Disclaimer: This article does not constitute legal advice. It is for informational purposes only.
Detailed Answer
Overview of Subrogation Rights
When you receive workers’ compensation benefits for a workplace injury, your employer’s insurance carrier gains subrogation rights against any third party responsible for your injury. This ensures the carrier can recoup benefits paid from any personal injury settlement under New York law.
Statutory Framework under New York Law
New York Workers’ Compensation Law § 29 establishes the carrier’s lien on third-party recoveries. It allows a carrier to recover the amount of compensation benefits paid, subject to equitable allocation of attorney’s fees and litigation costs.
See WCL § 29: https://www.nysenate.gov/legislation/laws/WKC/29
Section 32 requires carriers to file a notice of lien to preserve their subrogation rights.
See WCL § 32: https://www.nysenate.gov/legislation/laws/WKC/32
Calculating the Carrier’s Subrogation Lien
The carrier can recover the lesser of:
- The total benefits paid and payable; or
- The net third-party recovery (after attorney’s fees and costs) multiplied by the ratio of benefits paid to total damages.
This formula ensures the carrier recovers a fair share while protecting your net recovery.
Allocating Attorney’s Fees and Litigation Costs
Under WCL § 29(6), attorney’s fees and litigation expenses must be allocated equitably between you and the carrier. Typically, fees are applied first to the carrier’s subrogation interest so the carrier’s recovery is not reduced by those costs.
Practical Steps to Coordinate Benefits
- Notify the carrier early: Inform your workers’ compensation insurer when you file a third-party claim.
- File a lien: Ensure the carrier files a timely lien under WCL § 32.
- Negotiate your settlement: Draft the settlement to reflect the carrier’s subrogation rights and fee allocation.
- Obtain lien release: Before finalizing the settlement, secure a lien release or confirmation of the carrier’s share.
- Disburse funds correctly: Allocate attorney’s fees and costs first, then divide the net recovery between you and the carrier per the statutory formula.
Hypothetical Example
Jane suffers a workplace injury and receives $50,000 in comp benefits. She settles her third-party claim for $150,000. After $30,000 in attorney’s fees and costs, the net recovery is $120,000. The carrier’s recoverable amount is the lesser of $50,000 or ($120,000 × $50,000 ÷ $200,000 total damages), which equals $30,000. Jane keeps $90,000.
Next Steps: Working with an Attorney
Coordinating benefits can be complex. Consult a personal injury or workers’ compensation attorney experienced in third-party claims. They can draft settlement language, calculate liens, and negotiate with the carrier.
Helpful Hints
- Keep detailed records of all benefits and medical expenses.
- Provide prompt notice to the carrier when pursuing a third-party claim.
- Review lien notices and challenge any errors immediately.
- Confirm allocation of legal fees before settlement.
- Request written confirmation of subrogation releases.