How Workers’ Compensation Liens Impact Your Personal Injury Recovery in South Dakota
When you pursue a personal injury claim against a third party after a work-related accident, any workers’ compensation benefits you received can create a lien on your recovery. Understanding how this lien works helps you estimate your net settlement or verdict.
Detailed Answer
Under South Dakota law, when an injured employee recovers from a third party, the employer or insurer that paid workers’ compensation benefits has a right to reimbursement. This right, called a lien, is governed by South Dakota Codified Laws §62-7-24. You can view the statute here: SDCL 62-7-24.
Key points under §62-7-24:
- The lien amount equals the total benefits paid for the specific injury.
- The lien is reduced by one-half of the reasonable attorney’s fees and litigation costs associated with obtaining the third-party recovery.
- The employer or insurer must assert its lien in writing before settlement or trial.
Example:
- Workers’ compensation benefits paid: $20,000
- Gross third-party recovery: $100,000
- Attorney’s fees (33% contingency): $33,000
- Litigation costs: $2,000
Under the statute, the employer’s lien is reduced by half of fees and costs: 50% of ($33,000 + $2,000) = $17,500. So their final lien is $20,000 – $17,500 = $2,500.
Distribution of funds:
- Gross recovery: $100,000
- Subtract attorney’s fees: $33,000
- Subtract litigation costs: $2,000
- Subtract adjusted lien: $2,500
Net to you: $62,500
Helpful Hints
- Notify your workers’ compensation insurer early when you file a third-party claim.
- Obtain a written acknowledgment of lien rights to avoid disputes at settlement.
- Track all litigation costs and attorney’s fees to ensure the lien reduction is accurate.
- Consider negotiating a lien waiver or reduction, especially if the recovery is modest.
- Work with a personal injury attorney experienced in handling workers’ comp subrogation.
Disclaimer: This article is for informational purposes only and does not constitute legal advice. Always consult a qualified attorney about your specific situation.