Detailed Answer

What Is a Workers’ Compensation Lien?

In New York, when an injured worker receives benefits under the Workers’ Compensation Law, the carrier or employer gains a lien on any personal injury recovery the worker obtains against a third party. This lien ensures the Workers’ Compensation Board (WCB) and insurer are reimbursed for benefits paid out.

Statutory Basis: WCL §29

The lien arises under New York Workers’ Compensation Law §29. You can review the statute here: WCL §29. The statute governs how liens attach, how they must be asserted and how they can be resolved.

Step 1: Identify and Quantify the Lien

Request a detailed accounting from the workers’ compensation carrier showing all benefits paid, including medical costs, indemnity payments and interest. Verify the dates and amounts to ensure accuracy.

Step 2: Notify All Parties

Under WCL §29, you must provide written notice of the third-party claim to the carrier giving them the right to assert their lien. Typically, this occurs when you serve a summons and complaint or a demand letter on the third-party at fault.

Step 3: Negotiate a Lien Reduction

Many carriers will agree to reduce the lien to account for attorney fees and litigation costs. Start negotiations early. Common compromises range from 25% to 50% off the gross lien amount, depending on the complexity of the case.

Step 4: Petition the Workers’ Compensation Board for Approval

If the carrier will not reduce the lien, you can file a Petition for Lien Resolution with the WCB. The Board may hold a hearing, consider equitable factors and enter an order fixing the lien amount.

Step 5: Incorporate the Lien into the Third-Party Settlement

Once the lien amount is fixed, you must provide proof of WCB approval or a stipulation signed by the carrier. Include the approved amount in your settlement documents to ensure funds are held in escrow until the lien is satisfied.

Step 6: Obtain a Release or Satisfaction of Lien

After paying the agreed or approved lien, request a written release or satisfaction from the carrier and file it with the court and WCB. This document formally discharges the lien and allows you to distribute remaining proceeds to the injured worker.

Disclaimer: This article is for general informational purposes and is not legal advice. Always consult a qualified attorney about your specific circumstances.

Helpful Hints

• Start lien discussions early to avoid delays in settlement.
• Keep detailed records of all correspondence with the carrier.
• Document all medical and indemnity payments to support your position.
• Consider the timing of your third-party lawsuit to preserve your client’s rights.
• Work with counsel experienced in WCB proceedings to streamline the petition process.