Can I Sue a Third Party While I'm on Workers' Comp?
Yes. Workers' comp only protects your own employer and your coworkers. You can still sue the operator, another contractor, an equipment maker or a trucking company whose negligence hurt you, and keep your comp benefits while you do. The catch is the comp lien: under Texas Labor Code 417.001, the carrier gets repaid from the first money you recover, less its share of attorney's fees.
Most seriously hurt oilfield workers never sue their own employer. The real money in an oilfield case usually comes from somebody else on the location. This page covers who that somebody else can be, and what happens to your comp benefits when you go after them.
What Is a Third Party Claim?
A third party claim is a lawsuit against any company or person other than your employer and your coworkers. Texas Labor Code 408.001 makes comp your only remedy against a covered employer and the people who work for it. Everyone else is fair game if their negligence caused or contributed to your injury.
That matters on an oilfield location more than almost anywhere else. One pad can have an operator, a drilling contractor, a well service crew, a frac company, a wireline outfit, water haulers and sand haulers, plus a dozen equipment vendors. Each one has its own people, its own equipment and its own insurance policy.
Your Employer
Protected by the exclusive remedy if it carries comp. See when you can sue your employer.
Your Coworkers
Covered by the same protection when they were doing their jobs for your employer.
Everyone Else
Operators, other contractors, manufacturers, drivers and trucking companies whose negligence played a part.
Who Can Be a Third Party on an Oilfield Location?
The company that owns the lease. Texas Chapter 95 shields it unless it controlled how the work was done and knew about the danger. That's a real hurdle, but operators often send company men who call the shots.
When an operator is liable ›A crane operator from another company drops a load. A frac crew leaves a line pressured. A well control company misreads the gauges. Their negligence is a third party claim.
Rig and well blowouts ›When a BOP, tong, chain, valve, iron or pressure line fails, the company that designed, built or sold it can be liable for a defective product even if nobody on location did anything wrong.
Equipment failure claims ›Vehicle crashes are a leading cause of oilfield deaths. A water truck, sand hauler or another company's pickup that hits you on a lease road or highway is a third party.
Oilfield truck accidents ›The company that looks like a third party but isn't
Oilfield master service agreements sometimes have the operator or a general contractor buy comp coverage for everyone on the job. Under Texas Labor Code 406.123, that company can become your statutory employer and get the same protection from suit your employer has. Staffing agency setups can do the same thing. The contracts decide this, which is why we ask for them first.
What Does a Third Party Claim Pay That Comp Doesn't?
Texas comp is a no fault system with hard limits. It pays medical care and a portion of your lost wages for a set period. A third party lawsuit is a full negligence case, so you can recover everything the injury actually cost you:
For a hand earning six figures on a rig, the gap between comp and a full recovery can be the difference between keeping the house and losing it.
What Is a Workers' Comp Lien?
When the carrier pays your comp benefits, it gets a right to be repaid out of any third party recovery. Lawyers call that subrogation. Most people just call it the lien. It comes from Texas Labor Code 417.001, and Texas courts enforce it hard.
Three rules shape every lien in Texas:
First money. The carrier is repaid from the first dollars you recover, before you see anything. The Texas Supreme Court has held the carrier stays first in line even when the settlement doesn't cover all your losses.
Shared fees. Under 417.003, the carrier pays its share of the attorney's fees and expenses that produced the recovery. When it doesn't hire its own lawyer, the fee on its share is capped at one third.
Future credit. Under 417.002, what you net above the lien is treated as an advance on future comp benefits. The carrier can stop paying until your future benefits use up that credit.
It covers death claims. The lien can reach a family's wrongful death recovery too, which surprises a lot of families. See oilfield wrongful death rights.
That third rule is the one people miss. If you settle and spend the money, then need another surgery, the carrier may not pay for it until the credit runs out. A good settlement plans for that.
Can the Comp Lien Be Reduced or Wiped Out?
Sometimes. The lien is a statutory right, not a suggestion, but it is not always the number on the carrier's first letter.
Check for a waiver of subrogation
This is the big one in the oilfield. Operators and contractors routinely require each other to carry a waiver of subrogation endorsement on their comp policies. If your employer's policy waived subrogation against the company you're suing, the carrier may have no lien against that recovery at all. In Insurance Co. of the State of Pennsylvania v. Roberts (2019), the Texas Supreme Court enforced one of these waivers as written. You need the actual policy and the actual contract to know.
Audit what the carrier paid
Carriers sometimes include payments for unrelated treatment, duplicate bills or costs tied to a separate issue. Only benefits paid for this injury belong in the lien.
Make the carrier carry its share
The fee and expense split under 417.003 reduces what the carrier actually takes. When the carrier sits back and lets your lawyer do the work, that reduction is real money in your pocket.
Negotiate when the case is hard
When liability is disputed or the defendant has limited insurance, a carrier facing a recovery of zero often has a reason to take less than its full lien. Nothing forces that, but it happens.
Will the Defendant Blame My Employer?
Almost always. Under Texas Civil Practice and Remedies Code Chapter 33, a defendant can ask the jury to assign a share of fault to other parties, including your employer, even though your employer can't be sued. Every percent the jury puts on your employer comes off what the defendant pays. Texas also bars recovery if the jury finds you more than 50 percent at fault.
Expect the operator to blame the contractor, the contractor to blame the manufacturer and everyone to blame your crew. That finger pointing is why the investigation has to start before the rig moves. More on how shared fault works in what happens if you were partly at fault.
Mistakes That Cost Injured Workers
Most third party lawsuits in Texas have to be filed within two years of the injury, and product and death claims have their own rules. The evidence disappears much faster than that. See every Texas oilfield injury deadline and what to say to an adjuster.
A Simple Example
A derrickhand is hurt when another contractor's equipment fails. The comp carrier has paid $90,000 in medical and income benefits. The third party case settles.
Carrier's Lien
Everything comp paid for this injury. This comes off the top before the worker is paid.
Carrier's Fee Share
Up to one third of the carrier's recovery goes to fees when the carrier relies on the worker's lawyer, so the carrier actually takes about $60,000.
Future Benefits
What the worker nets above the lien is an advance on future comp. The carrier can hold off on new payments until that credit is used up.
More on Third Party Claims
Will filing a third party lawsuit stop my workers' comp benefits?
No. You keep receiving comp benefits while the third party case is pending. The carrier gets repaid from the recovery, and money you net above its lien is treated as an advance against future benefits.
Do I have to pay back workers' comp if I win a lawsuit in Texas?
Usually yes. Under Texas Labor Code 417.001 and 417.002, the comp carrier is repaid from the first money you recover from a third party, less its share of attorney's fees and expenses, unless the carrier waived subrogation.
Can I sue a coworker for an oilfield injury?
Generally no. If your employer carries workers' comp, the exclusive remedy also protects coworkers who were acting within the scope of their jobs. Workers for other companies on the location are a different story.
How long do I have to file a third party oilfield injury lawsuit?
Most Texas personal injury lawsuits must be filed within two years of the injury under Civil Practice and Remedies Code 16.003. Product and wrongful death claims have their own rules, so the safest move is to talk to a lawyer early.
Deciding between comp and a lawsuit? Read workers compensation versus a lawsuit in Texas, or see all of our oilfield injury questions.
Texas Labor Code Chapter 417 · Texas Labor Code Chapter 408 · Civil Practice and Remedies Code Chapter 95 · Civil Practice and Remedies Code Chapter 33 · Ins. Co. of the State of Pa. v. Roberts (Tex. 2019)
This page is general information about Texas law, not legal advice for your situation. Reading it does not create an attorney client relationship.
Comp Isn't the Whole Story.
Find Out Who Else Owes You.
Most serious oilfield cases are won against the companies that weren't signing your checks. Talk to a Board Certified oilfield injury lawyer before the rig moves and before you settle anything.