Disclaimer: This article provides general information and is not legal advice.
Detailed Answer
Under Utah law, a workers’ compensation insurer (or employer) gains a statutory lien on any third-party recovery to recoup benefits paid. You must verify and satisfy this lien before distributing a personal injury settlement. Follow these key steps:
1. Identify the Statutory Lien
Utah Code § 34A-2-906 establishes the lien on third-party recoveries. Section 34A-2-107 governs the employee’s reimbursement duty. Obtain a written notice from the claims administrator confirming the lien and citing these sections:
- Utah Code § 34A-2-906 (Lien on Recovery)
- Utah Code § 34A-2-107 (Reimbursement by Employee)
2. Obtain a Detailed Lien Statement
Request an itemized statement that lists:
- Dates and types of benefits paid (indemnity, medical, mileage).
- Payment amounts and any interest or fees.
- Remaining balance due.
3. Verify Calculation Accuracy
Cross-check the insurer’s figures against your client’s records and medical bills. Adjust for any third-party credits such as Medicare or Medicaid subrogation.
4. Negotiate Reduction (If Feasible)
In many cases, you can negotiate a reduced lump-sum payoff. Document any agreed‐upon reduction or payment plan in writing.
5. Incorporate Lien Payment in Settlement Documents
Draft the settlement agreement to specify how and when the lienholder will be paid. Common methods include:
- Escrow arrangement with the settlement fund.
- Direct payment from the settlement administrator.
6. Obtain Judicial Approval (If Required)
If the settlement involves minors or requires court oversight, submit a stipulation explaining lien satisfaction. Secure an order approving disbursement to clear the lien.
7. Make Timely Payment
Issue payment for the full agreed amount. Adhere to deadlines in the lien statement or any court order to avoid additional interest.
8. Secure and File Lien Release
Once paid, request a formal release or satisfaction document. File this release with the court and, if applicable, the county recorder to clear any public record liens.
Helpful Hints
- Start the lien verification process early to prevent settlement delays.
- Maintain detailed records of all lien communications and payments.
- Watch for federal liens (e.g., Medicare) that may attach to the recovery.
- Consider holding settlement funds in escrow until all releases are secured.
- Consult with a qualified attorney to review complex lien disputes.