I was hurt on a construction site accident about four years ago. My attorney has told me that I have to pay money back out of my settlement for a Worker’s Compensation lien. Do I have to pay money out of my settlement for benefits I already received?
The short answer is yes you do. The reason is because Worker’s Compensation § 29 says you must.
The insurance carrier for your Worker’s Compensation benefits has a right of subrogation. The Worker’s Compensation carrier has a claim against the responsible party to seek reimbursement for any medical and lost wage benefits paid by the insurance company in your Worker’s Compensation case. This right of subrogation is the same type of right your car insurance company would have if you filed a collision claim for damage caused to your car in an accident. In a collision claim, your car insurance company pays to fix your car. Then your insurance company has the right to pursue a subrogation claim against the at-fault driver for the money it paid to fix your car.
Worker’s Compensation Law § 29 creates a right of subrogation against the responsible party for your accident. Since you were involved on a construction site accident, I am assuming that your attorney brought a Labor Law case against the owner and general contractor on the job site in which you were injured. The Worker’s Compensation carrier has a lien for lost wage and medical benefits paid on your case. Under the statute, the Carrier must deduct from its lien your “procurement costs” to obtain that recovery. That means (since one-third of the recovery in personal injury cases is taken out as a legal fee) the Compensation Carrier will deduct at least one-third from the lien. So a $75,000 lien will be reduced to at least $50,000.
In addition to paying back the lien, the claimant must also obtain the Compensation Carrier’s consent to the settlement. (Failure to obtain Carrier consent can jeopardize future Compensation benefits.) The Compensation Carrier will also take a credit to the extent of the recovery. That means if the injured party receives $10,000 in recovery from a $15,000 settlement (two-thirds of the recovery less the legal fee deduction), the Carrier will not pay future medical or lost wage benefits until the sum of those potential benefits equals $10,000. After the injured party has submitted $10,000 worth of medical expenses and lost wage benefits, then the Compensation benefits may be paid again to the injured worker.
In fact, if the injured worker does not know about Labor Law cases or just decides he doesn’t want to sue, the Compensation Carrier has the right, under Worker’s Compensation § 29, to appoint an attorney to pursue the Labor Law case against the owner and general contractor on the job site. The injured party must cooperate with the appointed lawyer or risk losing Compensation benefits.