How Third-Party Recovery Can Impact Workers’ Compensation Settlements
Billings, Montana, has long been an industrial crossroads. Crews hang steel along the Rimrocks, oil-field truckers haul pipe east on I-94, and nurses rush between wings at St. Vincent. When a worker is hurt, Montana’s no-fault system pays medical bills and a share of lost wages without forcing a drawn-out courtroom fight. Our workers’ comp lawyer at Gertstner Adam Law can help.
Yet many serious accidents involve more than the employer. A defective scaffold clip may snap, a distracted driver may crash into a company pickup, or a subcontractor may ignore trench-safety rules. Those outside actors—called third parties—can be sued for full damages even while workers’ compensation checks continue arriving.
The twist is that Montana law also lets the comp insurer seek reimbursement from any third-party recovery and claim a credit against future benefits. Before you sign a release, you need to know how those moving parts fit together with a workers’ comp lawyer.
How Third-Party Rights Fit Into the Workers’ Comp System
Workers’ compensation shields employers from most lawsuits. That protection doesn’t extend to unrelated businesses or individuals whose negligence plays a role. Under Montana Code Annotated § 39-71-414, an injured employee may:
File a civil claim against the negligent third party for pain, suffering, and full wage loss.
Keep receiving comp benefits while the civil case moves forward.
Owe reimbursement to the comp carrier once money changes hands.
That reimbursement—called subrogation—can shrink the net settlement and even pause ongoing wage checks. An experienced workers’ comp lawyer starts talking about lien rights and future credits the very first week, not at the settlement table.
Subrogation Basics
When workers’ compensation has already paid medical bills or wage benefits, the insurer gets first dibs on part of the civil recovery. Fortunately, the law pulls the edge off that payback by forcing the carrier to share in litigation costs. In practice, reimbursement is usually calculated like this:
Add every dollar the carrier has paid in medical and indemnity benefits to date.
Subtract a proportional share of your attorney fees and out-of-pocket case expenses.
Pay the balance to the carrier from the settlement proceeds.
That formula seems simple on paper, but questions erupt over what counts as “benefits paid,” how to value future care, and whether certain medical charges were reasonable. The professionals at Gerstner Adam Law—led by a seasoned Montana workers’ comp lawyer—audits every line before any reimbursement check is cut.
The Future-Credit Problem
Subrogation doesn’t end with one check. After the carrier reimburses itself, it also claims a credit against benefits it would otherwise owe going forward.
If you net $50,000 after fees, costs, and liens, the carrier can stop weekly checks and refuse new medical bills until that $50,000 credit is exhausted. In catastrophic cases, the credit can wipe out years of treatment. That’s why we push for settlement language that:
Commits the insurer to pre-approve essential care during the credit period.
Sets a calendar end-date if the credit hasn’t been applied within a fixed time.
Clarifies that future cost-of-living adjustments aren’t absorbed by the credit.
Negotiating those terms up front prevents surprise benefit suspensions months after the ink dries.
Choosing Which Case to Settle First
Montana law doesn’t force you to wrap up the comp claim before the civil claim (or vice versa), but timing changes the math. Settling comp first locks in a lump-sum structure, yet it risks losing ongoing medical coverage once the later third-party money arrives and the credit kicks in.
Settling the third-party claim first gives everyone a single pot to divide, but the comp carrier may hold back on wage-loss advances while it waits to see how rich the civil case becomes.
Sometimes the smart play is a conditional comp settlement that stays open until the liability case resolves. We map timelines with both defense counsel and the comp adjuster so our client keeps cash flowing without sacrificing medical security.
Comparative Fault Alters the Pot
Montana follows modified comparative fault. If a jury (or adjusters during mediation) says the worker is 25% at fault, the civil recovery drops by that amount. Because reimbursement is taken from the net recovery, comparative fault lowers the carrier’s share, too. That creates room for creative allocations:
Carve out pain-and-suffering dollars that comp never covers.
Label part of the award for a spouse’s loss-of-consortium claim, which is often protected from subrogation.
Fund a Medicare Set-Aside when future medical care will shift to federal coverage.
Every percentage point of fault changes who gets paid and how much, so we assemble accident-reconstruction experts early and share testimony with all necessary parties to keep the apportionment fair.
Practical Steps for Injured Workers
A couple of smart moves in the first weeks can preserve thousands later:
Document every comp payment: Keep wage-check stubs and medical EOBs in one folder. We’ll need exact totals when the civil case hits mediation.
List potential third parties immediately: Badly designed tools, negligent subcontractors, or careless drivers disappear fast; early notice lets investigators preserve evidence.
Tell every provider about the comp claim: Surprise liens from hospitals or therapists can derail a closing—they need to bill comp, not promise to “wait for settlement.”
Coordinate all lawyers: If separate firms handle the comp and tort cases, make sure deposition transcripts, surveillance footage, and expert reports move in both directions.
Staying organized turns the settlement meeting from a scramble into a calculation.
Medicare’s Watchful Eye
Catastrophic injuries often push workers onto Social Security Disability or into Medicare eligibility by age. Federal law says Medicare mustn’t pay for treatment that a liability or comp settlement has already funded. We solve that conflict by:
Securing a Medicare Set-Aside (MSA) allocation letter when future medical needs are substantial.
Funding the MSA—often with part of the third-party recovery—so Medicare remains a backup payer.
Negotiating language that keeps enough cash free for home modifications or therapy animals rather than locking every settlement dollar inside the MSA.
Balancing Medicare’s interests with quality-of-life needs takes both benefits knowledge and creative structuring.
Insurer Participation in The Civil Suit
Workers’ compensation carriers may intervene in your lawsuit to protect subrogation rights. Their involvement can help—they’ll sometimes pay for engineers or biomechanical experts whose work boosts case value. But their priority is reimbursement, not your pain damages. We draft joint-prosecution agreements spelling out:
Who controls the settlement authority.
How costs are shared.
What happens if the carrier wants to accept an offer you think is too low.
Laying ground rules avoids last-minute friction that could tank negotiations.
Life-Care Plans and Future-Proofing
Severe burns, spinal fractures, or crush injuries demand lifetime therapy, adaptive equipment, and home alterations. We commission a certified life-care planner to project:
Wheelchair replacements every five years.
Periodic revision surgeries.
Attendant-care hours as mobility declines.
Those numbers anchor negotiations over the carrier’s future credit and justify allocating a hefty chunk of any third-party award into a special-needs trust or annuity that stretches dollars across decades.
How Gerstner Adam Law Adds Value
After all these moving pieces, experience is the hinge. Our firm brings a veteran Montana workers’ comp lawyer together with litigators who’ve handled seven-figure negligence verdicts. We unravel lien ledgers line by line, draft settlement terms that freeze the carrier’s credit when needed, and structure payouts that survive IRS and Medicare scrutiny.
With offices minutes from Billings’ workers’ compensation court and certified mediators on speed dial, we speak the adjusters’ language and know the judges’ calendars.
Contact Our Workers’ Comp Lawyer
By planning from day one with a workers’ comp lawyer—tracking payments, preserving evidence, and structuring settlements wisely—you keep more of what you win and protect the care you’ll need tomorrow.
Injured workers from Glendive to Miles City and Sidney can count on Gerstner Adam Law to guide every step; reach out today to safeguard your full recovery.