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Disclaimer: This article is for informational purposes only and does not constitute legal advice.

Detailed Answer

In Utah, when an injured worker receives workers’ compensation benefits and later recovers damages from a third-party tortfeasor, the employer or its insurer holds a lien on that recovery. The lien equals the amount of compensation benefits paid, including medical treatment costs and wage-loss benefits. See Utah Code §34A-2-418.

Key steps in calculating the impact on your final net recovery:

1. Determine gross third-party recovery. For example, a $100,000 settlement with a negligent driver.
2. Subtract attorney fees and litigation costs. If fees total 33% ($33,000), the remaining net recovery is $67,000.
3. Compute the lien amount relative to the total recovery. If you received $30,000 in workers’ comp benefits, the lien is capped at that amount but is applied proportionally. The formula Utah follows is: (Workers’ comp benefits ÷ Gross recovery) × Net recovery = Lien share.
4. Calculate proportional reimbursement. Using our example: ($30,000 ÷ $100,000) × $67,000 = $20,100. That is the amount paid to satisfy the lien.
5. Disburse the balance to the injured worker. From $67,000 net, paying $20,100 leaves $46,900 for the claimant.

If the employer fails to give timely written notice of its lien claim (often within 120 days after learning of the third-party action), Utah law may limit recovery to 50% of the net proceeds. Always verify notice deadlines to protect full lien rights.

Helpful Hints

• Track all workers’ comp payments (medical and lost wages) to calculate the lien precisely.
• Review your third-party settlement agreement to allocate portions to medical bills versus non-medical damages.
• Ensure the employer or insurer receives timely notice of your third-party claim to avoid lien reductions.
• Negotiate lien reductions if the full lien amount exceeds your net recovery or if benefits were paid for disputed expenses.
• Consult a personal injury attorney experienced with Utah’s subrogation and lien statutes to maximize your net award.