How a Workers’ Compensation Lien Affects Your Personal Injury Settlement in Maryland
Detailed Answer
When you sue a third party for a work-related injury in Maryland, your employer’s workers’ compensation insurer may have a lien on your personal injury recovery. Under Maryland Insurance Article §9-616, the insurer can seek reimbursement for benefits it paid for your medical treatment and wage loss.
Statutory Framework
Maryland Insurance Article §9-616 establishes that an insurer that pays workers’ compensation benefits has a right to reimbursement from any third-party settlement or judgment. The lien covers medical benefits and indemnity (wage-loss) payments. The insurer must file notice of its claim before the case resolves.
Notice Requirements
To preserve its lien, the insurer must send a written claim to you and your attorney before or within 30 days after it hears of the third-party action. Failing timely notification can forfeit the lien under Maryland case law.
Calculating the Lien and Reductions
The lien amount generally equals the total benefits paid. However, Maryland courts allow you to deduct a pro rata share of your attorney’s fees and related costs from the lien. For example, if you settle for $100,000 and pay $20,000 in fees and costs, you may reduce the lien by 20%.
Settlement Allocation
When you negotiate a settlement, you and your attorney should allocate the recovery among medical expenses, lost wages, and pain and suffering. Proper allocation can minimize the lien’s impact. Funds allocated to non-lienable damages—like pain and suffering—remain with you.
Negotiating or Challenging the Lien
You can negotiate with the insurer to reduce or waive its lien, especially if the claim seems excessive or notice was late. In some cases, you can petition the Workers’ Compensation Commission or a Maryland court to resolve disputes over lien amount.
Disclaimer: This article provides general information and does not constitute legal advice.
Helpful Hints
- Review all lien notices promptly to preserve your rights.
- Work with your attorney to allocate the settlement strategically.
- Document fees and costs for pro rata deductions.
- Consider negotiating the lien before finalizing a settlement.
- Consult a qualified Maryland attorney for guidance specific to your case.