Disclaimer: This article provides general information about Indiana law and does not constitute legal advice. Consult a qualified attorney for guidance on your specific situation.
What Is a Workers’ Compensation Lien?
When you receive workers’ compensation benefits after a workplace injury, your employer (or its insurer) may seek to recover those benefits if you later win money from a third party. This right to repayment is called a subrogation lien. It prevents injured workers from receiving a double recovery.
How Indiana Law Treats Workers’ Compensation Liens
Indiana Code § 22-3-2-16 governs subrogation. It allows the employer or insurer to claim the amount it paid, but only after deducting costs and attorney fees from your third-party recovery. The lien cannot exceed the net amount you actually receive.
Calculating Your Net Recovery
Indiana uses a proportional approach. The steps are:
- Determine your gross third-party recovery (settlement or judgment).
- Subtract attorney fees and litigation costs.
- Calculate the ratio of those fees and costs to the gross recovery.
- Apply that ratio to the total workers’ compensation benefits paid to get the reduced lien amount.
- The insurer receives this reduced amount; you keep the remainder.
Hypothetical Example
Imagine you settle a third-party claim for $100,000. Your attorney’s fee is 30% ($30,000), and costs total $5,000. The net recovery is $65,000. Your employer paid $50,000 in workers’ compensation benefits.
- Fee and cost ratio: ($30,000 + $5,000) ÷ $100,000 = 35%
- Reduced lien: $50,000 × (1 – 35%) = $32,500
- Your final award: $65,000 – $32,500 = $32,500
Key Statutes
- Indiana Code §22-3-2-16 (Subrogation).
Helpful Hints
- Keep detailed records of all benefits, fees, and costs related to your claim.
- Review your fee agreement to confirm how attorney fees and costs are allocated.
- Ask your attorney for a lien calculation before finalizing any settlement.
- Negotiate liens if the recovery is low or if extraordinary costs arose from your case.
- Consult an attorney experienced in both workers’ compensation and personal injury law to protect your net recovery.