Disclaimer: This article is for educational purposes and does not constitute legal advice. Always consult a qualified attorney for guidance specific to your situation.
Detailed Answer
In Minnesota, if you receive workers’ compensation benefits for a workplace injury and later pursue a personal injury claim against a third party, the workers’ compensation insurer has a statutory lien on your settlement. This lien arises under Minnesota Statutes § 176.061, subdivision 4. The insurer’s subrogation right lets it recover benefits paid out of any third-party recovery you obtain.
Key Points of Minn. Stat. § 176.061, subd. 4 (revisor.mn.gov/statutes/cite/176.061):
- The insurer may file a written lien notice and must provide you and your attorney with a copy before you settle.
- The lien attaches to any judgment or settlement you receive from a third party.
- The insurer may recover the full amount of benefits it paid, subject to allowable reductions for attorney fees and costs.
Calculating the Lien: Minnesota follows a pro rata formula to allocate attorney fees and costs between you and the insurer. Under Minn. Stat. § 176.061, subd. 6, the insurer’s recovery is reduced by a proportional share of your attorney fees and litigation costs. For example, if you settle for $100,000, pay $30,000 in attorney fees and $2,000 in costs, the insurer’s lien of $50,000 is reduced by its share of fees and costs—roughly 48% of fees and 48% of costs—resulting in a net lien of about $23,040.
Negotiating Lien Reductions: You can negotiate with the workers’ compensation insurer to reduce the lien based on litigation risk, the strength of your third-party claim and equitable factors. A mutual agreement will speed up settlement distribution and reduce administrative delay.
Helpful Hints
- Request a detailed lien statement from the insurer early in negotiations.
- Review the allocation of your settlement carefully—ensure defense costs and attorney fees are correctly apportioned.
- Consider lien reduction if liability is unclear or damages are disputed.
- Obtain written lien resolution or stipulation before finalizing the personal injury settlement.
- Verify lien calculations against Minn. Stat. § 176.061 and check for any updates to the law.
- Keep accurate records of medical bills, wage loss benefits and correspondence with the insurer.