Detailed Answer
When an injured worker in Indiana brings a personal injury claim against a third party—such as a negligent driver—the employer or insurer that paid workers’ compensation benefits may assert a lien seeking reimbursement. Under Indiana law, resolving this lien involves several clear steps:
- Identify the Lien.
Review all benefit records and notices from the employer’s workers’ compensation insurer. The lien arises by operation of law under Indiana Code § 22-3-2-13, which grants the employer a right of subrogation to recover compensation benefits paid from any third-party recovery. - Notify All Parties.
Indiana Rule of Trial Procedure 24(B) requires that the lienholder be joined or notified in any action in which the injured worker seeks recovery. Provide formal notice of the third-party lawsuit or settlement negotiations to the employer or insurer asserting the lien. - Calculate the Lien Amount.
The lien equals the full amount of benefits paid, including medical expenses and lost wages. Under § 22-3-2-13, you may deduct attorney fees and litigation costs apportioned to the third-party claim. Keep clear records of all payments and legal expenses. - Negotiate a Settlement.
Most liens resolve by agreement. The parties often negotiate a percentage reduction to reflect the injured worker’s attorney fees. For example, if the total recovery is $100,000 and the lien is $30,000, the employer may accept $25,000 after negotiation. Document any agreement in writing. - Obtain Court Approval.
If the lienholder does not object, a court order approving the settlement can bind all parties. Indiana Code § 22-3-4-8 outlines that the employer must be paid before distribution of net proceeds. Link: IC 22-3-4-8. - Distribute Funds.
After approval, the settlement funds are disbursed. Pay the agreed lien amount directly to the employer or insurer. The remainder goes to the injured worker and their attorney according to fee agreements. - File a Lien Release.
Once paid, obtain a written lien release or satisfaction from the employer/insurer. File it with the court to close the lien and clear title to any funds.
Disclaimer: This article is for informational purposes only and does not constitute legal advice. Consult a qualified attorney about your specific situation.
Helpful Hints
- Always track benefit payments and communications with the insurer to verify lien amounts.
- Early notice to the lienholder reduces disputes and delays in settlement.
- Consider mediation if negotiations over the lien stall.
- Confirm that attorney fees are allocated correctly between workers’ comp and third-party claims.
- Keep a copy of the final court order showing lien satisfaction in your records.