Resolving Workers’ Compensation Liens on Personal Injury Claims in Texas

Disclaimer: This information is for educational purposes only and does not constitute legal advice.

Detailed Answer

Step 1: Confirm the Existence and Amount of the Lien

Under Texas Labor Code §417.003, an employer or workers’ compensation insurance carrier may assert a lien against any recovery in a third-party personal injury claim. To confirm the lien, send a written request to the carrier asking for a lien and medical information report (LCMI). This report details medical expenses, compensation paid, and the carrier’s claimed lien amount.

Step 2: Provide Written Notice Before Suit

To preserve the lien, Texas Labor Code §417.004 requires you to deliver written notice to the lienholder and all known parties at least 45 days before filing a personal injury suit. Include a description of the claim, the name of the injured worker, and your intent to file suit. Failure to give proper notice waives the carrier’s lien rights.

Step 3: Review and Organize Documentation

Gather all relevant records: medical bills, compensation benefit statements, LCMI, and correspondence with the carrier. Organize these documents to support negotiations or, if necessary, a court hearing to determine the lien’s validity and amount.

Step 4: Negotiate the Lien Amount

Carriers often agree to reduce their lien in exchange for prompt payment or a percentage of the gross recovery. Present the carrier with your damage analysis and settlement proposal. Use the organized documentation to argue for a fair reduction, focusing on overlapping benefits or unpaid medical expenses.

Step 5: File a Lien Determination Suit if Negotiation Fails

If parties cannot agree, either side may file an action in the appropriate Texas court to determine the lien under Texas Labor Code §417.003. The court will:

• Review medical expenses and compensation benefits paid;
• Determine the reasonable amount of the lien;
• Allocate any settlement or judgment between past medical expenses and future care.

Step 6: Obtain and Enforce a Court Order

Once the court issues an order specifying the lien amount, use that order to:**

• Instruct the settlement agent or clerk to disburse funds accordingly;
• Ensure the workers’ compensation carrier is paid before you disburse any net proceeds to the client;
• File the order with the court and serve it on the lienholder to prevent further challenges.

Following these steps ensures compliance with Texas lien statutes and protects your client’s recovery.

Helpful Hints

• Always track the 45-day notice deadline under Texas Labor Code §417.004 (LA.417.004).
• Request an updated LCMI early to identify all claimed amounts.
• Prepare a detailed settlement budget showing net recovery after lien payment.
• Consider mediation to resolve lien disputes quickly and cost-effectively.
• Maintain clear communication with the carrier to avoid surprises at settlement.
• Keep copies of all correspondence and court filings in a centralized file.
• Consult a qualified attorney if statutory deadlines or procedural rules are unclear.