Assert Statutory Liens in Civil Actions

If an employee’s work-related injury could be caused by actions of another outside of employment (such as an automobile accident), the employee may decide to pursue a civil lawsuit in addition to collecting statutory compensation and benefits from the employer. In some states, the employer can pursue a civil action if the employee chooses not to do so. These lawsuits are attractive because one can assert additional categories of damages against the third party that are not allowed under the worker’s compensation statute.

We have seen an increase in such third-party actions in the last year. If the employee is successful in recovering a settlement or judgment in the civil case, the employee should reimburse the employer some of the amount of statutory compensation and benefits it incurred related to the worker’s compensation claim. Depending on the amount of the recovery and the status of the worker’s compensation claim, the employee may forfeit entitlement to ongoing worker’s compensation benefits or be required to assign the settlement to the employer as an option of continuing with the worker’s compensation claim.

In Indiana, the worker’s compensation statute requires the parties to the civil action to obtain the employer’s written consent before finalizing a settlement. This allows the employer to protect its reimbursement interest and avoid a double recovery by the employee.

If you learn your employee is pursuing a civil claim, you should notify the attorneys involved in the civil case of 1) the amount of the statutory lien and 2) your interest in being involved with any settlement discussions. If the worker’s compensation claim is ongoing, you will want to update your letter to advise the attorneys of the new statutory lien amount and your continued recovery interests. If the statutory lien is significant, the employer may choose to intervene as a party in the civil suit.  

Please contact Ann Stewart to discuss an employer’s options for asserting a statutory lien and recovery in the event of a settlement or judgment.

This publication is intended for general information purposes only and does not and is not intended to constitute legal advice. The reader should consult with legal counsel to determine how laws or decisions discussed herein apply to the reader’s specific circumstances.