2. Statutory Lien
• 42-1-560(b): the carrier’s lien is to the extent of the
total amount of compensation, including medical
and other expenses, paid or to be paid by the
carrier.
• Request an itemization.
• Review for payments to NCM’s, P.I.’s, or DME’s.
• Do the math yourselves.
3. Breeden and Future Medicals
• “The Clincher Enforcement Act.”
• Lien includes only those medical expenses
paid or accrued but not yet paid at the time
of the third party settlement, and does not
include future medical expenses.
• Future medicals are to be included in the
fund designated to pay future compensation
benefits under subsection (g).
4. Breeden and Future Medicals
• What does this mean for the third party case?
• For your client to receive any benefit from the
third party case, she must clincher or waive her
right to future medicals.
• Waiver or clincher of future medicals potentially
implicates Medicare and may require a MSA.
6. Have Lien in Mind Early
• When to file 3rd
Party Complaint?
– Don’t wait for the WC claim to resolve;
– WC and 3rd
party attorneys work in conjunction
• Include Loss of Consortium Claim
• Timely file and serve S-2 and S-4
– Harsh penalties if not: Callahan v. Beaufort Cty. (Court left open
whether dismissal without prejudice and refiling with S-2 prevents
election of remedies)
• Do not settle third party case while WC claim is pending without
explicit confirmation that Claimant has not elected his remedies.
• Meet with WC Defense attorney up front to discuss third party case
and any assistance the Employer can provide
7. Mediation
• Excellent method to resolve 3rd
party case
and workers’ compensation claim/lien
• Choose mediator familiar with workers’
compensation law/liens
8. Mediation – All Hands on Deck
• 3rd
party defendants and adjusters;
• WC Claimant attorney;
• WC Defense attorney and subrogation adjuster;
• Structured settlement broker;
• MSA proposal
9. Diminish Expectations
• Make sure clients understand WC lien will be
paid out of 3rd
party proceeds;
• If Client receiving lifetime meds, discuss effects
of continuing to receive benefits after resolution
of 3rd
party case v. clinchering meds;
• Do not wait until the day of mediation to explain
this to your client.
10. Posture of the WC Claim
• Ongoing WC claim with no indemnity
award, clincher, or future medicals
awarded;
• Clincher with no future medicals;
• Indemnity award in place with lifetime
medicals
11. Be Aware of Other Potential Liens
• STD/LTD;
• ERISA;
• Always request the Plan Documents.
13. Potential Methods of Resolution
• Apportion to Loss of Consortium claim;
• Upfront negotiation on a sliding scale repayment
of lien;
• Statutory reduction formula - Total cognizable
damages (42-1-560(f));
• Equitable reduction or waiver when employer
conduct contributed or WC defense IME hurts 3rd
party case
14. Ongoing WC Claim
• Consider two mediators;
• Negotiate settlement of WC alongside
third party case;
• Negotiate waiver of if third party case has
low value.
15. Ongoing WC Claim
• If recommended future surgery that client
may not get, consider waiving future meds
in return for waiver of lien;
• If client wants recommended surgery,
consider resolving lien but requiring carrier
to pay for specific surgery or treatment
under the Fee Schedule.
16. WC Lien and Lifetime Meds
• Must clincher or waive right to lifetime
meds for client to benefit from 3rd
party
case;
• MSA may be required;
17. MSAs Funding Options
• Carrier funds MSA and adds cost to lien;
• Carrier funds MSA after lien repaid;
• Client funds MSA using annuity or other
structured settlement vehicle;
• Client and Carrier jointly contribute to funding
MSA.
• Look at legal and economic benefits of each
option with your particular case.
18. Settling 3rd
Party Claim Without
Resolving WC Lien
• If settling for less than amount of WC lien,
carrier can continue to prosecute 3rd
party
claim (42-1-560(f));
• File Petition to have WCC determine total
cognizable damages and reduction of lien
– Helpful in 3rd
party cases with large damages
but weak liability
