If an employer and employee file a third-party action and recover damages, who has the first right of recovery?

• A. Employee
• B. Employer
• C. Employer, if lien doesn't exceed the amount of the recovery
• D. 1/3 to the employee; 1/3 to the employer; 1/3 to the employee's attorney

Answer: (C)

In a situation where both an employer and an employee file a third-party action and recover damages, the employer generally has the first right of recovery to ensure that any expenses related to the employee's injury, which were covered under workers' compensation, are compensated. This is established because the employer has typically already incurred costs for wages, medical expenses, and other related benefits due to the injury.

The employer's right of recovery often comes in the form of a lien. This lien allows the employer to claim damages that reimburse the costs they covered while providing support to the injured employee. If the amount recovered from the third-party action does not exceed the employer’s lien for the expenses incurred, the employer can recoup their paid costs directly from that recovery.

This first right of recovery serves to protect employers from financial loss related to workplace injuries while balancing the interests of the employee and employer in cases where a third party may be liable for the injury. The other answers do not appropriately reflect the legal framework surrounding recovery rights in this context.