SC Lawyer, January 2006, #5. The Workers' Compensation Lien Against Third Party Proceeds: The Complex Has Become More Complexing.

AuthorBy Stanford E. Lacy

South Carolina Lawyer


SC Lawyer, January 2006, #5.

The Workers' Compensation Lien Against Third Party Proceeds: The Complex Has Become More Complexing

South Carolina LawyerJanuary 2006The Workers' Compensation Lien Against Third Party Proceeds: The Complex Has Become More ComplexingBy Stanford E. LacyWorkers' compensation is the exclusive remedy an employee has against an employer for work related injuries. It is a no fault system. The employee does not have to prove the employer was negligent to collect benefits. All an employee must prove is an injury by accident arising out of and in the course of employment.

The Workers' Compensation Act's (Act) exclusivity doctrine, S.C. Code Ann. § 42-1-540 (2004) forbids an employee from suing the employer in civil court regardless of how grossly negligent the employer may have been in causing the employee's injuries. The protection of the exclusivity provision extends to co-workers and statutory employers.

But what remedies does the injured worker have when his compensable injuries are caused by someone other than the employer, co-worker or statutory employer? Is the injured worker limited to only workers' compensation benefits? If not, can the injured worker collect both workers' compensation and proceeds from the third party actions? What rights, if any, does the employer/carrier have to be reimbursed from third party proceeds?

Three statutes within the Act attempt to balance the rights of the injured worker, the employer, and the third party. These statutes are S.C. Code Ann. § 42-1-550, -560 (2004) and 580. The first provides that an employee injured because of the negligence of the third party can pursue the third party in tort without filing a workers' compensation claim. The second section allows the worker to collect workers' compensation benefits and pursue the third party but give the employer a lien against any proceeds from the third party action to the extent benefits are paid. The last section was intended to give some protection to the third party if the employee was injured because of the negligence of both the third party and the employer.

Election of remedies

These statutes give the injured worker an election of remedies. He can pursue workers' compensation only and forget the third party action; he can pursue the third party and forget the workers' compensation claim; or he can do both. When the injured worker takes this last approach, § 42-1-560 and § 42-1-580 become pivotal as to the distribution of any third party proceeds. The claimant must be aware, however, that once he as elected to pursue the third party and has resolved that civil suit, he has waived his workers' compensation claim.

Basic tenets

The distribution scheme for third party proceeds is based on two basic tenets. First, the injured worker should not collect twice for the same injury. Workers' compensation benefits include all medical treatment, temporary total disability and payment for permanent disability. Benefits are set by statute and do not necessarily take into account all damages a plaintiff might be awarded in a civil action such as pain and suffering, loss of companionship and punitive damages. The Act concentrates on loss of earning capacity and loss of use of body parts called scheduled members.

The second basic tenet is the ultimate...

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