The Workers Compensation Lien Against Third Party Lawsuits

Caution cone at a construction site.When you are injured on the job and the responsible party is not your employer, you may file a personal injury lawsuit against that 3rd party for your losses. You will receive workers compensation while you are unable to work, and your workers compensation carrier will have to pay your medical expenses. In the lawsuit against the third party, you can include these expenses — compensation for wage loss and medical expenses — as part of your claim.  However, the workers comp carrier is going to file a lien against your lawsuit. What this basically means is that the workmans compensation carrier is seeking recovery of the money they paid to you, from the proceeds of your lawsuit.

Lien Is Paid from Lawsuit Award

This may sound a little unfair, and I think it is. However, the workers comp lien is reduced by usually 15-20% based on the fact that you have hired a lawyer to get a judgment. For example, I have an industrial injury lawsuit in Vicksburg Mississippi against a third party contractor with a workers compensation lien of approximately $40,000. The lien of $40,000 will be paid from the jury award or settlement with the third party contractor. But because we recovered the $40,000 for the workmans comp carrier, they are going to have to give us a reduction to reflect the amount the plaintiff pays in attorney’s fees. It makes sense – the workers comp carrier should not benefit from the proceeds of a lawsuit if they do not help with the cost of the attorney’s fees.

So this is how the lien works – the workmans comp carrier gets a refund, with a reduction based upon the fact that you have retained an attorney to get their money back for them. In addition, the workers comp carrier will pay an amount for future wage loss or medical expenses. When settling a 3rd party claim, you and your personal injury attorney are dealing with two issues — adequate compensation from the third party and the appropriate reduction in the workers compensation lien.