Detailed Answer
In New Mexico, when an injured worker pursues a third-party personal injury claim (for example, against a negligent driver), the workers’ compensation insurer holds a statutory lien to recover benefits it paid. Under NMSA 1978, §52-5-24, the carrier may claim repayment of medical expenses and indemnity benefits from the gross settlement or judgment. Here’s how this affects your recovery:
- Gross Recovery Calculation: Add all compensation from the third-party claim—settlement amounts, verdict awards, and structured payments.
- Carrier’s Lien Amount: The insurer presents a lien statement listing medical bills, lost-wage benefits and other indemnity payments. It must follow the forms and timelines in NMSA 1978, §52-5-25 for subrogation notice.
- Attorney Fees Allocation: New Mexico courts allocate attorney fees proportionally. If you owe 33% of the gross recovery to your lawyer, one-third of the insurer’s lien is also deducted as a fee against the lien. This practice follows the “common fund” doctrine recognized by New Mexico case law.
- Net Recovery Distribution: From the gross settlement, subtract (a) your attorney fees, (b) the adjusted workers’ comp lien, and (c) litigation costs. You receive the remainder.
Example: You settle a car-accident claim for $90,000. Your attorney’s fee is 30% ($27,000). The carrier’s lien totals $20,000. The attorney fee applies pro rata: 30% of $20,000 is $6,000, leaving a net lien of $14,000. Net recovery equals $90,000 – $27,000 – $14,000 = $49,000.
Negotiations may reduce the lien. You or your attorney can request an independent audit of medical bills or argue that liened benefits overlap third-party damages already covered by your settlement. Courts encourage parties to reach stipulations before seeking a hearing in the Workers’ Compensation Administration.
Helpful Hints
- Obtain a detailed lien statement from the carrier immediately after settlement talks begin.
- Review the lien for errors—duplicate charges and unrelated treatments sometimes inflate the amount.
- Ask your attorney to allocate fees pro rata so you’re not overcharged on the carrier’s portion.
- Negotiate directly with the insurer or petition the Workers’ Compensation Administration for a lien hearing.
- Document all medical and wage-loss benefits paid to support or challenge the carrier’s subrogation claim.
Disclaimer: This article is for informational purposes only and does not constitute legal advice. Consult a qualified attorney to discuss your specific situation.