Disclaimer: This article is for educational purposes only and does not constitute legal advice. Consult a qualified attorney in Washington for guidance tailored to your situation.
Detailed Answer
In Washington, if you receive workers’ compensation benefits for a workplace injury and later recover damages from a third party, RCW 51.24.040 grants the Department of Labor & Industries (L&I) a lien on your third-party recovery. This lien covers benefits paid, including medical care, wage replacement, and any awarded permanent disability, plus accrued interest.
When you file a third-party lawsuit, you must notify L&I of your claim and the anticipated recovery. L&I can file its lien with the court. Under RCW 51.24.070, the lien must be secured—often by depositing the lien amount into the court registry—before you gain access to settlement or jury award funds.
The final amount you receive equals your gross recovery minus three key deductions:
- Attorneys’ Fees and Costs: Your legal fees and case-related expenses, typically deducted first.
- Workers’ Compensation Lien: The full amount L&I paid on your behalf, plus interest, which may reduce your recovery dollar-for-dollar.
- Other Liens: Any medical or health plan liens you may owe to private insurers or Medicare.
For example, if you settle for $100,000, and you owe $30,000 in attorneys’ fees, $20,000 to L&I, and $5,000 in medical liens, your net recovery is $45,000.
You can sometimes negotiate lien reductions or offsets before court approval. L&I may agree to a reduced lien if you demonstrate hardship or if a reduction serves equity interests. Always seek written confirmation of any lien compromise.
Helpful Hints
- Notify L&I as soon as you file a third-party claim to avoid lien disputes.
- Review your attorney fee agreement to understand how fees and costs are allocated.
- Ask your attorney to negotiate lien reductions when possible.
- Consider structured settlements to manage tax or cash-flow impacts.
- Keep documentation of all communications with L&I and other lienholders.
- Consult a personal injury attorney familiar with Washington workers’ compensation liens.