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When a worker is injured while working , he/she is entitled to workmans’ compensation benefits.  The injured worker is entitled to these “benefits” irrespective of how the injury occured .  In other words, even if the worker was careless or otherwise did not take the appropriate steps to safeguard him/herself from injury, workmans’ compensation benefits are still paid.  Similarly, if an employer negligently contributes to the employee’s injury at work , the worker’s remedy is limited to the workmans’ compensation system.

When an entity OTHER THAN the employee or the company is at fault, employees may pursue a “third party” claim.   For instance, if a machinist is injured at the job, and the equipment was not properly taken care of by a person or entity in charge of maintaining it (third party), the employee can go after a claim of negligence against that party in civil court . 

Another frequent illustration is when a worker is injured on the job while driving a automobile and the accident is the result of the carelessness of another driver.  In that case, the injured worker can sue the other driver as a third party .

This is important because the victim can now receive compensation in full for his/her injuries instead of being limited by statutory provisions under the state compensation laws.

This is also good for the employer (insurance carrier) because any “benefits” given to the worker must be paid back if a money is obtained against the third party.  This is also known as a Workers’ Comp Lien .

For the client’s attorney, the scenario is excellent as it pertains to fees.  The lawyer can earn a fee for handling the workers’ compensation case AND accumulate a contingent fee of up to forty percent on the third party civil action.

Are Third Party Cases “fundable” for purposes of Pre settlement loans ?

The answer to the above query is that it depends on a range of variables.

In certain courts, lawsuit loan companies will not advance funds on workers’ compensation cases.  The presence of a third party lawsuit makes the case available for cash advance funding in those jurisdictions where pre settlement cash advance companies might not otherwise provide cash for a workers’ compensation case.  Third party claims avail themselves to lawsuit fundings in New Jersey, New York, Ohio, Pennsylvania, Texas, California, Arizona, Maryland, Massachusetts, Michigan and a variety of other states. 

The bad news is the presence of the workmans’ comp lien.  That quantity must be repaid from any recovery against a third party.  Liens are a major consideration for litigation loan underwriters since they must analyse the risks associated with advancing money before the claim is resolved (pre-settlement).  So while there may be more funds available for the client and his/her attorney, the amount available for repayment of the advance after settlement must be weighed in order to appropriately control the funder’s risk.

Of course, the same is true for all liens when considering legal loans.

Thank you for your interest in the litigation loan business.