Workers’ Compensation Liens in a Personal Injury Lawsuit

A lien is a legal right a person or entity has against the property of another.  Liens can work in a variety of different ways.  Some liens can be placed against property, like a house, which prevents you from selling it until the lien is “satisfied,” or “paid back.”  Other kinds of liens work by “attaching” to money you are owed until the lien is satisfied, like in the case of a settlement or award in a personal injury lawsuit.  In this post, we will discuss the right of the workers’ compensation carrier to take a lien against a personal injury settlement or award.

When you are hurt on-the-job, workers’ compensation pays you for any medical expenses or lost wages you may have as a result of the injury.  However, if someone besides your employer was responsible for your injuries, you may be able to bring a third-party lawsuit and to get compensated for things workers’ compensation doesn’t pay for, like pain and suffering.   However, if workers’ compensation paid you for things like medical treatment or lost wages, the law allows them to “take a lien” against the third-party lawsuit to reimburse them for a portion of what they paid you.   This may seem confusing, because you brought a lawsuit for things workers’ compensation doesn’t pay for, but under the law, the workers’ compensation carrier has a right to reimbursement even if your entire settlement was allocated to pain and suffering.  This means that when you settle your case your lawyer had to consider the cost of reimbursing the compensation carrier in addition to compensating you personally for your injuries.

The good news is that workers’ compensation only takes a lien for about two-thirds of what they paid you.  This happens because the law makes workers’ compensation share in the cost of the recovery: Your lawyer did all that hard work getting the compensation carrier their money back, so they should have to pay something for that lawyer’s time and effort.  Since you generally pay a 1/3 attorneys fee, it seems only fair that workers’ compensation pay the same.  Look at this example:

Alex is a pizza delivery person.  While delivering a pizza he is struck by a drunk driver and suffers a broken arm.  Workers’ compensation pays Alex a portion of his lost wages and all of the medical expenses associated with fixing his broken arm for a total of $30,000.00 in workers’ compensation benefits.  Alex then sues the drunk driver for causing the accident and settles the case for $300,000.00.  Worker’s compensation now has a lien against that $300,000.00 for the $30,000.00 they already paid him, less one third ($10,000).  Therefore, Alex must repay workers’ compensation $20,000 to satisfy the lien.

At Segar & Sciortino, PLLC we have decades of experience handling cases involving workers’ compensation liens.  If you have questions about injuries you sustained in an accident, give us a call.  We are here to help.

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