Detailed Answer
Under Texas law, an employer’s workers’ compensation insurer has a statutory lien on any third-party recovery for injuries covered by the Texas Workers’ Compensation Act. This lien gives the insurer a right to reimbursement for benefits it paid on behalf of the injured worker. The key provisions appear in the Texas Labor Code (§417.001 and §417.003). To verify and satisfy this lien, follow these steps:
- Obtain a Lien Letter: As soon as you file the personal injury lawsuit, request a lien letter (sometimes called a subrogation letter) from the Texas Department of Insurance, Division of Workers’ Compensation (DWC). This letter identifies the date benefits began, the payment amounts and any unresolved medical expenses.
- Verify the Lien Amount: Compare the insurer’s recorded benefits (medical payments, income benefits, etc.) to your client’s medical records and bills. Confirm pending charges and any future medical correspondence to ensure accuracy.
- Provide Notice of Settlement: Before finalizing any settlement, serve a written Notice of Lien to the insurer and file Form DWC-041 (Lien Affidavit) with the DWC. Administrative rules generally require this filing within 30 days of giving notice (see 28 Tex. Admin. Code §129.6).
- Negotiate or File for Adjustment: If the settlement lumps all damages together, negotiate a pro rata reduction of the lien based on the portion of recovery attributable to injuries covered by workers’ compensation. If negotiations stall, file a Petition for Approval of Settlement and Lien Adjustment with the DWC to determine a fair lien amount.
- Submit Settlement Documents to DWC: Once you reach an agreement or receive a DWC order, submit the fully executed settlement agreement, releases and any DWC petition orders. Request written confirmation that the lien is satisfied.
- Pay the Lien Amount: Pay the agreed or DWC-approved reimbursement amount directly to the insurer or to the DWC, as directed, to formally satisfy the lien.
- Obtain a Release of Lien: After payment, secure a written release or DWC order clearing the lien. Retain this document to close out both the workers’ compensation claim and the personal injury file.
Disclaimer: This article is for educational purposes only and does not constitute legal advice. Consult a qualified attorney to apply these rules to your specific situation.
Helpful Hints
- Act promptly: Insurers often file liens early. Request the lien letter immediately after filing suit.
- Keep thorough records: Retain all correspondence, notices and filings regarding the lien.
- Understand subrogation limits: Texas law limits reimbursement to benefits paid for the injury that led to the third-party claim.
- Use DWC resources: The DWC website offers forms (including DWC-041) and guidance on liens.
- Consult counsel: An attorney experienced in workers’ compensation subrogation can ensure all timelines and procedures are met.