I collected workers’ compensation. Does that affect my third-party settlement?

In Massachusetts, when workers get hurt on the job, employers are required, by statute, to provide workers’ compensation benefits. As discussed in a previous SUGARMAN blog post, those benefits include a percentage of weekly wages and medical bills relating to the workplace injury. Under the law, where companies provide workers’ compensation benefits as they are required to, employees are barred from suing their employers (and fellow employees) for injuries sustained on the job. This immunity does not extend to third parties. How Massachusetts Workers’ Compensation Can Affect a Third-Party Settlement

Can I file a lawsuit against an at-fault third party and collect workers’ compensation benefits?

When someone other than the injured worker’s employer (a so-called “third party”) is responsible for an accident, the injured person has a right to bring a lawsuit against the at-fault third party in addition to collecting workers’ compensation benefits. The injured employee of a subcontractor, for example, can bring a claim against the general contractor if the accident was caused by the negligence of one or more of the general contractor’s employees.

When an injured worker receives workers’ compensation benefits and gets a settlement or judgment against a third party as a result of a workplace accident, pursuant to a statute, M.G.L. c. 152 §15, “the sum recovered shall be for the benefit of the insurer, unless such sum is greater than that paid to it by the employee.” Put simply, what this statute means is that if there is a settlement with a third party, the workers’ compensation insurer may be entitled to be paid back for some of what it spent in workers’ compensation benefits.

When also filing a third-party lawsuit, are there limitations on how much workers’ compensation must be paid back?

There are several important limitations on how much the workers’ compensation must be paid back.

  • First, the insurer is required to credit the claimant for a portion of the legal fee and expenses incurred in achieving the third-party settlement.
  • Second, certain portions of the settlement do not need to be paid back.. In Eisner v. Hertz, 381 Mass. 127 (1980), the Court held that a workers’ compensation insurer was not entitled to any portion of a third party settlement allocated to family members of the injured worker… In Curry v. Great Am. Ins. Co., 80 Mass. App. Ct. 592 (2011), it was held that the workers’ compensation carrier was also not entitled to the portion of a settlement of judgment allocated to pain and suffering.
  • Finally, when an injured worker settles a claim against a negligent third-party, the settlement itself must be approved either by the Department of Industrial Accidents or by a court. Sometimes there are disputes about how much money the workers’ compensation insurer is entitled to be paid back. Several Massachusetts courts have ruled favorably for plaintiffs by limiting the amounts paid back to workers’ compensation insurers, and therefore leaving more for the injured worker.

SUGARMAN’s trial attorneys have decades of experience handling claims for workplace injuries, protecting settlement funds from overly aggressive workers’ compensation insurers, and maximizing recovery for injured workers. If you or a loved one has been injured at work, speak to a SUGARMAN principal today about what options may be available to you by calling us at (617) 542-1000 or email us at info@sugarman.com.