Worker’s Compensation Liens By David Worby on June 15, 2021

Job Accident Injury

Last month we introduced the topic of liens, and how a lien on a client’s lawsuit can ultimately reduce the amount that a client will net from a personal injury settlement.  We explained liens in general, and Medicare liens in particular.  This month we turn to worker’s compensation liens.

Who Pays Your Medical Bills When You are Hurt on the Job?

The first thing you need to know is that New York law prohibits lawsuits against your employer or co-workers for on the job accidents.  Your sole recourse in that situation is to file a claim for worker’s compensation benefits.  The worker’s compensation insurance company is then responsible to pay your medical bills, as well as a portion of your lost earnings.

“Third Party” Cases and the Worker’s Compensation Lien

But what about the situation in which you suffer an on the job accident, but the accident was caused by someone other than your employer or a co-employee?  The law does allow you to sue that third party for your injuries.  We typically refer to that type of case as a “third party” case  – and that’s where you have to consider the worker’s compensation lien.

In short, the worker’s compensation carrier is entitled to recover from your settlement the funds it has expended to cover your medical treatment and lost earnings.  The reason, at least in theory, is that without that payback requirement, you would be double dipping, that is, collecting twice (whether that is actually so in practice is a topic for another day).  However, the same law that permits the worker’s compensation carrier to assert a lien on a settlement requires that that lien be reduced by the percentage of fees earned and legal disbursements expended by your attorney.  Therefore, the amount saved is typically somewhat higher than a one-third reduction, to account for the legal fee charged by your attorney, as well as the amount of legal expenses, such as court costs.  The process to figure out procurement costs on a worker’s compensation lien is the same as what we covered last month in our discussion of Medicare liens.  The theory behind the lien reduction requirement is that had you as the plaintiff not commenced a claim or lawsuit to recover for your injuries, the worker’s compensation carrier would not have recovered any portion of its lien in the first place.  Keep in mind that the carrier is only entitled to assert a lien if you recover money on a third party claim or lawsuit.

As a plaintiff bringing a lawsuit, you are required to obtain the consent of the worker’s compensation carrier before you settle your third party case.  The White Plains accident lawyers at Worby Vecchio Edelman have systems in place to ensure that your third party case will not be finalized until we receive worker’s compensation consent.  At that stage of the litigation, the worker’s compensation carrier will indicate its consent to settle, and will also assert the amount it is entitled to receive from the settlement.

We Negotiate with the Worker’s Compensation Carrier

It sounds simple enough, but as usual more complicated scenarios can and often do arise.  As one example, there are cases in which the amount of a worker’s compensation lien might far exceed the amount of an insurance policy available to resolve a case.  In such instances, we negotiate with the worker’s compensation carrier to equitably divide the amount of the settlement in order to ensure that our client does not go to the trouble and emotional commitment of bringing a lawsuit just to pay back the worker’s compensation carrier.  On the other hand, there are some cases where it might be in the best interest of the worker’s compensation carrier to negotiate the amount of the lien payback to ever lower than a one-third discount.

Another wrinkle to consider is that while the worker’s compensation carrier is entitled to a lien on the settlement for benefits already paid, it is also entitled to a credit for the net amount that you receive against future worker’s compensation benefits.

Contact Our White Plans Accident Lawyers

Lien payback is an unfortunate fact of life in the personal injury field.  However, the White Plains accident lawyers at Worby Vecchio Edelman take all steps to ensure that our clients pay the most minimal amount possible under the circumstances of their individual case.  Under the right set of facts, we might even be able to eliminate the lien in its entirety.  Most importantly, we’ll make sure you understand every aspect of your case.  Call us if you have been involved in a workplace accident.  We’ll listen to the facts of your case, and we’ll set up a litigation plan tailored to fit your particular needs.  We offer a free, no obligation consultation, and we work on contingency, so we don’t charge a fee unless we recover money on your case.  Give us a call; you’ll be impressed by the level of our service.

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Team at Worby Vecchio Edelman LLP

Worby Vecchio Edelman LLP

The personal injury attorneys at Worby Vecchio Edelman, LLP, have advocated for the rights of injured clients for over 40 years. Our attorneys' affiliations and recognitions include:

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To schedule a free consultation at our law office, contact us online or call (914) 686-3700.

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