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Lien on Me? Understanding the Workers’ Compensation Lien in Job Injury Cases

Injured Person Receiving Workers Compensation Check

If you bring a lawsuit after being injured at work, you might be surprised to learn that part of your settlement will be given to your employer’s workers’ compensation company. This is because of the workers’ compensation lien. Why does this happen?

First, you need to know that it is possible to be injured while working and have not one, but two separate cases.

Few people realize this.

I will give you an example.

Let’s say you are a pharmaceutical sales rep who drives to multiple appointments daily.  While coming from one appointment with a doctor and going to another with a hospital, you are sitting at a red light and you get rear ended.  The person behind you wasn’t paying attention.  You feel pain in your neck, back, and shoulder, and a headache is coming on quickly.  More frightening, you immediately notice you can’t put any weight on your right leg.  Your foot is twisted funny.  You are pretty sure you have a broken ankle.  The ambulance is there.  So are the police. 

Do you know what to do?  Initially, of course, accept medical treatment and take these important steps for after any car crash. And be aware of the dangers of giving statements to the auto insurance company! Then, you need to go about getting compensated for your medical treatment and missed work, so you can continue supporting yourself and your family.

The Workers’ Compensation Case

First of all, you have a workers’ compensation case (it’s not a lawsuit) against your employer.  Anyone who is injured “arising out of” and “in the course of” their employment has a workers’ compensation case.  Illinois workers’ compensation pays for three things:

  • Medical benefits. Generally, you are entitled to go to any two (2) medical facilities of your choice, plus referrals from those.  Your employer may also have you examined within certain guidelines.  You do NOT have to go to the “company doctor.”
  • TTD, or Temporary Total Disability. This is what many people refer to as “being on workers’ comp.”  This is what you are paid when you are taken off work by a doctor.  It is paid at a rate of 2/3 of your average weekly wage (AWW), or the average rate of gross pay over the past 52 weeks prior to the incident.
  • PPD, or Permanent Partial Disability (and in limited cases PTD, Permanent Total Disability). This is what you are paid at the end of the case based upon the severity of the injury, any restrictions, the body part injured, your age, job description, wage rate, and several other factors.  This is the only part the attorney takes a 20% fee from.

The “Third Party” Negligence Case

You also have a case against the driver who hit you, or more accurately, against their insurance company (Illinois does not have direct actions against insurance carriers for injury, but the insurer stands in for its insured and pays damages up to the policy limits).

Unlike workers’ compensation cases, this type of case DOES allow for recovery for “pain and suffering,” “loss of a normal life,” and “lost wages.”  Generally, this case will be a larger recovery, since workers’ comp is almost a strict liability model where damages are limited.

The Workers’ Compensation Lien

Let us go on the assumption that your ankle injury was the most severe of the bunch (your neck and back got better quickly and the headache wasn’t serious).  It required surgery and you were off work for 2 months.  During this time, you accumulated medical bills which your employer’s workers’ compensation insurance carrier paid.  You also could not work but were paid TTD (which is income tax-free, making it at least theoretically close to what you earned before you were hurt).

Say you retained a lawyer for this.  Her job would be to evaluate the cases and determine the best way to proceed.  It can be confusing, but there are at least two options:

  • Settle the workers’ comp case, then settle the injury case
  • Ignore the workers’ comp case and settle the injury case

If you settle the workers’ compensation case for $50,000 — and then also receive compensation in the injury case — you will have to pay back most of that plus whatever TTD and medical payments were made at approximately 75% of the total.

So, say your lawyer does a great job and you have a $50,000 workers’ comp settlement.  Plus, TTD totaled $10,000 and medical $30,000.  Thus, is the total paid out by workers’ comp is $90,000.  This is the amount of workers’ compensation lien; put otherwise, the amount the workers’ comp insurer can try to get back from your injury suit settlement. In practice, you would have to pay back 75% of that (less pro rata costs and expenses), about $67,500, to the workers’ compensation insurer.

Say your injury lawyer got you a nice $180,000 settlement on the injury case with the driver.  You would deduct the 1/3 fee for your lawyer ($60,000), her expenses (for medical records, depositions, filing a case) of $2,000, leaving you with $118,000.  From that, you would deduct the $67,500 for the compensation lien, leaving you with a net tax-free settlement of $50,500.  This would be on top of the workers’ compensation settlement, where you probably received a net of about $40,000 ($50,000 less a 20% fee).

Confused Yet?

It is tough stuff.  Yet another reason you should always have a lawyer.

Contact a Personal Injury Lawyer

If you have the misfortune of becoming injured in a car crash or work incident you should contact a personal injury lawyer. If your injury was from a car crash while on the job, like in the example above, you should contact an attorney who is familiar with both Illinois workers’ compensation law and Illinois motor vehicle accident law.

Takeaways: 

  • If injured in a car accident, take a police report and get medical treatment.
  • If injured at work, make a workers’ compensation claim.
  • In either case, talk to a personal injury lawyer to make sure you are receiving all the compensation you have a right to.

Contact Chicago Personal Injury Lawyer Stephen Hoffman

As in all cases involving injury and potential liability, immediately get medical treatment, report the crash to police and your own insurance company, and contact a personal injury lawyer.

If you've been in an accident and have questions, contact Chicago personal injury attorney Stephen L. Hoffman for a free consultation at (773) 944-9737. Stephen has nearly 30 years of legal experience and has collected millions of dollars for his clients. He has been named a SuperLawyer, has a 10.0 rating on Avvo, and is BBB A+ accredited. He is also an Executive Level Member of the Lincoln Square Ravenswood Chamber of Commerce.

Stephen handles personal injury and workers' compensation claims on a contingency fee basis, which means you don’t pay anything up front and he only gets paid if you do. Don’t wait another day, contact Stephen now.

Categories: Work Injuries

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