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Understanding Worker Compensation Liens

The Florida Division of Worker Compensation reports 54531 workers comp claims in Florida in 2011, resulting in a total of $666,486,463 in medical payments and $1,021,598,822 in total benefits.

Workers injured in accidents caused by negligent third parties while in the course of their employment have two avenues to seek compensation. They may be entitled to medical expenses and lost earnings benefits through Florida’s workers compensation system. They may also be permitted to bring a third-party lawsuit against the negligent party, so long as they do not sue their employers. In the third-party action, injured workers can seek compensation for past and future pain and suffering. For example, a worker injured in a motor vehicle accident can file a workers comp claim and bring a separate lawsuit against the other driver involved in the accident. A worker injured by defective machinery can bring a lawsuit against the manufacturer separate from his workers compensation claim.

To prevent the injured person from receiving a double recovery, some or all of the money recovered in a third-party lawsuit must be repaid to the workers compensation carrier in proportion to the amount of benefits it paid. This is known as a workers compensation lien.

The workers compensation carrier can agree to reduce or waive the lien particularly when a third party offers a settlement. However, the carrier reducing or waiving the lien may then lower its offer to settle the underlying workers compensation case.

The injured worker can request that the court allocate the third party settlement proceeds between the amounts recoverable and not recoverable under the Worker Compensation Act. The allocation is done pursuant to a complicated formula in accordance with F.S.A. §440.39. The calculation takes into account the costs and attorney fees as well as the reality that cases are often settled for less than their full value. The Florida Supreme Court demonstrated and explained the formula in Manfredo v. Employer’s Casualty Insurance Company, 560 So.2d 1162 (Fla 1990).

As workers compensation attorneys, we work with our clients to make sure they receive the maximum recovery for their injuries from all possible sources.

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