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Disclaimer: This article provides general information under North Dakota law and is not legal advice. Consult a licensed attorney for advice on your specific situation.

Detailed Answer

In North Dakota, an injured worker who receives workers’ compensation benefits for a qualifying work-related injury creates a statutory lien in favor of the employer or its insurer against any third-party personal injury recovery. Under N.D.C.C. § 65-05-17, the employer or its insurer may seek reimbursement for benefits paid, medical expenses, and associated costs from the worker’s settlement or judgment.

This lien arises automatically by operation of law when the insurer pays benefits. To preserve the lien, the insurer must timely notify the worker and any party handling the third-party claim. If the insurer fails to assert its lien, it may lose the right to reimbursement.

When you negotiate a personal injury settlement, you typically allocate the gross recovery into categories: compensation for medical expenses, lost wages, pain and suffering, and other damages. North Dakota law requires that employer liens attach only to the portion of the settlement that compensates for medical costs and lost earnings which duplicate workers’ compensation benefits.

After you reach a settlement, the net amount available to the injured worker equals the gross settlement minus attorney fees, litigation costs, and the workers’ compensation lien. N.D.C.C. § 65-05-18 limits reimbursement to the proportion of the recovery representing benefits paid, and apportions legal fees and costs on a pro rata basis. For example, if you settle for $100,000, and $30,000 of that amount covers benefits that duplicated workers’ compensation payments, the insurer’s lien would be $30,000, reduced proportionally by attorney fees and costs attributable to securing that portion of the recovery.

In some cases, you can negotiate a reduced lien amount with the insurer or petition the Workers’ Compensation Court to determine a fair lien allocation. Early communication with all parties—and detailed documentation of your damages—can help streamline this process and protect your net recovery.

Helpful Hints

• Document all out-of-pocket medical expenses to distinguish them from workers’ compensation payments.
• Review N.D.C.C. § 65-05-17 and § 65-05-18 for details on lien rights and reimbursement limits (65-05-17; 65-05-18).
• Notify your attorney early about any workers’ compensation benefits you received.
• Negotiate lien reductions before finalizing your personal injury settlement.
• Consider filing a motion in the Workers’ Compensation Court to resolve disputed lien amounts.