Understanding Michigan Workers’ Compensation Liens on Personal Injury Claims
If you were injured on the job and received workers’ compensation benefits, your employer or its insurer may have a lien on any personal injury recovery against a third party. Resolving this lien correctly ensures you keep your settlement and protects you from future claims. Below is a step-by-step guide under Michigan law.
Detailed Answer
1. Identify and Assess the Lien
Under the Workers’ Disability Compensation Act, any employer or insurer that pays benefits has a right to recover those amounts from a third-party recovery. See MCL 418.827. This lien covers medical bills, wage loss, and disability benefits tied to the same injury.
2. Serve Proper Notice
Before you file a personal injury claim, Michigan law requires you to notify the employer and its workers’ compensation insurer in writing by registered or certified mail. The notice must describe the nature of your third-party claim and identify you as the injured worker. See MCL 418.847. Proper notice preserves the lien and starts the clock on the employer’s right to intervene.
3. Employer/Insurer Response and Intervention
After receiving notice, the employer or insurer has 30 days to intervene in your lawsuit. If they intervene, they become a party and can protect their lien directly in court. If they do not intervene, they retain the lien but may forego certain court rights.
4. Negotiate or Petition for Lien Determination
Often, parties negotiate a lien reduction or waiver before trial or settlement. If negotiations stall, either you or the lienholder can file a petition with the Michigan Workers’ Compensation Board to determine the lien amount. See MCL 418.841. The Board will issue an order specifying the employer’s share.
5. Escrow or Interpleader of Funds
When you settle or obtain a judgment, set aside the lien amount in escrow or file an interpleader action. This protects you from competing claims and ensures the correct amount is preserved while the lien is finalized.
6. Obtain Board Order and Allocate Recovery
Once the Board issues its lien determination, distribute settlement funds according to that order. First, pay the workers’ compensation lien, then allocate attorney fees and case costs, and finally disburse your net recovery.
Helpful Hints
- Start lien resolution early to avoid trial delays.
- Double-check that your written notice meets MCL 418.847’s formal requirements.
- Keep detailed records of all workers’ compensation benefits received.
- Consider a mediator if lien negotiations stall.
- Escrow funds quickly after settlement to prevent disputes.
- Review the Board’s order carefully before disbursing settlement proceeds.
Disclaimer: This article is for educational purposes only and does not constitute legal advice. Consult a qualified attorney to address your specific situation.