Understanding Workers’ Compensation Liens in Montana

When you’re injured at work in Montana and later pursue a personal injury claim against a third party, your workers’ compensation insurer may assert a lien on any settlement or judgment. This lien protects the insurer’s right to recoup benefits it has paid on your behalf. Below, we explain how liens work under Montana law and how they can affect the net recovery you actually receive.

Detailed Answer

1. Subrogation and Lien Rights

Montana law grants a workers’ compensation insurer a right of subrogation, meaning the insurer can step into your shoes to recover benefits paid from any third-party liability recovery. The insurer perfects this right by filing a lien under Mont. Code Ann. § 39-71-414.
(Mont. Code Ann. § 39-71-414)

2. Calculating Your Final Recovery

Once you reach a settlement or obtain a verdict, the process typically follows these steps:

1. Gross Recovery: Total amount obtained from a third party.
2. Attorney Fees and Costs: Montana allows attorneys to apportion fees and costs between your workers’ compensation claim and personal injury claim. For example, if you recover $100,000 and pay 30% in fees and $5,000 in costs, your net is $65,000.
3. Workers’ Compensation Lien: The insurer’s lien is enforceable after fees and costs are deducted. If the insurer paid $20,000 in benefits, it can claim up to $20,000 of your remaining recovery.
4. Net to You: In this scenario, you would receive $45,000 ($100,000 – $30,000 fees – $5,000 costs – $20,000 lien).

3. Negotiating and Reducing Your Lien

Montana law encourages compromise of the insurer’s lien when repayment would cause undue hardship or when the insurer’s legal expenses outweigh recovery. Under Mont. Code Ann. § 39-71-613, you can ask the Department of Labor & Industry or negotiate directly with the insurer to reduce the lien.
(Mont. Code Ann. § 39-71-613)

Helpful Hints

• Notify the workers’ compensation insurer early when you file a third-party claim.
• Document all benefits paid to ensure accurate lien calculations.
• Consider negotiating the lien amount if full reimbursement creates financial hardship.
• Review how your attorney allocates fees and costs between claims to maximize your net recovery.
• Consult a qualified Montana attorney before finalizing any settlement.

Disclaimer: This article is for informational purposes only and does not constitute legal advice. Consult a qualified attorney to discuss your specific situation.