Monday, November 19, 2012

Workers Compensation Liens: The Client's Duty to Repay and the Employer's Future Credit

   When a person suffers a work injury, he receives workers' compensation benefits.  These include both payment of medical benefits as well as payments of Disability Benefits.  Over time, there may be other benefits such as partial impairment benefits and vocational retraining benefits.

    When the work injury is caused by someone other than the employer, the worker has a "third party claim."  
Should the worker be successful in recovering his losses from this party, the worker has 3 duties to his employer and its workers' compensation insurer.

1.  The worker must obtain the employer's consent to settlement.  If  the worker fails to do this, the employer  is no longer responsible for paying workers' compensation benefits.   This is true even if the "settlement"  means the worker is giving up on his case.

2.  The worker must pay back any worker's compensation benefits.

3.   If the worker is able to recover more than he has received in workers's compensation benefits, the remaining amounts serve as a credit against future workers' compensation benefits.

While actual results depend on the facts of the specific case, a lawyer can negotiate a reduction of the worker's compensation "pay back."  At a minimum, the workers' compensation insurer must pay the pro rata share of any legal fees incurred to recover the pay back amounts.  Beyond this, a workers' compensation insurer may be willing to further reduce the pay back if the injured worker is willing to agree not to receive further workers' compensation benefits.

While one cannot predict the result in all cases, you have to play your hand smartly.  See