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Suing a third party for a workplace injury: a look at subrogation

In our last couple posts, we’ve been looking at the exclusive remedy doctrine as it applies to workers’ compensation benefits here in Illinois. We’ve looked at several recognized exceptions to the rule, including intentional conduct; dual capacity; and retaliatory discharge. Here, we wanted to mention an additional possibility for recovery that should be kept in mind by those who are injured on the job.

Employees who have injured on the job should keep in mind that, while they may not sue their employer for damages in court, they may still have the possibility of recovering damages from third parties who are responsible for their injuries. An employee who is injured by a third party may, therefore, receive workers’ compensation benefits and pursue third-party litigation. 

The important point to remember in third-party litigation for an employee injured on the job is that he or she can be required to reimburse the employer for workers’ compensation costs with the funds the injured employee receives in a settlement or judgment. This is known as subrogation. The employer, for its part, is required to pay, out of that reimbursement amount, the employee’s “pro rata share of all costs and reasonably necessary expenses” in connection with the third-party lawsuit, including court costs and attorney’s fees.

Pursuing third-party litigation is not something an injured employee does on his or her own, apart from the employer. Notice must be provided, and the employer and employee must both provide written consent for settlements and judgments in such actions. Indeed, an employer may pursue a third-party claim on his or her own, if the injured employee chooses not to do so.

An employee, prior to pursuing third party litigation, should understand whether doing so would be economically beneficial. Consulting with an experienced attorney is, therefore, important to understand whether such litigation is worth the time, effort, and associated costs. 

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