Detailed Answer: Workers’ Compensation Liens in Michigan Personal Injury Settlements
When you sustain a work-related injury in Michigan, you can pursue benefits through workers’ compensation while also filing a personal injury lawsuit against a negligent third party. If your case settles or you win at trial, the workers’ compensation insurer may assert a lien under Michigan law to recover benefits it paid on your behalf. Understanding how this lien works helps you plan your settlement strategy.
1. Subrogation and Reimbursement
Under MCL 418.827, the workers’ comp insurer has subrogation rights. The insurer can recover the full amount of benefits it paid from your third-party settlement or verdict. You must set aside funds from the recovery to reimburse the carrier.
2. Allocation of Attorney Fees and Costs
Michigan law governs how you and the insurer share attorney fees. MCL 418.831 requires that the first 15% of your gross recovery covers your attorney’s fees. Any additional fees and litigation costs split between you and the carrier based on how much each recovered. This allocation can affect your net recovery.
3. Notice Requirements to Preserve Lien Rights
You must notify the workers’ comp insurer of any third-party claim within 45 days of hiring an attorney or filing suit, as stated in MCL 418.835. Failing to provide timely notice may expose you to liability for additional costs or risk losing lien rights.
Hypothetical Example
Imagine Mary suffers a back injury at work and receives $30,000 in comp benefits. She then settles her personal injury claim against a negligent motorist for $180,000. Her attorney’s fee is 33.3% of the recovery, or $59,940. Pursuant to MCL 418.831, $27,000 (15% of $180,000) covers her attorney’s fees first. The remaining $153,000 is subject to the insurer’s $30,000 lien under MCL 418.827, leaving Mary with $123,000 before costs.
Disclaimer
This article is for educational purposes only and does not constitute legal advice. Consult a qualified attorney to discuss your specific situation.
Helpful Hints
- Ask your attorney for a detailed breakdown of fee allocation under MCL 418.831.
- Confirm the exact lien amount with your workers’ comp insurer before settlement.
- Submit your third-party claim notice within 45 days to protect lien rights (MCL 418.835).
- Negotiate who pays litigation costs and how they split between you and the insurer.
- Keep records of all comp benefits paid and related correspondence.