The idea of having to pay out a workers’ compensation claim can be irksome, especially when you are self-insured. This frustration can be further compounded as you learn all of the details surrounding the happening of an injury. Sometimes a compensable workers’ compensation claim truly is the fault and responsibility of a third party, and in those situations, it may even be possible to recoup some of the expenses associated with paying out a workers’ compensation claim.

A little of the background on the Workers’ Compensation Act - it is designed to create something that is accessible in fairly short order; often times in order to supplement what a worker would otherwise be lacking while they pursue an eventual third party claim. This does not mean that the injured worker is solely entitled to recover from both the workers’ compensation act AND from the third party. Quite the opposite in fact. While the workers’ compensation coverage may create an initial coverage, that carrier or employer is going to have a strong interest in seeing that any potential third party action is pursued to the fullest extent.

Indeed, the Virginia Code sets it so that a claim brought under the Virginia Workers’ Compensation Act for any injury, occupational disease, or death benefit shall create a lien on behalf of the employer against any verdict or settlement that the employee, their representative, or other person may have for the subject matter of the claim. The employer is also subrogated to any such right and may enforce, in his own name or in the name of the injured employee or his personal representative, the legal liability of such other party. The Code may require the employer to cover the bill initially, but it creates an avenue for them to be paid back if the situation permits it.

The Code does not give the employer the authority to go off on their own and assert the employees rights. In order to undertake such an action, the employer must get the authorization of the employee and the Workers’ Compensation Commission.

In the event that the employer manages to obtain this authorization and successfully pursue a claim that nets a settlement or verdict resolution greater than the amount of the lien, the balance must be paid to the injured worker (less a few contemplated costs and expenses under the code). At the same time, if an employee or their representative attempts to settle an action without addressing the employer’s lien, the employer has a right to recover its lien as either a credit against future benefits or through a civil action against the person who received the proceeds.

The law here is simply seeking balance. It would be unjust for the employee to receive the funds from both the employer and the third party tortfeasor; and it wouldn’t make much sense for the employer to keep the proceeds related to his employees injury. In a perfect world, the system would easily balance itself out as these matters proceed through the gauntlet of litigation. All of this and more can be found in the Virginia Workers Compensation Code, with this aspect addressed in §65.2-309.

Virginia Workers’ Compensation is full of fascinating nuances like the one outlined above, and each situation needs to be properly vetted by an experienced and competent hand. If you find yourself facing these issues or others related to Workers’ Compensation matters, or if you have specific questions related to this article, or if you would simply like a consultation regarding your current practices, please contact John Stacy (jstacy@setlifflaw.com) at (804) 377-1263, or Steve Setliff (ssetliff@setlifflaw.com) at (804) 377-1261.