workers' compensation benefits

Whose Money is it?

CT Supreme Court Says Injured Employees May Keep 1/3 of Workers’ Compensation Benefits from Lawsuits Against Third Parties

In a recent opinion, Callaghan v. Car Parts Int’l, the Connecticut Supreme Court held that employees who are injured on the job by third parties (people unrelated to the employer- think customers, vendors, passers-by, etc.) may keep a portion of any money won in a lawsuit by the employee against that third party. This is a great win for employees in the state of Connecticut, as this money would have previously been paid to the employer as reimbursement for workers’ compensation benefits paid.


“Allowing employees to keep at least one-third of [these winnings] creates a win-win situation, where employers receive a partial reimbursement of money they paid through no fault of their own, and employees get to keep a share of the money they deserve.”

Patrick Callaghan was on the job when he was involved in a motor vehicle accident. As a result, his employer was required to pay him workers’ compensation benefits in the amount of $75,000. Mr. Callaghan was able to receive a settlement from the other driver in the accident in the amount of $66,000. Older Connecticut law would have required Mr. Callaghan to reimburse his employer up to the full amount of workers’ compensation benefits he received (meaning Mr. Callaghan would not have kept any money from the lawsuit unless he won more than his $75,000 in workers’ compensation benefits; in this case, he would have kept nothing).

The Connecticut legislature changed the law in 2011 to allow employees to keep at least one-third of these proceeds from lawsuits against third parties, regardless of how much the employer has paid out in workers’ compensation benefits, so long as the employee is the one who started the lawsuit. Several members of the legislature noted that employees otherwise had no reason to go after third parties for compensation because any money they won would be repaid directly to their employer- why go through the trouble of suing someone if your employer gets to keep the money? Allowing employees to keep at least one-third of these proceeds creates a win-win situation, where employers receive a partial reimbursement of money they paid through no fault of their own, and employees get to keep a share of the money they deserve.


According to the new law, Mr. Callaghan was allowed to keep one-third of his winnings against the third party responsible for his injury, or an amount of $22,000. The problem came as Mr. Callaghan realized that the workers’ compensation benefits he was paid so far would not completely cover his medical bills. Would he be allowed to keep the $22,000 he won, or would he have to put that money towards his medical bills before his employer would be required to cover further costs? The Connecticut Supreme Court says Mr. Callaghan gets to keep his money.

The controversy comes from the idea that an employee should not be compensated twice for the same injury. If the employee is compensated once by their employer through workers’ compensation benefits should they later be allowed to also sue the third party that caused the injury? And should the employee keep that money, or should that money go to repaying the employer, who had no fault in the accident but still paid for their employee’s injuries?

Older law said the money would go to the employer because it is unfair for the employee to be paid twice while the employer has to pay for an injury they didn’t cause. The problem is that employers often do not consider it financially worthwhile to go after the party that actually caused the injury, while employees do not see the point of going through a lawsuit that will only benefit their employer. This meant that the employer would often simply take the loss and the party that caused the injury would get off without paying.

This new change in the law creates an incentive for both employers and employees to sue the party that really caused the injury; employees will now keep one-third of any proceeds they win in such a lawsuit (so long as they initiate the suit), and employers may avoid this one-third reduction of their reimbursement by exercising their right to sue the third party first.


What to do after a Catastrophic Event and Hiring a Lawyer


When you or a loved one is involved in a catastrophic accident, the first step is to make sure the proper authorities are notified, seek medical treatment, and contact police immediately if that is necessary. Secondly, notify your employer if an accident happens while you are working. Additionally, recording everything that transpires can aid towards your benefit and accumulating any tangible or concrete evidence in your possession. If applicable, secure anything you have on your telephone, such as telephone messages and retain all of your correspondence in one place, such as a diary or a log.

Furthermore, maintain any witness names and contact information. Among your initial first steps are to contact a lawyer for guidance to assist you through the process. This includes matters related to preserving your rights, determining deadlines, identifying issues, and deploy necessary investigation efforts.

How Critical is the Collection of Evidence as an Initial Step?

Among the initial measures that need to be taken with these claims is the collection of evidence. Evidence and witnesses are critical; we are not there at the scene of a catastrophic event, so we rely heavily on the individual or their family members, when possible, to obtain whatever they can. Employing capable and skilled private investigators who will collect evidence and information after the event or an accident occurs is crucial in documenting your case. If the injured party or a family member can take photographs of a defective piece of equipment or a damaged vehicle and any debris at the scene, it would be very helpful.  A lawyer is necessary to be retained who has access to the required resources to secure evidence and properly investigate an accident.

Research Before you Hire a Lawyer to Handle your Claim

When seeking legal guidance and an attorney, it is very important to consider what questions you will need to ask in regard to the specialization of the case, the lawyer’s experience, and the accountability of the lawyer. An injured party needs to take great care when researching law firms. In navigating through the many attorneys available, the injured party should spend time interviewing the prospective attorney to make sure they feel comfortable working with them. You can familiarize yourself with the law firm or attorney in advance by checking websites and paying careful attention to testimonials if they are available.

There are many well-respected and long-lived attorneys or law firms that advertise decently, but there are other attorneys that are not quite as proficient. There are boutique law firms that are skilled and specialized, but there are also high-volume firms that can fall short of the mark when it comes to serious legal representation. There are distinctions between the ways in which law firms operate and conduct business, and there are differences in terms of how effectively a law firm can pick up a case and bring it to a meaningful conclusion through proper litigation.

Law firms advertise in different ways, such as placing ads on billboards and buses, while others do so by sponsoring sports teams or weather reports. Thorough and accurate research is a crucial starting point in building and pursuing your case. Your legal and financial outcome depends greatly on this decision.

Asking the Right Questions

The injured party wants to make sure that they ask the right questions about experience, results, availability and access to essential resources, as well as about the attorney’s capacity to handle the sophisticated nature and the individual elements of their claim. An attorney’s answers to the following key questions should be strongly considered:

  • Have you handled many cases like mine?
  • What resources do you have available?
  • How will I communicate with you throughout the process?
  • What are your attorney fees and costs, and how are they billed?

Setting Expectations

You will want to meet with the attorney in person, making sure that you see eye-to-eye on how you will proceed. Occasionally, there is a philosophical difference between a client and a lawyer that becomes apparent later on in the process. It is better to understand that you can get along and that you have the same perspective about what you are trying to accomplish at an early juncture. It can be complicated to switch lawyers later in the case, so it is better to get the decision right in the beginning. This takes some talking and reflecting, and while it’s not necessary, it is ideal for it to be done in person.

To learn more about the crucial steps to follow on making an injury claim and other beneficial information related to personal injury cases in Connecticut, I encourage you to download our pocket guide for free via this link: Book Download