Workers’ compensation and personal injury lawsuits are meant to do the same thing: Both are intended to compensate people for what they have lost as a result of being injured in an accident. However, the ways the two systems go about doing this are very different.
That said, there are times when both systems are involved in the same accident. This is the case in third-party claims
The two systems
In a typical personal injury lawsuit, the injured party must prove that the other party caused their injuries through negligence or an intentional act. This isn’t always easy for the injured party. If they are successful, they can recover compensation for their damages, including medical expenses, lost wages and more.
Workers’ compensation is intended to make the path easier for injured workers to pay for their medical care, and to provide them with income while they recover from their injury. An injured employee does not have to prove that their employer was negligent or intentionally hurt them. All they must do is show that the injury happened in the course of their employment.
Employers are required to carry workers’ compensation insurance. If an employee is injured on the job, the employee reports the injury to the employer and the employer’s insurance company pays for the worker’s medical care. In some cases, the insurer may also provide some income while the employee is unable to return to work.
To be clear, the process of getting workers’ compensation benefits isn’t always easy, but it is usually much faster than filing a personal injury lawsuit against an employer.
With that streamlined approach comes a tradeoff. Workers’ compensation is an exclusive remedy. This means an employee who gets workers’ compensation benefits cannot also file a lawsuit against their employer involving the same injury. An injured employee must choose one system or the other: filing suit against their employer or pursuing workers’ compensation benefits.
Third-party claims
Workers’ compensation may bar an employee from filing suit against an employer but that doesn’t mean they are barred from suing anyone else.
For example, imagine a construction site where multiple contractors are working. Jim works at the site for A1 Carpentry. An electrician is working at the same site and negligently installs a power line. Jim suffers a powerful electrical shock and is badly injured.
Jim needs medical attention right away, and so he relies on A1 Carpentry’s workers’ compensation insurance to pay for his medical care. However, he soon finds that these much-needed workers’ compensation benefits aren’t sufficient to compensate him for everything he has lost. He decides to file a personal lawsuit against the electrician, seeking compensation for his medical expenses and more.
Jim is successful in his lawsuit. He collects both the workers’ compensation benefits and compensation through the lawsuit.
However, there’s a catch: Jim can’t recover compensation for the same damages twice. Under New Hampshire’s workers’ compensation system, the employer can take a lien on Jim’s recovery in his third-party lawsuit. A1 Carpentry and its insurer use that lien to take money out of Jim’s award in his lawsuit to pay them back for the benefits they provided him as part of his workers’ compensation claim.