When Third-Party Award Exceeds Workers’ Compensation Liability

New Jersey law prohibits an employer, who was injured during the course of employment but due to a third party’s negligence, to double recover from both his employer’s workers’ compensation insurance and the third party’s insurance carrier. Although you may file a claim for workers’ compensation benefits and a third party action, your employer will have a right for reimbursement.

In some situations, the third party award may exceed the workers’ compensation liability. These types of situations are governed by N.J.S.A 34:15-40(b). You should consult with your workers’ compensation attorney in New Jersey to determine how much you will be entitled to in such a situation.

Application of N.J.S.A 34:15-40(b)

An example may help you better understand what happens if your third-party award ultimately exceeds the workers’ compensation liability. Assume your third party award is $300,000 and your attorney’s fee is  $100,000, and your total worker’s compensation liability is $120,000.

Worker’s Compensation Settlement First

If your third party action is not settled when your workers’ compensation matter is resolved, the full lien will be satisfied from the third-party settlement. No deductions will be made from your worker’s compensation settlement.

From your $300,000 third party settlement, your workers’ compensation attorney in New Jersey will deduct $80,000 minus $200 ($79,800) and pay it directly to the compensation carrier. This leaves you with $120,000, plus $100,000, minus attorney’s fees.

Third-Party Action Settled First

If the third-party action settles prior to the workers’ compensation claim, two-thirds of the medical and temporary disability lien minus $200 will be deducted from the settlement, leaving you with $173,533.60 of your third-party action after deducting the fees for your personal liability attorney. In addition, there will also be a deduction from the permanency award when your workers’ comp case is resolved. Ultimately, you will be left with $220,219.60, not including the fees for your workers’ compensation attorney in New Jersey. This is approximately the same amount as in the prior example where the third-party action settles last.

Contact Us

For more information about what happens when a third-party award exceeds workers’ compensation liability, or to consult with a New Jersey worker’s comp lawyer, call the Law Offices of Dan T. Matrafajlo at (908) 248-4404.

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