Disclaimer: This article is for informational purposes only and does not constitute legal advice. Consult an attorney to discuss your specific situation.
Detailed Answer
In New Jersey, when an injured worker receives workers’ compensation benefits and later recovers damages through a third-party personal injury lawsuit, the workers’ compensation carrier is entitled to reimbursement of benefits paid under the principle of subrogation. See N.J.S.A. 34:15-40. Below are the steps necessary to resolve such a lien efficiently.
- Identify the Workers’ Compensation Lien
Obtain copies of the workers’ compensation award or order showing benefits paid to date. Confirm the carrier’s lien amount and any pending payments. - Review the Compensation Award & Benefits Paid
Examine records of medical expenses, lost wages, and other benefits. Verify the total monetary value to date, including weekly indemnity and medical payments. - Calculate the Lien Amount
Under N.J.S.A. 34:15-40, the carrier’s lien equals benefits paid, less a statutory fee (typically 5%). For example, if $15,000 in benefits were paid, the lien would be $14,250 after a 5% reduction. - Negotiate a Reduction or Allocation
Discuss settlement allocation with the carrier. You may seek to allocate portions of the recovery to non-lien items (e.g., pain and suffering) to reduce the carrier’s share. - Petition the Workers’ Compensation Division for Approval
File a Petition for Approval of Compromise or Settlement with the New Jersey Department of Labor & Workforce Development. Include a proposed lien resolution and joint stipulation. - Obtain Court or Board Approval
The Division (or Compensation Court) must approve the settlement and lien resolution. Once approved, it issues an order directing payment to the carrier. - Finalize the Personal Injury Settlement
Upon approval, disburse funds: pay the workers’ compensation carrier directly, satisfy attorneys’ fees, then distribute the net recovery to the client.
Helpful Hints
- Review statutes early: The subrogation statute (N.J.S.A. 34:15-40) imposes strict timelines.
- Keep detailed records of all benefits paid, medical bills, and lost-wage calculations.
- Engage counsel familiar with both workers’ compensation and personal injury law for dual-complexity cases.
- Negotiate proactively: Early discussions with the carrier may reduce litigation and administrative costs.
- File your Petition for Approval promptly to avoid delays in settlement disbursement.