One accident can produce two entirely separate cases. Most injured workers only find out about the second one by accident, and some find out too late to do anything with it.

The first is your workers’ compensation claim. The second is a lawsuit against someone who is not your employer — a property owner, a general contractor, a driver, an equipment manufacturer. Comp pays regardless of fault but pays a limited menu. The lawsuit requires proving fault but pays for things comp never touches.

The two cases are wired together, and one of the connections can cost you everything if nobody warns you about it. That connection is the subject of this page.

Why you cannot sue your own employer

This is the part that surprises people most, and it is worth understanding before anything else makes sense.

Workers’ Compensation Law § 11 makes an employer’s liability under the compensation system exclusive. You do not get to sue your employer in negligence for a work injury, no matter how careless the employer was. That was the original bargain of the compensation system: benefits without proving fault, in exchange for giving up the right to sue.

Section 29(6) extends the same protection to a co-worker. If the person who hurt you was another employee acting in the course of employment, compensation is your remedy against that person too.

There is a narrow provision often misunderstood on this point. Section 11 does allow a third party who is being sued to bring the employer in for indemnity or contribution — either where the worker suffered a “grave injury,” which the statute defines as a closed list, or where the employer signed a written indemnity agreement before the accident. The grave injury list is: death, permanent and total loss of use or amputation of an arm, leg, hand or foot, loss of multiple fingers, loss of multiple toes, paraplegia or quadriplegia, total and permanent blindness, total and permanent deafness, loss of nose, loss of ear, permanent and severe facial disfigurement, loss of an index finger, or an acquired brain injury caused by external physical force resulting in permanent total disability.

Read that carefully, because it is not what it looks like. Both of those are about whether a defendant can bring your employer into the lawsuit. Neither is a door that lets you sue your employer directly. That door stays closed.

Where the second case actually comes from

If your employer is off limits, the question becomes whether anyone else contributed to the accident. On a lot of job sites, someone did.

Construction is the clearest example. The property owner and the general contractor are usually not your employer, and New York’s Labor Law imposes duties on them for elevation-related and certain other construction hazards. A worker employed by a subcontractor who falls from a scaffold may have a compensation claim against the subcontractor’s carrier and a separate lawsuit against the owner and the general contractor.

The pattern repeats elsewhere. A home health aide injured in a client’s building. A delivery driver struck by another motorist. A warehouse worker hurt by a machine that was defectively designed or badly maintained by an outside service company. A cleaner who slips on a condition an outside management company was responsible for.

In each case there are two cases, and they proceed on separate tracks in separate forums with separate rules.

What each case actually pays for

Compensation covers medical treatment for the established injury and partial wage replacement. It does not pay for pain and suffering. It does not pay for loss of enjoyment of life. It does not pay your spouse for anything.

A third-party lawsuit reaches all of it: the full wage loss rather than a fraction, pain and suffering, and in the right case a spouse’s own claim. That is why the second case is often worth considerably more than the first, and why letting it quietly expire is a serious loss.

It is also why the two cases cannot simply be added together, which brings us to the lien.

The compensation lien

The compensation carrier has been paying your benefits while the lawsuit is pending. Under § 29(1), when you recover from the third party, the carrier has a lien on those proceeds up to the total compensation it has paid.

The lien is not the gross number, though. The statute directs that the reasonable and necessary expenditures incurred in producing the recovery, including attorney’s fees, come off first, and it allows a court to apportion those expenses equitably. The practical effect is that the carrier, which is being repaid out of a recovery it did not pay to produce, carries its fair share of the cost of producing it. Its lien is reduced accordingly.

How much that reduction is worth is a real negotiation, and it is one of the places where the handling of the two cases together makes a measurable difference to what you keep.

The trap: you cannot settle the lawsuit on your own

This is the part of this page that matters most, and it is the reason the page exists.

Under § 29(5), a compromise of the third-party case for less than the compensation provided under the statute may be made only with the written approval of the compensation carrier, or with a compromise order from a justice of the court.

If you settle without that consent, your future compensation benefits can be disallowed. Not reduced. Disallowed. A worker who takes a settlement offer that sounds good, signs it, and tells the comp attorney afterward can find that the weekly checks and the future medical exposure the carrier was on the hook for are simply gone.

There is a repair mechanism. A court can grant approval after the fact, by what is called a nunc pro tunc order. It is conventionally sought within three months of the settlement. Later applications are possible, but the claimant then has to show that the settlement amount was reasonable, that the delay in seeking approval was not the claimant’s own fault or neglect, and that the carrier was not prejudiced by the delay.

That is a real remedy and it is granted in real cases. It is also a motion you have to bring, argue and win, against a carrier with every incentive to oppose it, over a problem that would not have existed if the consent had been obtained in the first place. The cheapest version of this problem is the one that never happens.

When the lawsuit recovers less than comp would have paid

Sometimes the third-party case is worth less than the compensation case — a thin liability picture, a defendant with minimal insurance, a recovery capped by available coverage.

Section 29(4) addresses this. Where the recovery actually collected is less than the compensation the statute provides, the carrier contributes the deficiency. The compensation case does not simply vanish because a lawsuit was brought and produced a modest number.

Running in the other direction: where the recovery exceeds what the carrier has paid, the carrier generally takes a credit against future benefits rather than continuing to write checks. Where your future benefits are not yet fixed — you have not been classified, the permanency is unresolved, nobody can say what the future stream is worth — that credit cannot simply be calculated as a lump sum, and the carrier instead continues to bear its proportionate share of the litigation costs as benefits accrue.

The sequencing of the two cases, and where your comp case stands when the lawsuit resolves, can therefore change the arithmetic substantially.

Frequently asked questions

Do I have to choose between the comp claim and the lawsuit?

No. You pursue both. Compensation begins paying while the lawsuit is pending, which matters because a third-party case can take years and the bills do not wait. What the statute regulates is not whether you can have both, but how the money is sorted out at the end.

My comp attorney never mentioned a lawsuit. Does that mean I do not have one?

Not necessarily. Some firms handle only compensation and do not evaluate third-party liability at all. The question of who else was on that job site, who owned the property, who serviced the equipment, and who else had a duty is a separate investigation from the comp claim. If nobody has asked you those questions, they have not been asked.

How long do I have to bring the third-party case?

It runs on the civil deadline for the underlying claim, not on the compensation timeline, and the two are different. Where a municipality or public authority is involved the deadlines are considerably shorter and a notice of claim may be required within ninety days. This is worth asking about early rather than late.

I already settled my lawsuit without telling the comp carrier. What now?

Deal with it immediately rather than waiting to see what happens. The nunc pro tunc route exists precisely for this situation, and the case for it is strongest while the settlement is recent and the delay is short. Time is the variable working against you here.

Will the carrier take my whole settlement?

Its lien is capped at what it has actually paid in compensation, and it is reduced by the carrier’s equitable share of the cost of obtaining the recovery. Different rules can also apply in motor vehicle cases. What the carrier asks for initially and what it is entitled to are frequently two different numbers.

Can I sue the co-worker who hurt me?

Generally no. Section 29(6) makes compensation the exclusive remedy against another employee acting in the course of employment. Whether a particular person was actually acting in that capacity is occasionally a real question, but the starting point is that the answer is no.

Talk to us

This office handles both sides of this situation, which is the point. The compensation claim and the third-party case get evaluated together, the lien gets negotiated rather than accepted, and nobody settles anything without the consent that § 29(5) requires.

If you were hurt at work and anyone other than your employer may have contributed to it, it costs nothing to find out whether there is a second case. Consultations are free. In the compensation claim there is nothing to pay up front, and the fee is applied for and approved by the Board out of the award.

The information on this page is general and is not legal advice. Reading it does not create an attorney-client relationship.

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