Third Party Cases

• Jurisdiction: Maryland

XII. THIRD PARTY CASES

A. In General

If a person other than the employer is legally liable for the worker's injury or death, the employer, insurance carrier, Subsequent Injury Fund, and/or the worker or dependents of the worker may maintain a tort action for damages against that third person.

If damages are recovered, the employer or insurer and the Subsequent Injury Fund are first reimbursed for any benefit paid under the Workers' Compensation Act, and the balance is paid to the worker or dependents of the worker.³⁵⁶ In medical malpractice cases, the employer is entitled to reimbursement to the extent that the malpractice caused workers' compensation benefits to be paid.³⁵⁷

The employer, insurer, and Subsequent Injury Fund are entitled to be fully reimbursed for the amount of benefits paid, even if damages received from the third party were reduced as a result of bankruptcy.³⁵⁸

The employer, insurer, or Subsequent Injury Fund may not be compelled to join in a third party case brought by the employee.³⁵⁹

B. "Third Parties" Amenable to Suit

1. Co-employees

A co-employee is regarded as a "person other than the employer" and therefore may be sued in tort,³⁶⁰ except in cases involving local government employees.³⁶¹

2. Supervisor or corporate officer

However, a co-employee who is a supervisor or corporate officer is subject to liability only for breach of a duty which was personally owed to the injured employee; he or she is not liable merely for breach of a non-delegable duty that the employer owed to the employee.³⁶²

Among the employer's non-delegable duties are:

a. Providing a safe work place;
b. Providing safe equipment;
c. Warning employees about dangers of which the employees could not be expected to be aware;
d. Providing a sufficient number of competent fellow employees; and
e. Promulgating and enforcing safety rules.³⁶³

3. Statutory employers

Statutory employers under LAB. & EMpL. § 9-508 have been held not to be "third parties."³⁶⁴

4. Corporate subsidiary

A corporate subsidiary of the employer may be sued in tort as a third party as long as there was no employment relationship between the employee and the subsidiary.³⁶⁵

5. Parents/spouses

A spouse of an injured worker may not maintain an action for loss of consortium and a parent may not maintain an action for a child's medical expenses against an alleged tortfeasor where the worker himself or herself would not be permitted to bring suit against that person as a "third party."³⁶⁶

6. Employers in a dual capacity

An employer is liable in tort to its employee if it occupies, in addition to its capacity as an employer, a second capacity that generates obligations that are unrelated and independent of those imposed upon it as an employer.³⁶⁷

7. Insurers

A workers' compensation insurer may be sued in tort if it committed an intentional tort.³⁶⁸ It may also be sued for acts that are not related to its role as a workers' compensation insurer.³⁶⁹

C. Allocation of Amount Recovered

1. Court costs and counsel fees

Before the recovery may be divided between the employer-insurer and the worker or dependents of the worker, the parties must pay court costs and counsel fees in the ratio that each party's share of the recovery bears to the total amount of the recovery.³⁷⁰

The Commission has no jurisdiction to determine the amount of counsel fees in third party cases; the Commission's jurisdiction over counsel fees extends only to claims for workers' compensation benefits.³⁷¹

2. Net recovery to worker

Once court costs and counsel fees are paid and the employer-insurer has been reimbursed for benefits paid under the Workers' Compensation Act, the remainder of the recovery is paid to the worker or, in death cases, the worker's dependents.³⁷²

3. Crediting worker's net recovery against future compensation benefits

Payments of workers' compensation benefits are suspended until such time as the worker's net recovery from the third party case is exceeded by the amount of future benefits that he or she would have received in the absence of third party liability. After this point is reached, the employer must institute payment of further benefits.³⁷³

The credit allowed the employer does not include amounts paid by the third party for damages that are not related to the employer's workers' compensation obligations, such as damages for loss of consortium or for loss of earnings in a separate employment.³⁷⁴ The credit is calculated on actual payments made by the employer and not on the gross amount billed or any "write downs".³⁷⁵

? Claimants often expect that despite the third party recovery, the employer-insurer will continue to at least pay medical expenses. Counsel for claimants must explain to them that this is not the case and they must plan to pay their own medical expenses from the net third party recovery.

D. Election of Remedies

If the worker settles a third party case or obtains a final verdict before filing a workers' compensation claim, thereby prejudicing the employer's right to sue the third party for subrogation, the workers' compensation claim is barred.³⁷⁶

However, if the settlement was with a joint tort-feasor and a viable claim remains available against other tort-feasors, the employee is not barred from filing a workers' compensation claim.³⁷⁷

? In view of the election of remedies rule, claimant's counsel must always be careful to file the workers' compensation claim before the third party case is tried or settled, even if there is no present intention of pursuing

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