A construction worker injured by malfunctioning equipment, a police officer injured by a misfiring service weapon, or a commercial truck driver injured when his brakes fail are all clearly Workers’ Compensation-eligible. However, these injuries – and thousands of others – may also be easily attributed to a third-party, often in the form of a product liability claim. Employees may seek full recovery of pain and suffering damages in connection with their injuries from such third-parties, beyond what they have already been awarded in Workers’ Compensation benefits, as long as their employer’s Workers’ Compensation insurance plan contains a waiver of subrogation clause.
According to Philadelphia Workers’ Compensation lawyers, a waiver of subrogation is beneficial for workers because it presents injured employees with the ability to obtain a double recovery. If a workplace accident was the result of negligence by a third-party – not the employer – and the employee can pursue Workers’ Compensation benefits of lost wages and medical expenses at the same time they seek redress in a third-party lawsuit. Whatever they are ultimately awarded in third-party litigation remains theirs to keep, regardless of the extent of their Workers’ Compensation benefits.
An employer can waive or agree to reduce its subrogation interest after-the-fact, in exchange for the settlement of an open Workers’ Compensation claim. Additionally, a waiver or reduction in subrogation interest can encourage an injured employee to instead settle their claim with a third-party. The outcome of a trial is often difficult to predict, Philadelphia Workers’ Compensation lawyers note. By agreeing to abandon or discontinue a claim for Workers’ Compensation in exchange for a larger share of any future settlement with a liable third-party, an injured employee may incur less risk.
Any damages awarded to the injured employee can be partly recouped by the insurer who administered their Workers’ Compensation benefits. Two-thirds of all back pay and medical bills that were paid by the insurer can be deducted – as a lien – from any ensuing settlement or award issued by a third-party tortfeasor. Although an injured employee may keep whatever remains, they must essentially pay back a portion of what they received in Workers’ Compensation benefits from their insurer pursuant to Section 319 of the Pennsylvania Workers’ Compensation Act.
Under the statute, injured employees are barred from joining their employer to a third-party lawsuit – even for fault apportionment purposes. However, in 2015 the Supreme Court of Pennsylvania ruled that insurers may not themselves pursue a direct right of action against a third-party when an injured employee elects not to file suit. In a separate case, the same court ruled in 2012 that when an injured employee’s settlement with a third-party contains a clause explicitly limiting subrogation for Workers’ Compensation benefits, insurers cannot seek reimbursement of Workers’ Compensation already paid.
Understanding the ability of an insurer or employer to recoup their own losses from your settlement of third-party liability claims is of paramount importance before filing suit. Injured employees who are aware of how their recovery could be subrogated can make more informed decisions about how they will pursue an award of damages for their pain and suffering. For these reasons, employees must closely scrutinize the terms of their employers’ Workers’ Compensation plan. Since 1991, the Philadelphia Workers’ Compensation lawyers of Gross & Kenny, LLP, have been leaders in their field, aggressively pursuing benefits on behalf of clients throughout the region. Contact us at 215-512-1500 or complete this online contact form to schedule a free initial consultation at our Philadelphia offices.