Disclaimer: This article is for informational purposes only and does not constitute legal advice. Consult a licensed attorney in Pennsylvania regarding your specific situation.
Detailed Answer
When an injured worker in Pennsylvania pursues a personal injury claim against a third party, the workers’ compensation insurer may assert a lien against any settlement or judgment to recover benefits already paid. Under the Pennsylvania Workers’ Compensation Act, 77 Pa. C.S. § 671 (link), the insurer’s lien covers medical benefits, wage‐loss payments, and funeral expenses it has paid or is obligated to pay on claims arising from the same work injury.
Key steps to coordinate benefits:
- Identify Covered Benefits: Review your workers’ compensation award to determine medical and wage-loss benefits paid or still owed. Gather documents showing the insurer’s expenditures.
- Notify the Insurer Early: Pennsylvania law requires that you inform the comp carrier once you file or settle a third-party claim. Send written notice of the lawsuit or settlement demand to the insurer’s claims office, ideally by certified mail, so it can assert its lien timely.
- Hold Settlement Funds in Escrow: To avoid disputes, place the gross settlement in a neutral escrow account until the insurer’s lien is quantified. This protects both you and the insurer.
- Quantify the Lien: Request an itemized statement from the carrier that specifies benefits paid or owing. The insurer must justify the lien amount. You may negotiate reductions for attorneys’ fees and litigation costs allocable to the third-party claim.
- File a Petition if Necessary: If you cannot agree on the lien amount, you can file a Petition to Determine Compensation before the Pennsylvania Workers’ Compensation Office of Adjudication under 77 Pa. C.S. § 443 (link). A workers’ compensation judge will resolve the dispute.
- Disburse Net Proceeds: After the insurer’s valid lien is paid from the escrow account, distribute remaining settlement funds for your third-party damages (pain and suffering, future lost wages, etc.). Ensure your attorney provides a final allocation statement.
Understanding Pennsylvania Law
Pennsylvania courts have held that an insurer’s right to reimbursement is equitable, not punitive. You do not repay more than the portion of your recovery attributable to losses covered by comp benefits. You may reduce the lien by a proportional share of attorneys’ fees and litigation costs (see Alexander v. Workers’ Compensation Appeal Board (ITX), 780 A.2d 775 (Pa. Cmwlth. 2001)).
Helpful Hints
- Keep detailed records of all workers’ compensation payments and related medical bills.
- Provide prompt written notice of your third-party lawsuit or settlement negotiations to the comp carrier.
- Work with your personal injury attorney to negotiate the insurer’s lien amount.
- Consider mediation or informal conference before filing a petition under Section 443.
- Retain an attorney familiar with both workers’ comp and personal injury subrogation issues.