Although an injured worker cannot sue his or her employer for a work-related injury, a lawsuit can be filed against a “third party” who was responsible for the accident. A “third-party lawsuit” cannot be settled without written consent from the workers’ compensation insurance company. The insurer also usually has a “lien” against the worker’s lawsuit, and is entitled to recover some of what it paid in workers’ compensation and medical bills.
However, the insurer’s right to recover its lien, and also its right to take credit for the worker’s personal injury recovery, go along with its obligation to pay a share of the attorney fees and expenses connected with obtaining the third-party lawsuit recovery. That obligation can be used to reduce the amount of the repayment to the workers’ compensation insurer.
We settled a personal injury case for our client and argued that the workers’ compensation lien should be eliminated entirely based on these legal principles. The Judge agreed, and the insurance company appealed. The Appellate Division, First Department, rejected almost all of the insurance company’s arguments, and we were ultimately able to resolve the lien and credit issues on terms favorable to our client.