Understanding Workers’ Compensation Liens and Personal Injury Settlements in Oregon

Disclaimer: This article is for educational purposes and does not constitute legal advice.

Detailed Answer

What Is a Workers’ Compensation Lien?

Under Oregon law, when an insurer pays workers’ compensation benefits for a work-related injury, it can seek reimbursement from any third-party recovery the injured worker obtains. This right of subrogation appears in ORS 656.262.

How the Lien Applies to a Personal Injury Settlement

If you file a personal injury claim against a third party—such as a negligent driver—and reach a settlement, your workers’ compensation insurer has a lien against the settlement up to the amount it paid in benefits. The insurer can require you to allocate part of your settlement to cover its lien before you receive any net proceeds.

Calculating the Lien Amount and Attorney Fees

Oregon law requires an equitable allocation of attorney fees and costs between your recovery and the insurer’s lien. Under ORS 656.268, courts consider the total gross recovery, the benefit paid by the insurer, and the attorney’s work to determine the proportion of fees you owe on the lien portion.

Example: You recover $100,000 in settlement. The insurer paid $20,000 in benefits. Your attorney charges a 30% fee on the overall recovery. You and the insurer allocate fees proportionally: 30% of $20,000 ($6,000) goes to cover attorney fees on the lien portion, leaving $14,000 to reimburse the insurer and $64,000 as your net recovery.

Negotiating and Resolving the Lien

You can negotiate the lien amount or ask the insurer to accept less than full reimbursement. Insurers often reduce the lien if you show significant attorney fees or if strict enforcement would be inequitable. Final resolution requires a signed agreement or court order.

Timing and Practical Impact

Address the lien early. Delaying resolution can stall your settlement and prolong litigation. Provide the insurer with settlement documents and proposed allocation. Confirm payoff amounts before signing release documents.

Helpful Hints

• Notify your workers’ compensation insurer when you pursue a third-party claim.
• Keep detailed records of benefits paid and medical expenses.
• Discuss lien impact and fee allocation with your personal injury attorney early.
• Ask the insurer for a written calculation of the payoff amount.
• Negotiate lien reduction based on attorney fees and case complexity.
• Consult ORS 656.262 and ORS 656.268 for statutory guidelines.