Detailed Answer
In Tennessee, when an injured worker accepts workers’ compensation benefits and later pursues a personal injury claim against a third party, the employer or its insurer gains a statutory lien on any third-party recovery. Under T.C.A. § 50-6-112, this lien covers medical expenses and wage loss benefits paid.
To enforce the lien, the employer must file a notice of election to recover within 15 days after the third-party suit begins. Once perfected, the lien attaches to the gross settlement or judgment. However, Tennessee law limits the attorney fee applicable to the subrogation portion. Per T.C.A. § 50-6-112(e)(1), counsel may charge no more than 20% of the recovery attributed to compensation benefits. This yields a net repayment to the employer equal to the amount paid minus that 20% fee.
For example, imagine a $100,000 settlement and $20,000 in comp benefits. The employer’s lien is $20,000. Attorney fees on that portion cap at 20%, or $4,000, leaving $16,000 to refund the insurer. The remaining $80,000 (non-compensation damages) subjects to your agreed attorney rate. After standard fees on the remainder (e.g., 33.3% or $26,667), you net $53,333 plus the $4,000 fee savings on the lien portion—totaling approximately $57,333.
Helpful Hints
- File a timely lien notice: ensure the employer files within 15 days after your third-party suit starts.
- Allocate attorney fees correctly: track separate percentages for compensation and non-compensation recovery.
- Challenge excessive liens: you can negotiate lien reductions if repayment exceeds the allocated benefits.
- Maintain clear records: document all compensation benefits and medical payments.
- Consult early: an attorney familiar with Tennessee workers’ compensation law can protect your net recovery.
Disclaimer: This article provides general information and does not constitute legal advice. For guidance on your specific situation, consult a qualified attorney.