When Workers’ Compensation Insurance is Not Enough

Workers’ compensation laws have been put in place in one form or another in all 50 states. Regardless of who caused a workplace accident, workers compensation insurance is intended to protect workers when they’re injured on the job. The general rule is that workers’ compensation is an employee’s sole and exclusive legal remedy when injured on the job.

Benefits and Compensation

How much an injured employee might receive in workers’ compensation benefits depends on the nature and extent of his or her injury. Along with medical bills and lost earnings, five other types of compensation are payable. Those are:

  • Temporary total disability for when the injured employee is unable to work
  • Temporary partial disability for light duty work at a lower pay rate
  • Permanent partial disability for actual physical loss
  • Permanent total disability
  • Vocational rehabilitation benefits

Should an injury suffered at work leave an employee completely disabled and unable to work, that employee might be in a position to receive a sum equal to about two-thirds of his or her weekly wage for life. That might seem like fair and just compensation, but if that worker was earning $36,000 a year, he or she will fall $900 short at the end of every month. That’s when workers’ compensation just isn’t enough.

Third Party Claims

A notable exception to workers’ compensation benefits as an injured employee’s sole and exclusive remedy is when the employee is injured as a result of the negligent act of a third party who wasn’t a co-employee or employer. For example, an employee of ABC Carpentry might be severely injured at work as a result of the negligence of an electrician employed by XYZ Electric. When that happens, the injured carpenter is allowed to collect workers’ compensation benefits while maintaining a civil personal injury lawsuit against XYZ Electric and its employee at the same time.

A variety of damages not contemplated by workers’ compensation laws can be sought in that personal injury lawsuit example. Those include but aren’t limited to pain and suffering, mental anguish and loss of a normal life. When added up with other damages, an award in a personal injury lawsuit can significantly exceed benefits payable through workers’ compensation.

The Workers’ Compensation Lien

The law doesn’t allow a person to have two damage recoveries for the same injury. By virtue of that rule of law, the employer maintains a lien on any sums derived through a settlement or verdict in the personal injury case. For example, if the employer’s insurer paid out $125,000 in workers’ compensation benefits, it’s entitled to the first $125,000 of proceeds derived in the personal injury case. Under what’s known as the “fund doctrine,” it must pay attorney fees to the law firm that created the fund from which it’s being reimbursed. The insurer might also agree to be reimbursed a sum that’s substantially less than its total lien. Those funds can be passed on to the injured employee.

A successful third party action might be a seriously injured employee’s financial lifeline. When an attorney, like the Glendale workers compensation lawyers employees can count on, represents an individual who suffered severe injuries at work, he or she must conduct a full and complete investigation as to whether or not a viable third party claim exists.

Hickey and Turim Attorney at LawThanks to our friends and contributors from Hickey & Turim S.C. for their insight into workers compensation cases.