When a work injury involves a negligent person or business other than the employer, the injured worker may have both a workers’ compensation claim and a third-party civil claim. Under A.R.S. § 23-1023, the third-party claim is automatically assigned to the workers’ compensation carrier if the worker does not pursue it within one year of the injury. A written reassignment from the carrier can restore the worker’s right to pursue the claim and preserve the additional year, but Arizona firms should obtain and review that writing carefully.
The short answer: ask for a clear written reassignment early
For a workers comp reassignment of third party claim in Arizona, do not rely on a telephone conversation, an adjuster’s informal email, or the carrier’s lack of objection. Ask the carrier for a document that clearly reassigns the third-party claim to the injured worker. Keep the signed document with the civil case file and share it with the lawyers handling the workers’ compensation side.
The timing matters. The worker must pursue the third-party claim within one year of the injury or the right is automatically assigned to the workers’ compensation carrier. That one-year rule is different from Arizona’s ordinary two-year personal injury limitations period. For a closer discussion of the timing issue, see our guide to the Arizona third-party claim one-year deadline.
A reassignment is not the same thing as a lien waiver. The carrier may retain its statutory lien against an eligible third-party recovery for the compensation and medical benefits it paid. The lien is not subject to a collection fee, and it attaches at settlement. Your request and your file strategy should therefore address reassignment and lien administration as related, but separate, issues.
Why carriers often prefer reassignment to pursuing the civil case
After the one-year mark, the carrier may pursue the assigned third-party claim. In practice, carriers often prefer to sign a reassignment rather than litigate the civil case themselves. The civil action may require investigation, litigation decisions, settlement work, and coordination with the injured worker’s damages case. A carrier can decide that a written reassignment is the more practical route.
That practical preference does not make reassignment automatic. The carrier controls the assigned claim after the one-year mark unless it reassigns it in writing. A PI firm should make a direct, organized request rather than assume the adjuster or subrogation vendor will act without follow-up.
A concise request is also useful for carrier decision-makers. Identify the worker, injury date, claim number, third-party defendant or incident, and the approaching or passed one-year date. Explain that your office requests a written reassignment of the third-party cause of action. Make it easy for the carrier to send an executed document back to the right contact.
Early coordination can also help later lien work. The carrier’s reimbursement rights are limited to medical expenses and indemnity, or lost-wage, payments. They do not include legal fees, nurse case management, independent medical examinations, surveillance, or other non-recoverable costs. Ask for a current, itemized lien statement separately, and compare it against the carrier’s records. Our Arizona workers’ compensation lien itemization guide explains why that review deserves its own attention.
What a proper written reassignment should contain
The key practical goal is a signed writing that plainly returns the third-party claim to the injured worker. A document should be specific enough that the worker, the carrier, the third-party insurer, and a court can understand exactly what was reassigned.
At a minimum, request a writing that identifies:
- The injured worker by name.
- The workers’ compensation carrier and the relevant workers’ compensation claim number.
- The work injury or accident date.
- The third-party incident, claim, or potential defendants, if known.
- The third-party cause of action being reassigned under A.R.S. § 23-1023.
- Clear language that the carrier reassigns that claim to the worker.
- The date of the reassignment and an authorized carrier signature.
Avoid a document that merely says the carrier “has no objection” to a civil claim. That language may not clearly state that the carrier is returning the assigned right. Likewise, a vague statement that the worker may “discuss” a settlement does not answer who owns the right to pursue the claim after the statutory assignment.
Keep the reassignment and the lien materials in separate, labeled file sections. The carrier can reassign the third-party cause of action while still asserting a lawful workers’ compensation lien. For a broader explanation of how that lien operates, including the meaning of the amount actually collectable, see Arizona workers’ compensation liens.
Requesting reassignment before versus after the one-year mark
Before the one-year mark
As the one-year mark approaches, request the written reassignment before the deadline passes. Doing so gives the carrier time to route the request to its adjuster, subrogation department, or counsel. It also allows your office to identify any unclear terms while there is still time to resolve them.
The important point is not to treat a pending request as an extension of the statutory deadline. Maintain a clear record of the injury date, the request date, the carrier contact, and every response. If the carrier provides a draft, review whether it is an actual reassignment rather than a limited consent or a reservation that defeats the purpose of the request.
After the one-year mark
Once the worker has not pursued the third-party claim within one year, the right is automatically assigned to the workers’ compensation carrier. At that point, the request should state that the carrier is being asked to reassign the assigned third-party claim in writing. A signed reassignment restores the right to the worker and preserves the additional year.
Do not assume that a carrier’s awareness of the civil case is the same as a reassignment. Ask for the writing, obtain it, and save the final version. If the carrier is willing to reassign, getting the documentation promptly can prevent avoidable uncertainty about who may act on the third-party case.
Watch for partial reassignments, conditions, and reserved rights
A reassignment can create problems if its operative language is narrower than its title. Read the entire document, including attached riders, email terms incorporated by reference, and any language above the signature line. “Reassignment” on the first page does not cure a limitation buried later in the document.
A partial reassignment may identify only one defendant, only one insurer, or only a limited category of recovery. That may be intentional, but it should be understood before the civil case proceeds. If the document leaves part of the cause of action with the carrier, confirm exactly what the carrier says it retained and how that affects case decisions.
Conditions and reservations deserve the same scrutiny. A carrier may address its lien, reimbursement position, or settlement participation. Those items should not be confused with a clear return of the right to pursue the claim. When wording is unclear, ask for a clean revised document or a written explanation from the carrier. Do not describe a conditional document to the client or co-counsel as an unrestricted reassignment unless its language supports that description.
Settlement terms require special care when the recovery may be less than the carrier’s lien. If a third-party settlement is below the lien, the worker must obtain the carrier’s written approval to settle. Failure to obtain that approval can lead to significant penalties, including a possible assertion of forfeiture of future workers’ compensation medical and indemnity benefits. Arizona appellate decisions have moved away from strict forfeiture over time, but some carriers still raise it. A reassignment alone is not a substitute for the written approval needed for a below-lien settlement.
Sample reassignment request language for Arizona firms
This sample is a starting point for a firm’s own correspondence. It should be completed with the case-specific details and should request an actual executed reassignment, not simply a status update.
Re: [Injured Worker Name] — workers’ compensation claim no. [number]
Date of injury: [date]
Third-party matter: [brief incident or defendant]
Our office represents the injured worker concerning the third-party claim arising from the above work injury. Pursuant to A.R.S. § 23-1023, please provide a written, executed reassignment of the third-party cause of action to [Injured Worker Name].
Please identify the claim and injury date in the reassignment and state clearly that the carrier reassigns the third-party claim to the injured worker. Please also provide a current itemization of any asserted lien, limited to medical expenses and indemnity payments, and identify the appropriate carrier contact for lien and settlement communications.
Please send the signed reassignment and lien information to [name, email, and mailing address]. Thank you.
The request does not ask the carrier to waive a lien. It asks the carrier to return the third-party cause of action and to provide information needed to assess its asserted reimbursement interest. That distinction can make the request easier to evaluate and keeps later negotiation from being confused with the ownership question.
If the carrier refuses to reassign the claim
A refusal, a delay, or an unclear response should be treated as a live case-management issue. Preserve the written request and response, confirm the injury date and current timing posture, and identify whether the carrier says it will pursue the third-party claim itself. Do not proceed as though a reassignment exists when the carrier has not signed one.
Early communication matters especially where employer fault may affect the carrier’s lien. In Twin City Fire Insurance Co. v. Leija (Ariz. 2017), the Arizona Supreme Court held that an employee who settles a third-party case for less than the third party liability insurance limits may seek a court ruling reducing the carrier’s lien for the employer’s comparative fault, provided damages and comparative fault are determined in a fair proceeding. That makes early involvement of the carrier and its subrogation counsel much more important than it once was.
A carrier’s refusal to reassign is also a reason to coordinate closely with lawyers who focus only on Arizona work injury matters. The third-party action, the lien, the timing rule, and any proposed settlement may affect one another. The proper next step depends on the actual position the carrier has taken and the case’s remaining time.
Frequently Asked Questions
Can a workers’ comp carrier reassign a third-party claim in Arizona?
Yes. As the one-year mark approaches, the worker or counsel can request a written reassignment from the carrier. The written reassignment restores the worker’s right to pursue the third-party claim and preserves the additional year.
What happens if we miss the one-year third-party deadline?
If the worker does not pursue the third-party claim within one year of the injury, the claim is automatically assigned to the workers’ compensation carrier. The carrier may then pursue it. Requesting a written reassignment promptly is important if the carrier is willing to return the claim to the worker.
Is an email from the adjuster enough for a reassignment?
A firm should ask for a written, executed reassignment that clearly identifies the claim and says the carrier reassigns it to the worker. An informal message or a statement that the carrier does not object may leave the ownership question unclear.
Does reassignment eliminate the workers’ compensation lien?
No. Reassignment and the lien are separate issues. The carrier may retain a statutory lien for medical expenses and indemnity payments it paid, subject to the rules governing the recovery. The lien does not include the carrier’s legal fees, nurse case management, independent medical examinations, surveillance, or other non-recoverable costs.
Can we settle for less than the lien after getting reassignment?
A reassignment does not remove the need for written carrier approval when a third-party settlement is less than the carrier’s lien. Obtain that written approval before settling. Do not rely on the reassignment document as approval unless it clearly provides the necessary settlement approval.
What if employer fault may reduce the lien?
Arizona law recognizes equitable apportionment in defined circumstances. Under Twin City Fire Insurance Co. v. Leija, a settlement for less than third-party liability insurance limits may permit a court ruling reducing the lien for the employer’s comparative fault when damages and fault are determined in a fair proceeding. Involve the carrier and subrogation counsel early.
Free consultation for Arizona referring attorneys
If your firm has an Arizona work injury matter with a third-party assignment, lien, or settlement issue, Arizona’s Work Injury Firm can help you assess the workers’ compensation side. We practice workers’ compensation only and welcome Arizona work injury case referrals. Contact us for a free consultation at (877) 370-5788. There is no fee unless benefits are secured.