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What Is a Workers’ Comp Lien?

Our workers’ compensation attorneys are committed to helping injured workers and their families navigate all aspects of the workers’ comp system. A common question we get is: Who pays for my injury?

If you have been injured on the job, medical expenses will likely be paid by your employer’s workers’ compensation insurance. This may be your only legal option for a work injury, in which case you will be limited to medical payments and other benefits provided by workers’ comp.

However, if you have a cause of action against a negligent third party for a work injury, you may be able to file a personal injury claim to recover additional compensation. If the third-party claim succeeds (i.e., a settlement is reached or you are awarded compensation at trial), the workers’ comp insurer may place a lien on your recovery for repayment of benefits.

Claims involving third-party liability for work-related injuries and workers’ comp liens are complex. Our workers’ compensation attorneys can fight to maximize your recovery.

For a FREE consultation, call the Whitley Law Firm at (919) 785-5000 today. Our attorneys handle workers’ compensation claims throughout North Carolina from offices in Raleigh, Kinston, and New Bern.

What Is a Lien?

In personal injury matters, a lien is a claim on the proceeds of a personal injury case. Liens can be made by a number of different parties who provide payment for expenses incurred by the injured person. This includes health insurance providers, state and federal disability programs, and more.

Workers’ compensation liens are put in place by employers and insurers that pay the cost of an employee’s medical treatment, indemnity benefits, and more. If the employer and/or carrier receives notice of an employee’s third-party claim and a settlement or judgment is made, the employer and/or carrier can claim a portion of the recovery as recompense for the benefits paid.

How Do Workers’ Compensation Liens Work?

The North Carolina Workers’ Compensation Act governs third-party common law claims for personal injury among employees and the rights of employers and insurers to place liens on the employee’s recovery. This law is extremely complicated, making it crucial for injured employees to consult a workers’ compensation attorney to understand the effects a lien can have on their case.

Per the Workers’ Compensation Act § 97-10.2(h), “every party to the claim for compensation shall have a lien to the extent of his interest” for payments made to a worker in the event of injury. This includes benefits paid by the employer and/or via workers’ comp insurance coverage.

Before reaching a workers’ compensation settlement, both the employee and any parties with liens must abide by the following rule:

“Neither the employee or his personal representative nor the employer shall make any settlement with or accept any payment from the third party without the written consent of the other and no release to or agreement with the third party shall be valid or enforceable for any purpose unless both employer and employee or his personal representative join therein…”

  • Workers’ Compensation Act § 97-10.2(h)

After court costs and attorney fees are paid, the proceeds of a third-party personal injury claim (whether by settlement or judgment in favor of the worker) must go toward reimbursing the employer or workers’ comp insurer for “all benefits by way of compensation or medical compensation expense paid or to be paid” (see Workers’ Compensation Act § 97-10.2(f)(1)c). The remaining proceeds go to the worker.

Am I Required to Pay a Workers’ Compensation Lien?

Third-party claims represent a critical avenue of compensation for injured workers. Workers’ comp does not cover all of the losses commonly sustained by employees who are hurt on the job, which is why it is important to explore your right to file a personal injury claim.

Read More: Workers’ Comp vs. Personal Injury

When faced with compelling evidence of negligence, third parties will often choose to settle a personal injury case rather than go to trial. As discussed above, any settlement agreement must be approved by both the employee and the employer (or the workers’ comp insurer) if the plaintiff has received workers’ compensation benefits.

In the event that a third-party claim goes to trial, evidence of benefits and other compensation provided by an employer or insurance carrier may be introduced in court. Previously covered expenses will be subtracted from any damages awarded to the plaintiff (see Workers’ Compensation Act § 97-10.2(e)). This prevents the injured worker from being awarded compensation for losses already covered by workers’ comp.

Workers’ compensation attorneys can review any liens filed on a third-party action. Although employers and carriers may have a valid claim for repayment, the amount owed can be disputed.

Reducing a Workers’ Comp Lien

If a settlement is reached or a judgment is made in the employee’s favor against a third party, the worker or the employer can apply to the superior court to have a judge “determine the subrogation amount.” Subrogation refers to a process where an insurer or other party asserts its right to collect damages for expenses paid to another due to the negligence of a third party. (While subrogation is generally prohibited in North Carolina, it is allowed when workers’ compensation insurance is involved.)

The judge has sole discretion in determining the value of any liens on the settlement or proceeds of a lawsuit. Multiple factors may go into the judge’s decision, including “the anticipated amount of prospective compensation the employer or workers’ compensation carrier is likely to pay to the employee in the future, the net recovery to plaintiff, the likelihood of the plaintiff prevailing at trial or on appeal,” and more (see Workers’ Compensation Act § 97-10.2(j)).

Accurate accounting of the benefits you receive from workers’ compensation is essential. If your attorney determines that the lien placed by the employer or the workers’ comp insurer is excessive or deprives you of needed compensation, it may be possible to argue that the lien should be reduced or eliminated.

Contact Our Workers’ Compensation Attorneys Today

Being injured on the job can affect your life in a number of different ways. The pain of the injury and the reduction or loss of the ability to work can be extremely stressful.

Workers’ comp should cover some of your losses, and you may be entitled to recovery of additional damages through a claim against a negligent third party. Unfortunately, workers are often unaware of these rights. They are also unfamiliar with the many challenges involved in pursuing fair compensation for a work-related injury.

At the Whitley Law Firm, we take your unique circumstances into account and pursue maximum benefits and other compensation on your behalf. We closely examine any liens on your recovery and, if possible, fight to have the lien reduced or waived entirely.

Contact the Whitley Law Firm today for assistance with a workers’ compensation matter. It won’t cost anything to see if we can help.