A workplace accident usually falls under workers' compensation, but a third party claim operates like a personal injury tort case. When you collect workers' compensation while also pursuing a third party, there's some crossover. That crossover happens in the form of a workers' compensation lien.
What is a Workers' Compensation Lien?
A workers' compensation lien is both a lien in the traditional sense, but also a form of subrogation.
Lien – A lien is a claim against debtor's property until such a time as the debtor can pay back an obligation, such as a loan.
Subrogation – Subrogation is when another entity, such as your insurer, pursues a claim as if they were you. For example, if you're in a car accident, your insurance pays for damages and other costs. In turn, your insurer will make a claim against the other party or their insurer to recover those funds.
To put it together, once you've collected workers' compensation benefits, the workers' comp insurer puts a lien on your future settlement amount. That lien amount can vary but it's generally around two-thirds of the full amount of what they paid out to you.
Sometimes the other third will go to your lawyer. This is because your lawyer is technically also working on behalf of your lien holder by trying to get their money back for them.
Many states don't like the idea of you receiving double compensation for the same thing. The amount given by the workers' compensation insurer becomes a subrogation payment. This means they will attempt to recoup the funds paid out on your behalf.
A good example of this in action is if you take too long pursuing a personal injury case. The workers' comp insurer can pursue a claim on your behalf because they have an interest in recouping what they've paid out to you.
What It Means for Your Personal Injury Case
This lien isn't set in stone. It's negotiable, which can change some of the circumstances of your personal injury case. That lien is an added cost the lawyer has to figure into the amount he or she seeks on your behalf. This means your lawyer may seek a greater amount than originally intended.
The amount of the lien can also factor into whether it's worth it to pursue a case at all. You can receive a significant amount in workers' compensation benefits, but the third party case may only pay out a portion of that. After you settle the lien and the lawyers take their fee, it can leave you with little to nothing.
A workers' compensation lien can play a large role in your personal injury case. It's important that you have an experienced lawyer (like those at Kuzyk Law) on your side to help you figure out what steps you should take to come out of your case with the compensation you deserve.
After you are involved in a serious car accident, you might feel confused about what to do next. In order to feel like yourself again, you might be tempted to try to go about your daily activities, only to come across loads of challenges. In addition to focusing on your own recovery, you might also be left wondering what to do about medical bills, pushy insurance adjusters, and annoying family members. However, the right lawyer can help you to find your way. My name is Dan, and I know firsthand how difficult it can be to recover from a bad injury. Read my website to learn how proper legal representation can simplify your journey.