A workplace injury can sometimes create two separate claims. An injured employee may qualify for workers’ compensation benefits while also having a civil claim against another party whose negligence caused the injury.
South Carolina workers’ compensation generally provides medical treatment and partial wage replacement without requiring the employee to prove negligence. However, workers’ compensation does not provide the same damages available through a personal injury lawsuit, including compensation for pain and suffering.
When someone outside the protected employment relationship contributes to an accident, the injured worker may have a third-party claim in addition to a workers’ compensation claim. These claims can proceed together, but South Carolina law connects them through specific notice, reimbursement, and settlement requirements.
Why Does the Workers’ Compensation Exclusive Remedy Rule Matter?
South Carolina’s Workers’ Compensation Act generally makes workers’ compensation the exclusive remedy against an employer for a covered workplace injury. In exchange, an employee does not ordinarily need to prove that the employer was negligent to receive benefits.
Under S.C. Code § 42-1-540, an employee generally cannot receive workers’ compensation for an injury and then sue the employer for negligence over that same injury. South Carolina courts describe this arrangement as a trade-off: employees receive access to workers’ compensation benefits, while employers receive protection from most employee tort lawsuits arising from covered workplace injuries.
That protection can also extend to coworkers. However, the statute does not protect every person or company whose actions contribute to a workplace injury. Section 42-1-540 itself preserves certain actions involving subcontractors and employees of different subcontractors working under a common employer.
Determining who is protected by the exclusive-remedy rule is therefore an important first step. A person or business outside that protection may potentially be pursued through a separate third-party claim.
| Feature | Workers’ Compensation Claim | Third-Party Claim |
| Basis of claim | Generally does not require proving employer negligence | Requires establishing the third party’s legal liability |
| Who is responsible | Employer and its workers’ compensation carrier | Legally responsible third party |
| Medical expenses | Covered treatment for a compensable work injury | May be recovered as damages when legally supported |
| Lost income | Provides statutory wage-loss benefits | May include additional past and future lost earnings |
| Pain and suffering | Not a workers’ compensation benefit | May be recoverable |
| Can both claims exist? | Yes, when a legally responsible third party is involved | Yes, subject to South Carolina’s third-party claim rules |
What Can Create a Third-Party Claim After a Work Injury?
A third-party claim may exist when someone outside the protected employment relationship causes or contributes to a workplace injury. Unlike compensation, the civil claim generally requires establishing the outside party’s legal responsibility for the injury.
Potential examples include:
- A defective product or piece of equipment that causes an injury, potentially creating a claim against a manufacturer or another responsible company
- A driver from another company who causes a collision while the employee is traveling for work
- A contractor or subcontractor whose actions injure an employee of another company
- A property owner or another responsible party whose negligence contributes to unsafe conditions at a work location
Depending on the circumstances, an injured employee may receive workers’ compensation benefits while also pursuing a civil claim against a responsible third party. However, simply working for a different company does not necessarily make someone a third party under South Carolina law.
Is a Contractor or Subcontractor Always a Third Party?
No. On construction sites and other workplaces involving multiple companies, the name on a worker’s paycheck does not always determine who is considered an employer under South Carolina workers’ compensation law.
South Carolina’s statutory-employer provisions can extend workers’ compensation responsibilities and protections beyond a worker’s direct employer. Under S.C. Code §§ 42-1-400 through 42-1-450, an owner, contractor, or higher-tier subcontractor may qualify as a statutory employer under certain circumstances.
However, the analysis is more nuanced than asking whether the worker’s job was important or necessary to another company’s business. In Keene v. CNA Holdings, the South Carolina Supreme Court emphasized a company’s legitimate business decisions about what work it chooses to perform itself and what work it chooses to outsource.
A company that legitimately defines certain work as outside the scope of its own business does not necessarily become the statutory employer of a contractor’s employees simply because that work is important to its operations.
This definition can directly affect a third-party claim. If a company qualifies as the worker’s statutory employer, workers’ compensation exclusivity may limit a civil lawsuit against that company. If it does not, the company may remain a potential third party when its negligence contributes to the injury.
How Can a Third-Party Claim Proceed Alongside Workers’ Compensation?
South Carolina law allows an injured employee to receive workers’ compensation benefits while pursuing a claim against a legally responsible third party. The two claims provide different remedies and follow different rules.
Depending on the circumstances, the claims may provide:
- Workers’ compensation benefits: Medical treatment, partial wage replacement, and other benefits available under South Carolina’s workers’ compensation system.
- Third-party compensation: Damages based on the outside party’s legal responsibility, potentially including pain and suffering, additional lost earnings, and other losses available under civil law.
A worker does not necessarily have to abandon one claim to pursue the other. S.C. Code § 42-1-560 provides a framework for pursuing a third-party action while receiving workers’ compensation benefits.
However, the claims remain legally connected. A third-party recovery can affect the workers’ compensation carrier’s reimbursement rights and future benefit obligations. South Carolina law also imposes specific notice and settlement requirements when both claims are involved.
Starting a third-party action triggers specific notice requirements. South Carolina law generally requires notice to the Commission, employer, and carrier within 30 days.
How Does a Lien Affect a Third-Party Recovery?
When a workers’ compensation carrier pays benefits for an injury caused by a third party, South Carolina law gives the carrier a financial interest in the third-party recovery.
Under § 42-1-560, the carrier generally has a lien on money recovered through a third-party judgment or settlement. The lien can include compensation, medical expenses, and other covered amounts paid or payable by the carrier, subject to reasonable and necessary recovery expenses.
Attorney fees attributable to the carrier’s recovery are set by the South Carolina Workers’ Compensation Commission. The statute provides that those fees cannot exceed one-third of the total claim amount paid by the carrier to the injured employee.
The carrier’s lien is not necessarily equal to the full amount it has paid. When a third-party settlement or judgment is less than the employee’s estimated total damages, the Commission has statutory authority to reduce the lien proportionately. A reduction requires the Commission to determine that it is equitable to the parties and serves the interests of justice.
Money remaining after applicable expenses and satisfaction of the carrier’s lien can also affect future workers‘ compensation benefits for the same injury. Section 42-1-560 provides rules for applying certain remaining amounts as a credit against future benefits.
Why Do Notice and Settlement Requirements Matter?
A third-party claim and a workers’ compensation claim can proceed at the same time, but South Carolina law connects the two through specific procedural requirements.
Under S.C. Code § 42-1-560, notice of a third-party action must be provided within 30 days after the action begins. The notice goes to:
- The South Carolina Workers’ Compensation Commission
- The employer
- The workers’ compensation carrier
The Workers’ Compensation Commission provides Form S-2 for this purpose.
Settlement also requires careful coordination because the workers’ compensation carrier may have a lien on the third-party recovery. South Carolina courts have treated compliance with § 42-1-560 as important to preserving the rights of the employee, employer, and carrier.
For that reason, an injured worker should not treat a third-party lawsuit or settlement as completely separate from an existing workers’ compensation claim.
Coordinating Both Claims Together
A workplace injury involving a third party can create two separate but connected claims. Workers’ compensation may provide benefits without requiring proof of negligence, while a civil claim may provide additional compensation when another party is legally responsible.
Identifying that third party is not always straightforward. Contractors, subcontractors, property owners, drivers, manufacturers, and other businesses can raise different liability questions. Statutory employer rules may also affect which companies can be sued.
The claims must then be coordinated with the workers’ compensation carrier’s lien and South Carolina’s notice and settlement requirements. Handling one claim without considering the other can affect the injured worker’s rights and recovery.
If another person or company contributed to a work injury, Morris Law, LLC, can evaluate the claim and determine whether the circumstances also support a third-party claim.