Detailed Answer
Coordinating benefits between a workers’ compensation insurer and a personal injury settlement in Michigan involves understanding your insurer’s subrogation rights, allocating settlement proceeds properly, and negotiating lien amounts fairly. By following Michigan law and best practices, you can minimize disputes and ensure full compliance.
1. Understand Subrogation Rights Under MCL 418.827
Under Michigan’s Workers’ Disability Compensation Act, the insurer that pays your wage-loss and medical benefits has a right to recover those payments from any third-party tort recovery. See MCL 418.827. This right, called subrogation, means the insurer steps into your shoes to claim repayment from the at-fault party.
2. Provide Timely Notice and Obtain a Lien Statement
You must notify your workers’ compensation insurer when you file a third-party personal injury claim. The insurer then has a statutory period (typically 60 days) to file a lien statement detailing the benefits it has paid. If you settle without that statement, a court may enforce the full amount paid by the insurer.
3. Allocate Settlement Proceeds Correctly
When negotiating with the tortfeasor’s insurer or at trial, clearly allocate parts of your settlement or verdict to:
- Past and future medical expenses (which reimburse medical benefits paid and expected costs);
- Lost wages (which reimburse wage-loss benefits paid and future wage loss); and
- Pain and suffering (which is typically not subject to subrogation).
Proper allocation helps reduce disputes over what portion of the settlement the workers’ compensation insurer can claim.
4. Negotiate the Lien Amount and Attorney Fees
MCL 418.827 allows a court to reduce the insurer’s recovery to reflect your attorney’s fees and litigation costs attributable to the subrogation portion. In practice, claimants often negotiate a discount or pro-rata share of fees so you and the insurer share costs fairly.
5. Resolve Disputes Through Mediation or Court
If you cannot agree with the insurer on lien calculation, you can:
- Pursue mediation under MCR 2.411 to reach a settlement on the lien amount; or
- File a motion in the workers’ compensation court to determine a reasonable portion of the settlement subject to subrogation.
Helpful Hints
- Notify your workers’ compensation carrier immediately when you file a third-party claim.
- Request a detailed lien statement in writing and keep copies of all benefit records.
- Allocate settlement proceeds among medical costs, lost wages, and pain and suffering.
- Negotiate lien reductions based on your attorney’s fees and case complexity.
- Consider mediation or court intervention early to avoid surprises at closing.
Disclaimer: This article provides general information about Michigan law. It does not constitute legal advice. Always consult a qualified attorney for guidance on your specific situation.