Disclaimer: This article is for informational purposes only and does not constitute legal advice.
Detailed Answer
When you receive workers’ compensation benefits for a workplace injury in New Hampshire, your employer’s insurer gains a right to recover those payments from any later personal injury settlement with a third party. This right, called a subrogation lien, ensures the insurer does not pay twice for the same medical costs or lost wages. Under NH RSA 281-A:17, the insurer may claim reimbursement up to the amount it paid in benefits. (See RSA 281-A:17.)
Key steps in how the lien operates:
- Filing notice. The insurer must notify you and the court of its lien before you finalize the settlement.
- Allocation of settlement. You and your attorney should allocate portions of the settlement to medical expenses, lost wages and pain-and-suffering. Only the amounts labeled as medical expenses or wage loss are subject to lien recovery. Courts generally do not allow subrogation against pain-and-suffering awards.
- Net recovery calculation. New Hampshire law permits the insurer to recover the lesser of (1) the total compensation paid or (2) the net amount you recover after deducting reasonable attorney’s fees and costs. This approach avoids unfairly penalizing injured workers by allowing them to use a share of the third-party award to cover legal expenses.
- Settlement approval. You cannot distribute your settlement funds until the workers’ compensation lien is resolved—either paid off, negotiated down or approved by the court.
Example: Jane suffers a back injury at work and receives $20,000 in comp benefits for medical bills. She later sues a negligent third party and settles for $100,000. After attorney’s fees and costs of $30,000, her net recovery is $70,000. Under RSA 281-A:17, the insurer may claim up to $20,000 or the net $70,000—whichever is less—so the lien is $20,000.
Helpful Hints
- Review the insurer’s lien statement carefully. Confirm the benefits paid match your records.
- Allocate settlement proceeds. Clearly designate medical and wage-loss components to limit the insurer’s recovery.
- Negotiate reduction. Many insurers will reduce liens if the net recovery is small or if medical expenses significantly exceed settlement amounts.
- Meet deadlines. The insurer must file its lien notice before settlement; you must object or negotiate promptly.
- Get professional guidance. A workers’ compensation attorney can help you navigate subrogation rules and protect your net recovery.