Disclaimer
This article is for educational purposes only and does not constitute legal advice. Consult a qualified attorney before making decisions.
Detailed Answer
When you suffer a workplace injury in New Jersey caused by a third party, you can pursue two avenues: workers’ compensation benefits and a personal injury claim. New Jersey law requires coordination to prevent double recovery. Under N.J. Stat. § 34:15-38, your employer’s workers’ compensation insurer has a lien on any third-party recovery to the extent of benefits paid.
1. Filing Both Claims
You file a workers’ compensation claim no later than two years from the injury date. Separately, you file a third-party personal injury lawsuit against the negligent party. Notify your workers’ compensation carrier in writing that you intend to pursue third-party damages.
2. Statutory Lien and Reimbursement
The insurer’s lien equals the total workers’ compensation benefits paid. N.J. Stat. § 34:15-38 entitles the insurer to reimbursement from your net recovery after attorney’s fees and litigation costs. Courts typically allow the insurer to recover up to 50% of the net settlement or verdict, reflecting a pro rata share of legal expenses.
3. Calculating the Lien
- Gross third-party recovery (settlement or verdict)
- Minus attorney’s fees and litigation expenses
- = Net recovery
- Insurer’s lien = lesser of total benefits paid or net recovery
- Remaining funds go to the injured worker
4. Settlement Process
Before finalizing any settlement, your attorney must serve the workers’ compensation insurer with notice and a copy of the proposed settlement. The carrier then has 30 days to assert its lien or negotiate a reduced amount. Many carriers are willing to accept a negotiated lien to expedite your recovery.
5. Lien Waivers and Escrow
Once the insurer confirms its lien amount, set aside those funds in escrow at closing. After disbursement to the insurer, you receive the balance. Obtain a written lien waiver from the carrier to close the matter.
Helpful Hints
- Notify your workers’ compensation carrier in writing as soon as you file a third-party claim.
- Keep detailed records of all benefits paid and legal expenses incurred.
- Work with an attorney experienced in both workers’ compensation and personal injury coordination.
- Request a lien statement from the insurer showing benefits paid and any credits.
- Negotiate with the carrier to allocate a fair share of attorney’s fees.
- Escrow the lien portion at settlement to avoid delays in disbursement.
- Obtain a final lien waiver before closing your case.