Disclaimer: This article is for general informational purposes only and does not constitute legal advice.
Detailed Answer
In New York, when an injured worker receives workers’ compensation benefits and then pursues a personal injury claim against a third-party, the workers’ compensation insurer has a statutory right to recover the benefits it paid. This is called a workers’ compensation lien or subrogation claim.
Statutory Basis: Under New York Workers’ Compensation Law (WCL) §29(6)(link), and §32(link), the carrier may claim repayment from any recovery you obtain from a third-party (for example, a negligent driver) for the same injury.
Key Steps and Effects
- Automatic Lien: The lien attaches automatically to your settlement or verdict proceeds.
- Notice Requirement: You must notify the workers’ compensation insurer in writing when you file a third-party lawsuit. Failing to do so may jeopardize their subrogation rights.
- Calculation of the Lien: The insurer may seek full reimbursement of benefits paid, subject to a pro-rata share of attorney’s fees and litigation costs under WCL §29(6).
- Allocation of Fees and Costs: New York law allows deduction of a reasonable share of your attorney’s fees and expenses before calculating the net lien amount.
- Settlement Approval: You should provide the insurer an opportunity to review proposed settlement terms. Often, the carrier issues a final Certificate of Compliance from the Workers’ Compensation Board to confirm satisfaction of the lien.
As a result, your gross recovery is first reduced by legal fees and costs, then by the lien amount. The remainder is your net award. Proper planning and communication with your attorney and the insurer can help protect your rights and maximize your recovery.
Helpful Hints
- Notify the workers’ compensation carrier in writing promptly after you file a third-party claim.
- Ask your attorney to negotiate a reduction of the lien if the amount seems excessive.
- Request a Certificate of Compliance from the Workers’ Compensation Board before closing your settlement.
- Keep detailed records of all benefit payments and communications with the insurer.
- Consider the impact of future medical expenses when evaluating your settlement offer.