When an employer and employee file third-party actions and recover, who has the first right of recovery?

• A. The employee
• B. The employer, if the lien does not exceed the amount of recovery
• C. Insurance companies involved
• D. Both equally

Answer: (B)

In situations where an employer and employee both pursue third-party actions and achieve a recovery, the employer has the first right of recovery, especially when there is a lien in place. This occurs because the employer may have already covered certain expenses related to the employee's injury, such as medical benefits or lost wages, under their workers' compensation policy.

The employer's entitlement to recover some of those costs is contingent upon the amount of the recovery from the third party. If the amount the employer seeks to recover does not exceed the total recovery from the third party, they can exercise their lien rights to recoup benefits paid out. This principle ensures that the employer is compensated for the costs they have incurred on behalf of the employee, while also allowing the employee to recover damages for pain and suffering or other losses not covered by workers' compensation.

Other parties, such as insurance companies, may have their own rights for reimbursement based on the specific contractual agreements in place, but the employer's lien takes precedence concerning the distribution of compensation. This structure effectively balances the interests of both the employer's investment in employee welfare and the employee's right to seek full compensation for their injuries.