Who Pays Medical if Third Party Settlement in Workers’ Comp

If I Have a Third Party Settlement in My Workers’ Compensation Case, Who Pays My Medical Bills?

Many injured workers pursue simultaneous claims for compensation in the form of workers’ compensation benefits and a lawsuit for civil damages against a third party.  While the workers’ compensation system constitutes the exclusive no fault remedy against an employer for a work-related injury or illness, third parties can be sued in a civil lawsuit.  A range of third parties might be liable in a third party lawsuit, such as a negligent driver that is neither the employer nor co-worker of the injury victim or a manufacturer of defective equipment based on strict liability.  Because both types of claims will include a wage replacement component, the situation can be confusing.  Our experienced Pennsylvania workers’ compensation attorneys often receive questions about who is responsible for an injured employee’s medical bills in this situation.

Whether you pursue a third party settlement in your workers’ compensation claim or not, your medical expenses for hospitalization, diagnostic screening, treatment, and rehabilitation will be paid by your employer’s workers’ compensation carrier.  However, the insurance company that has incurred these expenses will have a right to “subrogation.”  The term “subrogation” refers to the insurer’s right to recover the money it paid out in benefits.

The right to subjugation within the Pennsylvania worker’s compensation system is set forth in Section 319 of the Pennsylvania Workers’ Compensation Act, which provides in pertinent part: “[w]here the commensurable injury is caused in whole or in part by the act or omission of a third party, the employer shall be subjugated to the right of his employee . . . against such third party to the extent of the compensation payable under this article by the employer. . . .”

An injured worker who receives benefits through the workers’ compensation system forfeits the right to recover twice.  While an employee who suffers a work-related illness or injury can file a lawsuit against the third party seeking damages for lost wages and medical bills, the employer’s workers’ compensation insurer will be first in line to be reimbursed for expenditures toward benefits.  After the insurance company has been reimbursed for the money it paid for benefits, the employee has the right to the remainder of the third party settlement or judgment.  The key is that an employee cannot “double dip” for benefits paid to cover medical bills or wage loss.

By way of example, a sales representative employed by a pharmaceutical company travels to the office of a customer to present a sales pitch.  The employee is T-boned in an intersection by an intoxicated driver.  The sales rep. has the right to pursue worker’s compensation benefits against the drug company’s workers’ comp. carrier and a personal injury lawsuit against the drunk driver.  The benefits available through the workers’ compensation system will cover medical expenses and a portion of lost wages.  The third party settlement against the drunk driver will cover all lost wages, medical costs, out-of-pocket expenses, loss of companionship, pain and suffering, and punitive damages.  After the insurance company is reimbursed for the portion of wages and medical bills paid in benefits, the remaining damages from the settlement are retained by the injured worker.

However, the right to subrogation recovery only extends to corresponding types of compensation.  While the employer’s insurer has a right to reimbursement for wage and medical benefits, the portion of the recovery for loss of companionship and pain and suffering may not be subject to subrogation.

Our experienced Pennsylvania workers’ compensation lawyers at the law firm of Krasno, Krasno & Onwudinjo work diligently to pursue the fullest measure of compensation for our clients.  If you have questions about subrogation or other issues related to your workers’ compensation claim, we invite you to call us toll free at (877) 299-0779 to learn how we can help.

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