If someone other than your employer caused your work injury, you may have both a workers’ compensation claim and a claim against that person or business. These claims can affect each other, especially when benefits have been paid and a settlement is being considered. Arizona’s Work Injury Firm focuses only on workers’ compensation and can help you understand the workers’ compensation side of an Arizona third party work injury claim. For a free consultation, call (877 ) 370-5788 or contact Arizona’s Work Injury Firm.
Many cases vetted by our firm are referred to us by fellow members of our legal community, attorneys and staff that do not handle workers compensation claims or problems as a matter of course. Often times an intake staff member, as soon as they hear a person was injured while on the job, will refer said person to our firm. It is important however to note that, while not common, said referrals will sometimes have been injured by a negligent third party while in the course of their employment.
What Makes a Work Injury Claim a Third-Party Claim?
A third-party claim starts with a simple question: Was someone other than your employer responsible for the injury? If the answer may be yes, the person or business that caused the injury can be a third party.
Workers’ compensation and a civil claim have different roles. Workers’ compensation is the claim connected to your job injury and your employer’s coverage. A third-party claim is a civil claim against a negligent person or business that is not your employer. It does not mean you are bringing a civil claim against your employer.
The facts matter. An injury may happen during a normal work task, on a job site, while driving for work, or while making a delivery. Even when an injury clearly happened on the job, another party’s conduct may have contributed to it. A careful review can identify whether there is a separate claim while keeping attention on your workers’ compensation benefits.
Common third parties in Arizona work injuries
The following are common examples of parties who may be separate from your employer:
- Negligent drivers who cause a crash while you are driving, riding, making deliveries, traveling between job locations, or otherwise working.
- Property owners whose unsafe property conditions may have contributed to an injury.
- Other contractors or subcontractors working at the same construction, industrial, or commercial site.
- Manufacturers of equipment or products involved in the injury.
- Delivery or rideshare drivers whose negligence causes an on-the-job collision.
These examples are not automatic claims. The specific circumstances, the relationship of each party to your employer, and the available evidence all matter. The important point is to look beyond the immediate workplace and ask whether a non-employer caused or contributed to the harm.
Your Workers’ Compensation Claim and Civil Case Can Run Side by Side
You do not necessarily have to choose between workers’ compensation and a claim against a negligent third party. In many situations, the workers’ compensation claim and the civil case move forward at the same time. The workers’ compensation claim addresses work-injury benefits, while the civil claim seeks recovery from the person or business outside your employment relationship that may be responsible.
That overlap requires coordination. Medical information, wage information, settlement decisions, and communications with the workers’ compensation carrier can all matter in both matters. A step in the civil case can create consequences for the workers’ compensation claim, particularly when there is a recovery from the third party.
For an injured worker, keeping the claims separate in your mind is useful, but keeping their timing coordinated is essential. You may be treating, receiving workers’ compensation benefits, and pursuing a civil claim at once. A decision should account for the benefits already paid, the carrier’s lien rights, and the time limit that applies to the third-party claim.
Arizona Has a Strict One-Year Third-Party Claim Deadline
Arizona law gives an injured worker one year from the injury to pursue a third-party claim. This is not the ordinary two-year personal-injury time limit that people often expect. Treat the one-year date as a critical date from the beginning of the case.
If you do not pursue the third-party claim within that one-year period, the right to pursue it is automatically assigned to the workers’ compensation carrier. The carrier may then pursue the claim. Losing control of the claim this way can change your options and make coordination more difficult.
Read more about the one-year deadline for an Arizona third-party work injury claim. Do not assume that a workers’ compensation claim or ongoing medical care preserves the separate third-party deadline.
A written reassignment may preserve additional time
As the one-year point approaches, you or your counsel can ask the workers’ compensation carrier for a written reassignment of the third-party claim. A written reassignment restores the right to the worker and preserves the additional year. Carriers often prefer to sign a reassignment rather than litigate the third-party case themselves, but you should not assume one has been granted unless it is in writing.
The request, the response, and the timing all deserve attention. Learn how a written reassignment of an Arizona third-party claim may fit into the process. Early review leaves more room to coordinate the claim instead of reacting to a deadline.
Who Pays What When There Is a Third-Party Recovery?
When workers’ compensation has paid medical expenses or indemnity payments for lost wages, the carrier has a statutory lien against a third-party recovery to the extent of those payments. The lien attaches at the time of settlement. It is one reason a third-party settlement needs to be planned with the workers’ compensation claim in view.
The carrier is entitled to reimbursement only for medical expenses and indemnity, or lost-wage, payments. It is not entitled to reimbursement for legal fees, nurse case management, independent medical examinations, surveillance, or other non-recoverable costs. The lien is also not subject to a collection fee.
For lien purposes, the amount actually collectable is the total recovery less the reasonable and necessary expenses actually spent to secure it, including attorney fees. That calculation may be central to understanding the value of a proposed settlement. Our page on Arizona workers’ compensation liens explains the lien issue in more detail.
A simple lien example
The firm’s materials use this example: a third-party case settles for $90,000, the attorney fee is $30,000, and the workers’ compensation lien is $40,000. In that example, the client receives $20,000, and the carrier then receives a credit for the $20,000 paid to the client.
A credit is a separate issue from the carrier’s lien reimbursement. It is the carrier’s responsibility to pursue that credit. If the carrier fails to do so and continues paying benefits, it cannot later demand repayment from you or your attorney after settlement. Details matter, so the lien amount, the allowable expenses, the settlement terms, and the carrier’s position should be reviewed before an agreement is final.
Do not settle below the lien without written carrier approval
A settlement for less than the amount of the carrier’s lien requires the carrier’s written approval. Proceeding without it can trigger significant penalties and, at the extreme, forfeiture of future workers’ compensation benefits, including medical and indemnity benefits. Arizona appellate courts have moved away from strict forfeiture over time, but some carriers still assert it.
This is not a detail to leave until the last phone call before settlement. Involving the carrier and, when appropriate, its subrogation counsel early can help identify concerns before an agreement is reached. A proposed settlement should be evaluated against the lien and the written-approval requirement before you accept it.
Can the Workers’ Compensation Lien Be Reduced for Employer Fault?
Arizona law recognizes equitable apportionment in certain situations. In Aitken v. Industrial Commission of Arizona, the Arizona Supreme Court allowed a reduction of the carrier’s lien by the percentage of fault assigned to the employer, originally in a case tried to a jury verdict. Later decisions made clear that a post-settlement process designed to place all fault on the employer did not provide the same result. Grijalva v. Arizona State Compensation Fund rejected that type of post-settlement summary trial, and Stout v. State Compensation Fund again held that the equitable reduction procedure did not apply where there was a settlement.
The rule changed in an important way with Twin City Fire Insurance Co. v. Leija. In 2017, the Arizona Supreme Court held that when an employee settles a third-party case for less than the limits of third-party liability insurance, the employee may seek a court ruling reducing the carrier’s lien to account for the employer’s comparative fault. The worker’s damages and the employer’s comparative fault must be determined in a fair proceeding.
That does not mean every settlement results in a lien reduction. It means comparative fault and the procedure used to determine it can matter. Weber v. Tucson Electric Power Co. illustrates another setting in which a jury’s damage verdict and comparative-fault finding reduced a carrier lien against a settlement with a different defendant, by 25 percent in that case. These issues make early carrier involvement especially important.
What a Civil Claim May Address Beyond Workers’ Compensation
Workers’ compensation benefits and a civil recovery are not the same thing. A civil claim may seek recovery from a responsible third party for losses that workers’ compensation benefits do not address in the same way. Whether a recovery is available, and what it may include, depends on the facts, the responsible party, available insurance, and the proof in the case.
Auto-related work injuries can create another important distinction. Uninsured motorist and underinsured motorist proceeds are not lienable under A.R.S. § 23-1023, unlike third-party liability proceeds. If your work injury involved a vehicle, learn more about Arizona work-injury UM and UIM claims before assuming that every source of recovery is treated alike.
When a work injury is fatal, the surviving family may face both workers’ compensation issues and a potential claim involving a responsible third party. Our information on wrongful-death work injury claims in Arizona addresses that distinct situation.
Why a Workers’ Compensation-Only Firm Matters in a Third-Party Case
Arizona’s Work Injury Firm practices only workers’ compensation law. That focused perspective matters because a third-party case does not sit apart from your benefits claim. The workers’ compensation lien, credit, deadlines, settlement approval, and carrier communications can all affect the benefits you depend on after the injury.
A civil attorney may be focused on proving negligence and obtaining a recovery from the third party. Your workers’ compensation interests require equal attention: which benefits have been paid, what the carrier may properly include in its lien, when approval is needed, and how a settlement may affect future benefits. If you already have a personal-injury attorney, focused workers’ compensation guidance can help keep the two matters coordinated.
You deserve a clear explanation of how the claims connect before you sign a settlement agreement or let a key date pass. The attorneys at Arizona’s Work Injury Firm serve injured workers in Phoenix, Tucson, Yuma, Flagstaff, Mesa, Glendale, Scottsdale, Mohave County, Lake Havasu, and throughout Arizona.
Frequently Asked Questions
Can I sue someone other than my employer after I get hurt at work?
Possibly. If a negligent person or business that is not your employer caused the injury, you may have a civil claim against that third party while also pursuing workers’ compensation benefits. The facts determine whether a separate claim exists.
Do I have one year or two years for a third-party work injury claim in Arizona?
You have one year from the injury to pursue the third-party claim under the Arizona rule that applies to this situation. That differs from the ordinary two-year personal-injury deadline. Because the dates are different, it is wise to review the issue early.
What happens if I miss the one-year deadline?
If you do not pursue the third-party claim within one year, the right to pursue it is automatically assigned to the workers’ compensation carrier. The carrier may then pursue the claim. A written reassignment from the carrier may restore the right to you and preserve the additional year.
Does workers’ compensation get all of my third-party settlement?
No. The carrier’s lien is limited to the medical expenses and indemnity payments it paid. The amount actually collectable is the total recovery less the reasonable and necessary expenses actually spent to secure the recovery, including attorney fees. The specific numbers and any future credit should be reviewed before settlement.
Can I settle my third-party case for less than the workers’ compensation lien?
You must obtain the carrier’s written approval to settle for less than the lien. Without approval, the carrier may assert serious consequences involving future workers’ compensation benefits. Raise this issue early, rather than waiting until a settlement is ready to sign.
Can workers’ compensation take my uninsured or underinsured motorist recovery?
UM and UIM proceeds are not lienable under A.R.S. § 23-1023, unlike third-party liability proceeds. Vehicle-related work injuries can involve several sources of coverage, so it is important to identify the source of a proposed recovery.
Talk With an Arizona Work Injury Attorney
A third-party claim can add options after a work injury, but it also adds a strict one-year deadline and important lien issues. Arizona’s Work Injury Firm can explain the workers’ compensation side of your situation in plain English. For a free consultation, call (877) 370-5788 or contact our Arizona workers’ compensation team. There is no fee unless benefits are secured.
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