Disclaimer: This article is for informational purposes only and does not constitute legal advice. Consult a licensed attorney for guidance on your specific situation.
Detailed Answer
When you recover damages from a third party for a work-related injury in Vermont, your employer or its workers’ compensation insurer has a statutory lien for the benefits it has paid or will pay. See 21 V.S.A. § 664. To verify and satisfy this lien before finalizing your personal injury settlement, follow these steps:
- Identify the Potential Lien
As soon as you learn there may be a third-party recovery, notify the workers’ compensation insurer and your employer in writing. Ask for a detailed lien statement showing all indemnity, medical, and vocational benefits paid or payable. - Obtain and Review the Lien Statement
Under Vermont law, the insurer must provide an itemized statement of benefits paid and anticipated. Compare the insurer’s figures against your own records. Check dates of payments, benefit rates, and attorney fees or interest the insurer claims. Discrepancies must be resolved promptly. - Dispute or Negotiate if Needed
If you believe the insurer’s lien is excessive or includes non-compensable items, you can negotiate directly or file a petition with the Department of Labor’s Office of Workers’ Compensation within a reasonable time. The Commissioner may arbitrate the dispute. See 21 V.S.A. § 664. - Draft Settlement Documents with Lien Holdback
When you settle your third-party claim, include clear language allocating part of the gross recovery to satisfy the workers’ compensation lien. Often, you’ll escrow the lien amount until full payment and release occur. This protects all parties and prevents future disputes over distribution. - Secure a Release of Lien
After the insurer is paid the agreed amount, obtain a written lien release or satisfaction document. This confirms the insurer relinquishes any further claim against your settlement proceeds. Keep a certified copy for your records. - Disburse Settlement Funds
Coordinate with your settlement administrator or escrow agent to pay the insurer directly from escrow. Then distribute the remainder of the funds to cover your attorney’s fees, medical bills, and your net recovery. - File Proof of Satisfaction (if required)
Although Vermont law does not always require court filing of lien satisfactions, check local court rules. If you filed an interpleader or protective petition, file the lien release to close the case officially.
Vermont law also governs how to prorate a recovery when multiple liens or medical subrogations exist. See 21 V.S.A. § 665 for rules on apportionment.
Helpful Hints
- Keep all correspondence with the insurer in writing and date-stamped.
- Maintain organized records of your medical and wage-loss benefits.
- Request the lien statement early—ideally before mediation or settlement negotiations.
- Consider a short holdback in escrow to cover any adjustment after payment.
- If the insurer delays, document phone calls and emails to establish your good-faith efforts.
- Consult a workers’ compensation attorney if the lien amount is substantial or contested.
- Verify whether local court rules require filing proof of lien satisfaction.