Detailed Answer
What Is a Workers’ Compensation Lien in Tennessee?
When you sustain a workplace injury and receive workers’ compensation benefits, your employer or its insurer has a subrogation right. This lien lets them recover benefits paid from any settlement or judgment you obtain against a third party. See Tenn. Code Ann. § 50-6-112(a)(1).
How a Lien Affects Your Personal Injury Settlement
- Priority of Recovery: The workers’ compensation lien takes precedence over other claims against your settlement proceeds.
- Net Recovery Limit: Tennessee law caps the lien at the amount remaining after attorney’s fees and costs. The insurer cannot recoup more than your net recovery. (Tenn. Code Ann. § 50-6-112(e)).
- Negotiation and Reduction: You can often negotiate a reduction of the lien based on fairness and the ratio between benefits paid and total recovery.
- Filing Requirements: The insurer must file a notice of lien before settlement or entry of judgment. Missing this deadline may invalidate the lien.
Example Scenario
For example, Jane Doe suffers a back injury at work. Her employer’s insurer pays $20,000 in benefits. Jane then settles a third-party claim for $100,000. After $30,000 in attorney’s fees and costs, her net recovery is $70,000. The insurer’s lien is limited to $20,000, leaving Jane with a $50,000 net settlement.
Helpful Hints
- Notify your workers’ compensation insurer when you pursue a third-party claim.
- Keep detailed records of all benefits paid and related expenses.
- Consult a personal injury attorney early to address potential lien issues.
- Review any lien notice for accuracy before agreeing to a settlement.
- Negotiate lien reductions based on actual fees and equitable considerations.
Disclaimer: This article is for informational purposes only and does not constitute legal advice. Consult an attorney to discuss the specifics of your case.