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A word about third-party lawsuits in the context of workplace injury

We've previously mentioned on this blog that workers' compensation is, generally speaking, the sole remedy available to injured workers. We've also noted that a worker may have his or her workers' compensation award either increased or decreased depending on whether the employer took reasonable steps to keep workers safe or whether the employee did something wrong, such as fail to follow established safety rules.

Here, we wanted to briefly mention third-party litigation as a possible avenue for compensation in the context of workplace injuries. Although an injured employee is only able to recovery compensation from the employer in the form of workers' compensation, he or she may still receive workers' compensation while pursuing a negligence claim against a third-party who caused the accident. 

A third-party in the workplace would be an individual who is not an employee or an agent of the employer. It could a contractor, an individual who has permission to be on the property for business purposes, an individual who presents on the worksite who isn't supposed to be there, or a motorist who causes an accident on or near a worksite.  

In Wisconsin, there are certain rules surrounding third-party lawsuits involving injured workers with respect to damages. For instance, before the injured worker receives any of the proceeds of the damages in such a case, all costs of collection, including attorney's fees, are taken out prior to distribution of funds to the worker. The insurance company or employer is repaid an amount equal to the amount the injured worker was paid as compensation. Only after that is the employee paid.

Although it is not required, third party litigation is typically a joint action by the employer and the workers' compensation insurance carrier. Such suits can be initiated by the employee, though, and should be if the employer and insurance company are not doing so and when the likely damages from third-party litigation are significant. 

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