Detailed Answer
In Vermont, a workers’ compensation insurer has a statutory right to recover benefits paid when an injured worker collects damages from a third-party personal injury claim. To prevent double recovery, the insurer enforces a lien or exercises subrogation against your settlement.
Statutory Basis for Coordination
Under 21 V.S.A. § 641, your employer (and its insurer) holds a lien on third-party recoveries to match benefits already paid. Vermont law also allows insurers to seek reimbursement directly from gross recoveries. See 21 V.S.A. § 645 on third-party actions.
Steps to Coordinate Benefits
- Notify the Insurer Early: Inform your workers’ comp insurer as soon as you file a third-party claim. Prompt notice preserves lien rights and avoids delays.
- Request a Lien Statement: Ask the insurer for a detailed statement of its lien, including all benefits paid and related expenses.
- Structure the Settlement: Allocate your settlement to medical expenses, lost wages, pain and suffering, and future costs. Clear allocation can limit the insurer’s subrogatable share.
- Negotiate the Lien Amount: Pursue a reasonable reduction. Vermont courts may cap subrogation to prevent unfair double recovery.
- Draft a Joint Release: Include language that protects both parties. A precise release finalizes allocation and satisfies the lien.
- Obtain a Lien Waiver or Credit: After settlement, secure a waiver or credit letter confirming the insurer has no further claim on your proceeds.
Sample Allocation in a Hypothetical Case
Suppose you settle for $100,000. You allocate $40,000 to medical costs, $30,000 to lost wages, $20,000 to pain and suffering, and $10,000 to future treatment. The insurer’s lien applies only to the medical and wage-loss portions. You negotiate the lien down to $35,000 and net $65,000.
Disclaimer: This article provides general information under Vermont law. It does not constitute legal advice. Consult a qualified attorney for advice tailored to your situation.
Helpful Hints
- Keep all communications with the insurer in writing.
- Review your workers’ comp policy’s subrogation provisions early.
- Involve your personal injury attorney in lien negotiations.
- Document your settlement allocation in writing.
- Retain any credit or waiver letters from the insurer.