When Workers’ Compensation Liability Exceeds Third-Party Award

New Jersey employees are prohibited from totally recovering from both their employer’s worker’s compensation insurance carrier and a third party action when they are injured during the course of employment, but due to the negligent actions of another individual. If the employee files both claims for compensation, the New Jersey workers’ comp attorney will be obligated to reimburse the workers’ comp insurance carrier.

In some situations, the workers’ compensation liability may exceed the third-party claim. These types of situations are governed by N.J.S.A 34:15-40(c). Your attorney will help you determine how much you will be entitled 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 workers’ compensation liability exceeds your third-party action proceeds. Assume your third party award is $90,000 with attorney’s fee of  $30,000, and a total compensation liability of $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 $90,000 third party settlement, your New Jersey workers’ comp attorney will deduct $60,000 minus $200 ($59,800) and pay it directly to the compensation carrier. This leaves you with nothing from your third-party case after deducting attorney’s fees and medical liens.

Third-Party Action Settled First

If your workers’ compensation claim settles prior to your third-party action, two-thirds of the medical and temporary disability lien minus $200 will be deducted from the settlement, leaving you with $33,533.60 of your third-party action after deducting attorney’s fees. 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 $46,666.67.

Negotiating Compensation

If your New Jersey workers’ comp attorney is also handling your third party action, he may be able to reduce the workers’ compensation carrier’s lien by simply negotiating with the carrier. In most cases, carriers are willing to negotiate a lien so that a third-party case can settle more quickly.

Contact Us

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

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