Fees Come Off the Top:
    Before reimbursement, your legal bills and litigation costs are deducted.
  • You Keep the Rest:
    Your net settlement, after covering the lien and legal expenses, can be much higher than workers’ comp alone (source).

Practical Example

• You receive $20,000 from workers’ comp for your injury.
• Separately, you sue an equipment manufacturer and receive a $100,000 third-party settlement.
• After attorney fees and costs (let’s say 33% or $33,000) are paid, the workers’ comp carrier recoups the $20,000 from the remaining settlement.
• You still walk away with $47,000 above what workers’ comp paid, and receive benefits that workers’ comp doesn’t cover.

Coordination is Crucial

• The timing of settlements,
• The calculation of deductions and legal costs,
• Focusing on non-economic and future damages in the third-party suit,

are all areas where the right lawyer can make a significant financial difference. Learn more here.

Workers Comp Settlement and Third Party Claims

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Settling a Third-Party Claim When You’ve Received Workers Comp

How Settlement and Reimbursement Work

• If you win or settle your third-party lawsuit, the workers’ comp insurer will almost always require reimbursement for benefits (such as medical care and wage loss) they previously paid to you.
  • This reimbursement comes via a lien on your personal injury settlement (source).
• Attorney Fees and Costs:
  The law generally allows your legal bills and case expenses to be deducted from any recovery before reimbursement to the insurer. This gives you a larger net portion of the third-party settlement.
• Negotiation Strategies:
  An experienced attorney may negotiate with the insurance carrier to reduce the lien or account for disputed expenses, further helping your net recovery.

Third Parties and Broader Damages

• A workers comp settlement with third party offers the opportunity to recover
  • Pain, suffering, and distress,
  • Permanent disfigurement,
  • Loss of future income,
  • Loss of consortium (impact on relationships),
  • Punitive damages in egregious cases,

  all of which are unavailable under ordinary workers’ comp rules (source).

Avoiding Double Recovery and Other Pitfalls

• The law prohibits “double-dipping,” meaning you cannot be compensated twice for the same loss.
• Settlements must be structured properly so you get the most from your claims, while complying with legal requirements to repay the insurance carrier as needed.

Practical Tips and Considerations for Third Party Negligence Work Injury Cases

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Top Tips for Protecting Your Rights and Maximizing Compensation

1. Consult an Experienced Work Injury Attorney

• Why it matters: Navigating both third party negligence work injury and workers’ comp claims requires legal knowledge and strategy. View resource.
• A skilled attorney:
  • Assesses the viability of a third-party claim,
  • Helps document every loss and develop your evidence,
  • Coordinates settlements to maximize your net benefit (source; source).

2. Preserve and Document All Evidence

• Document everything: As soon as you’re injured:
  • Write down exactly how, where, and when it happened.
  • Take photos or video (of the scene, equipment, and injuries).
  • Get witness names and contact information.
  • Save all medical reports, bills, and insurance communications (source).
• Documentation is critical if you want to prove liability and damages in a third-party lawsuit.

3. Know the Statutes of Limitations

• Act quickly:
  Both workers’ comp claims and third-party lawsuits have strict legal deadlines that vary by state and type of defendant. View resource.
• Missing a deadline:
  Can forfeit your right to ANY compensation—even if the claim is strong otherwise (source).

4. Be Wary of Settlement Pitfalls

• Overlapping and interacting claims can:
  • Cause confusion about what you’re actually owed,
  • Subject you to unexpected liens or repayment demands,
  • Affect government benefits or future comp eligibility.
• Proactive planning and legal advice are essential when combining personal injury and workers’ comp claims or negotiating a workers comp settlement with third party involvement.

Conclusion: Suing Third Party While on Workers Comp, Settlements and Combining Claims

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Recap: If you’ve suffered a workplace injury caused by someone outside your company, suing third party while on workers comp could drastically increase your total recovery—particularly for pain, suffering, and other losses NOT covered by standard workers’ compensation benefits.

However, managing both claims is complex and requires professional guidance. You must comply with deadlines, gather strong evidence, and plan strategically to:

• Maximize your net settlement,
• Avoid or minimize liens,
• Coordinate legal deadlines,
• Prevent unintentional forfeiture of rights.

Practical next steps:

• Consult with a work injury attorney, even if you’re already receiving workers’ comp.
• Document the facts, third party involvement, and every loss or expense.
• Don’t delay—statutes of limitations are unforgiving.

Want to Know If You Have a Third Party Claim?

Visionary Law Group makes it easy to get answers.
GET A FREE AND INSTANT CASE EVALUATION:
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Don’t settle for less than you deserve. Start your free, no-risk evaluation now with Visionary Law Group!

Sources

• https://jeffmorrislawfirm.com/workers-comp-and-third-party-lawsuits/
• https://www.krasnolaw.com/blog/third-party-settlements
• https://www.klezmermaudlin.com/workers-comp-and-third-party-lawsuits/
• https://www.schwabgasparini.com/blog/workers-compensation-and-third-party-liability-legal-considerations-for-employers/
• https://gvilaw.com/blog/understanding-workers-comp-third-party-cases/

This blog is for informational purposes only and does not replace professional legal counsel. Every case is unique—schedule your free evaluation today to discuss your specific situation with a workers’ compensation and third-party claim specialist.

FAQ

Can I sue a third party while receiving workers’ comp benefits?

Yes, it is legal and common to sue a third party while you are collecting workers’ comp benefits. These claims are separate and allow you to seek additional compensation.

What types of damages can I recover from a third-party lawsuit that workers’ comp does not cover?

Third-party lawsuits can include damages for pain and suffering, emotional distress, full lost wages, loss of consortium, and sometimes punitive damages, which workers’ comp typically does not cover.

Will the workers’ comp insurer be repaid from my third-party settlement?

Usually, yes. The workers’ comp insurer will assert a lien on your settlement to recoup previously paid benefits, but attorney fees and costs are deducted before repayment, increasing your net recovery.

Do I need an attorney to pursue a third-party claim while on workers’ comp?

Yes, an experienced attorney is highly recommended as these cases involve complex coordination of claims, strict deadlines, and careful management of liens to maximize your recovery.

What happens if I miss the statute of limitations for a third-party claim?

If you miss the legal deadline to file a third-party claim, you may lose all rights to pursue additional compensation beyond your workers’ comp benefits.