Workers’ Compensation and Third-Party Liability Claims: Can You File Both?

When an employee is injured on the job in Indiana, workers’ compensation is typically the first—and sometimes only—source of financial recovery. Indiana’s workers’ compensation system is designed to provide medical benefits and partial wage replacement without requiring the injured worker to prove fault. In exchange for this relatively streamlined system, employees generally give up the right to sue their employer for negligence.

However, many workplace injuries are not caused by either the employer, employee, or coworker. In some situations, a negligent third party may have played a role in causing the injury. When this happens, an injured worker may be able to pursue both a workers’ compensation claim and a separate third-party liability claim. Understanding when these dual claims are allowed, how they interact, and how compensation is affected is critical to protecting your rights and maximizing your recovery.

At Lee Cossell & Feagley, LLP, we regularly advise injured workers in Indianapolis and throughout Indiana on whether their case involves potential third-party liability and how to pursue all available legal options. Call our office to speak with an experienced Indianapolis workers’ compensation attorney and personal injury lawyer who can evaluate which claims you have and help you maximize your compensation.

Understanding the Workers’ Compensation “Exclusive Remedy” Rule

Indiana workers’ compensation law is built around what is known as the “exclusive remedy” rule. This rule generally prevents injured employees from suing their employer for workplace injuries, even when the employer may have been negligent. Instead, the employee’s remedy is limited to workers’ compensation benefits, which typically include coverage for medical treatment, temporary disability benefits, and compensation for permanent impairment.

While this rule protects employers from most personal injury lawsuits, it does not protect third parties who may have contributed to the accident. If someone other than your employer or a fellow employee caused or contributed to your injury, the exclusive remedy rule does not apply to them. In those cases, Indiana law allows injured workers to pursue a third-party personal injury claim while still receiving workers’ compensation benefits.

What Is a Third-Party Liability Claim?

A third-party liability claim is a civil personal injury lawsuit filed against an individual or company that is not your employer but whose negligence caused or contributed to your workplace injury. Unlike workers’ compensation claims, third-party claims are fault-based. This means the injured worker must prove that the third party owed a duty of care, breached that duty, and caused damages as a result.

Third-party claims are significant because they allow injured workers to seek damages that are not available through workers’ compensation. While workers’ compensation provides limited, predefined benefits, a third-party lawsuit may allow recovery for the full scope of losses, including pain and suffering, emotional distress, and full lost wages.

Common Scenarios Involving Third-Party Claims

Third-party liability arises in a wide range of workplace injury scenarios, particularly in industries that involve equipment, vehicles, or shared worksites. One common example involves motor vehicle accidents. If you are injured while driving for work and another driver caused the crash, you may have a workers’ compensation claim through your employer and a personal injury claim against the at-fault driver.

Construction sites frequently give rise to third-party claims because multiple contractors, subcontractors, and vendors often work on the same project. If an employee of one company is injured due to the negligence of another company on the site, such as unsafe scaffolding, falling debris, or improper site management, that injured worker may have a valid third-party claim.

Defective equipment and machinery are another frequent source of third-party liability. If a worker is injured because a tool, machine, or safety device was defectively designed or manufactured, the injured employee may be able to bring a product liability claim against the manufacturer or distributor, in addition to receiving workers’ compensation benefits.

Premises liability claims also arise when injuries occur on property owned or controlled by someone other than the employer. For example, delivery drivers, maintenance workers, and contractors may be injured on poorly maintained property owned by a third party. In those cases, the property owner’s negligence may form the basis of a separate lawsuit.

Can You Receive Workers’ Compensation and File a Lawsuit at the Same Time?

Yes. Indiana law allows injured workers to receive workers’ compensation benefits while simultaneously pursuing a third-party liability claim. These claims proceed on separate legal tracks, but they are closely connected and must be handled carefully to avoid unintended consequences.

Workers’ compensation benefits typically begin soon after the injury, helping to cover medical bills and partial wage loss. A third-party lawsuit, on the other hand, often takes longer to resolve and may involve extensive investigation, negotiation, or litigation. The availability of workers’ compensation benefits during this time can be essential for financial stability while the lawsuit is pending.

That said, filing both claims requires careful coordination, especially when it comes to settlements or trial verdicts.

How Third-Party Claims Affect Workers’ Compensation Benefits

One of the most important issues in cases involving both workers’ compensation and third-party liability is the employer’s or insurer’s right to reimbursement, often referred to as a “lien.” Under Indiana law, if an injured worker recovers money from a third party, the workers’ compensation insurer may be entitled to reimbursement for certain benefits it paid, such as medical expenses and wage replacement.

This does not mean that pursuing a third-party claim is not worthwhile. In many cases, third-party recoveries far exceed the value of workers’ compensation benefits alone, even after reimbursement is accounted for. However, failing to properly address liens and reimbursement rights can significantly reduce the injured worker’s net recovery.

An experienced attorney can often negotiate lien reductions and structure settlements in a way that protects the worker’s long-term interests, including future medical needs and ongoing disability benefits.

Additional Compensation Available Through Third-Party Claims

One of the primary advantages of a third-party lawsuit is the broader range of damages available. Workers’ compensation does not compensate injured employees for pain and suffering, emotional distress, or loss of enjoyment of life. It also limits wage replacement to a portion of the worker’s average weekly wage.

A successful third-party claim may allow recovery for the full value of lost income, both past and future, as well as non-economic damages that reflect the real human impact of the injury. In cases involving catastrophic injuries, these additional damages can be substantial and life-changing.

Why Legal Representation Is Especially Important in Dual Claims

Cases involving both workers’ compensation and third-party liability are legally complex. They require knowledge of multiple areas of law, strict compliance with filing deadlines, and strategic coordination between claims. Insurance companies representing employers and third parties often work aggressively to limit their financial exposure, sometimes at the expense of the injured worker’s best interests.

At Lee Cossell & Feagley, LLP, we understand how these claims intersect and how to pursue them together effectively. We work to identify all potential sources of compensation, protect your workers’ compensation benefits, and maximize your recovery from responsible third parties.

Protecting Your Rights After a Workplace Injury in Indianapolis

If you have been injured at work, do not assume that workers’ compensation is your only option. A careful review of the facts may reveal that a negligent third party played a role in your injury, opening the door to additional compensation beyond what workers’ compensation provides.

The attorneys at Lee Cossell & Feagley, LLP, have extensive experience representing injured workers in Indianapolis and throughout Indiana. We are committed to helping clients understand their rights, explore all available legal remedies, and pursue the full compensation they deserve.

If you have questions about workers’ compensation, third-party liability claims, or whether you may be eligible to file both, contact Lee Cossell & Feagley, LLP today for a free consultation. We are here to protect your rights and help you move forward after a serious workplace injury.