Detailed Answer
In South Dakota, workers’ compensation laws grant an employer or insurer the right to recover benefits paid when an employee secures a third-party personal injury settlement. This right—known as “subrogation”—is governed by SDCL 62-4-17 and 62-4-18.
1. Confirm Eligibility and Coverage
First, verify that the injured worker received workers’ compensation benefits for the accident. Review benefit records, insurance documents and claim files. Confirm dates, types of benefits paid and total amounts.
2. Notify the Insurer of Third-Party Action
Under SDCL 62-4-17, the employee must provide written notice to the employer or insurer within 30 days after filing a lawsuit against a third-party tortfeasor. (See SDCL 62-4-17.) This notice preserves the employer’s subrogation lien.
3. Request a Lien Statement
Ask the insurer for a detailed lien statement or “subrogation demand letter.” This document should list total benefits paid, any accrued interest, and allowable adjustments such as the pro rata share of attorney fees and costs.
4. Calculate the Net Recovery and Lien Amount
South Dakota law allows a reduction of the lien based on the proportionate share of litigation expenses. See SDCL 62-4-18. Subtract the employee’s share of attorney fees and costs from the total recovery, then apply the lien percentage.
5. Allocate Settlement Funds and Satisfy the Lien
At settlement, designate sufficient funds to cover the lien amount. Ensure the settlement agreement or stipulation explicitly references the subrogation payment. Issue payment directly to the insurer or its claims administrator.
6. Obtain a Lien Release and File Proof of Satisfaction
After payment, request a written lien release from the insurer. File proof of satisfaction with the court handling the personal injury case, if required. Keep copies for your records.
Helpful Hints
- Keep detailed records of benefits paid and all correspondence with the insurer.
- Request the lien statement early in settlement talks to avoid last-minute issues.
- Understand how attorney fees and litigation costs affect your net recovery.
- Confirm and meet all statutory deadlines under SDCL 62-4-17.
- Consider having a qualified attorney review the lien calculation and settlement documents.
Disclaimer: This article is for informational purposes only and does not constitute legal advice.