Detailed Answer
When you pursue a personal injury claim in Tennessee after a workplace accident, your employer or its workers’ compensation insurer may assert a lien for medical bills and lost wages already paid. Under Tenn. Code Ann. § 50-6-112, the employer has a right to reimbursement from any recovery you obtain from a third party. Resolving this lien involves several key steps:
1. Identify the Lien and Calculate Its Value
Review your workers’ compensation award or settlement. Your insurer must provide a written statement of all benefits paid. Confirm the total medical expenses and wage replacement benefits that give rise to the lien. Keep copies of invoices, benefit summaries and notices.
2. Provide Formal Notice
Once you file a third-party lawsuit (for example, against a negligent driver), you must notify your employer and its insurer in writing. Include case details, the accident date and your demand for recovery. Early notice avoids disputes over notice defects and preserves your employer’s subrogation rights.
3. Negotiate the Lien Amount
Employers and insurers often agree to reduce their lien to encourage settlement. Engage your attorney to negotiate a reasonable repayment amount. Consider your anticipated net recovery and the insurer’s interest in avoiding litigation costs.
4. Resolve Disputes Through Court Petition
If negotiations stall, you or the insurer can petition the Tennessee Workers’ Compensation Division or Chancery Court to determine a fair lien amount and distribution of funds. The court will apply Tenn. Code Ann. § 50-6-112 (link: https://www.lexisnexis.com/hottopics/tncode/) and allocate costs, attorneys’ fees and the repayment balance.
5. Allocate Settlement Proceeds
Before you or your counsel disburse settlement funds, the court’s order or a written agreement must outline how to divide the recovery. Typical allocations include:
- Plaintiff’s attorneys’ fees and litigation expenses
- Employer’s lien repayment
- Net proceeds to the injured worker
6. Final Payment and Recordkeeping
After funds distribution, confirm the insurer receives its payment directly. Obtain a release or lien satisfaction letter. Maintain all correspondence, receipts and court orders. Clear documentation prevents future subrogation claims.
Disclaimer: This article is for informational purposes only and does not constitute legal advice.
Helpful Hints
- Act promptly: Tennessee limits third-party claims to one year after an accident (Tenn. Code Ann. § 28-3-104).
- Get benefit statements early: Request your insurer’s itemized wage and medical payments.
- Engage a knowledgeable attorney: Efficient negotiation can reduce lien amounts.
- Use written agreements: Avoid misunderstandings by memorializing settlement terms.
- Keep detailed records: Store all notices, court orders and payment confirmations.