Disclaimer: This article is for informational purposes only and does not constitute legal advice.
Detailed Answer
Overview of Workers’ Compensation Liens in Massachusetts
When an employee suffers a workplace injury, the employer’s insurer pays benefits for medical care and lost wages under M.G.L. c. 152. If the injured worker later recovers damages through a third-party personal injury claim, the insurer can assert a subrogation lien to recover benefits paid. Under M.G.L. c. 152, § 15, the insurer steps into the injured worker’s shoes and may seek reimbursement from any third-party settlement or verdict.
Calculating the Lien Amount
The insurer’s lien equals the total compensation benefits paid (medical bills plus wage replacement). However, the insurer must share in attorneys’ fees and litigation costs on a pro rata basis. For example, if you pay 30% of your settlement to your attorney, the insurer’s recoverable amount reduces by 30%. This reduction follows established Massachusetts practice and case law interpreting § 15.
Timing and Enforcement
The insurer must file a lien enforcement action in Superior Court within 20 days after receiving written notice of your settlement or verdict. See M.G.L. c. 152, § 11 (notice requirement). If the insurer misses this deadline, it risks losing its subrogation right entirely.
Impact on Your Net Recovery
Your personal injury recovery typically follows this order:
- Gross settlement or verdict amount.
- Deduct attorneys’ fees and litigation costs.
- Pay the workers’ compensation lien (reduced by your share of fees and costs).
- The remainder is your net recovery.
For instance, if you settle for $100,000, pay $30,000 in fees and $5,000 in costs, and the insurer’s benefit payments total $40,000, its lien reduces by 35% (your share of fees and costs), leaving an enforceable lien of $26,000. You would receive $39,000 net ($100,000 − $30,000 − $5,000 − $26,000).
Helpful Hints
- Notify the workers’ comp insurer in writing as soon as you engage with a third party. Early notice preserves lien rights and avoids disputes.
- Keep detailed records of all medical bills and wage-loss payments the insurer covered. Accurate totals prevent overcharges.
- Review your fee agreement. A lower attorney fee percentage reduces the insurer’s lien reduction and may increase your net recovery.
- Negotiate lien waivers or reductions. Insurers sometimes agree to reduce liens to speed up settlement.
- Confirm lien enforcement deadlines. Missing a 20-day deadline under § 11 can extinguish the insurer’s claim.