Detailed Answer
Under South Dakota law, when an injured employee receives workers’ compensation benefits and later settles a personal injury claim against a third-party tortfeasor, employers or insurers have a statutory right to reimbursement. This right arises under SDCL §62-7-3, which grants subrogation, and SDCL §62-7-9, which governs liens and reimbursement limits. Employers can assert a lien to recover the amount of compensation already paid, including medical and wage-loss benefits.
First, the employer or its insurance carrier files a notice of lien. They must prove the compensation paid and the connection to the work-related injury. Once a settlement is reached with the third party, the carrier may demand reimbursement. However, SDCL §62-7-9 limits recovery to the portion of the net settlement after attorney fees and litigation costs. For example, if you settle for $100,000, pay $30,000 in attorney fees and $5,000 in costs, the carrier can only claim from the remaining $65,000.
South Dakota courts also allow negotiation over how the settlement is allocated among categories such as medical expenses, lost wages, and pain and suffering. A clear allocation can reduce the lien amount because the carrier is only entitled to benefits it actually paid. If parties cannot agree, either side can seek a court order for a fair allocation or lien reduction.
Key statutes:
- SDCL §62-7-3 (subrogation rights for employers)
- SDCL §62-7-9 (lien limits and reimbursement procedure)
Helpful Hints
- Review the notice requirements for asserting a workers’ compensation lien under SDCL §62-7-9.
- Keep detailed records of all benefits paid, including dates and amounts.
- Work with counsel to allocate settlement proceeds for optimal lien reduction.
- Confirm attorney fees and costs before calculating the carrier’s lien share.
- Consider filing a motion in circuit court to approve settlement allocation and resolve lien disputes.
- Consult a qualified personal injury attorney familiar with South Dakota workers’ compensation liens.
Disclaimer: This article is educational and does not constitute legal advice. For specific guidance, consult a licensed attorney in South Dakota.