Employees who receive workers’ compensation benefits are not permitted to sue their employers for damages associated with the work-related injuries. However, employees may file claims against third parties for damages arising from those same injuries. For example, if you are injured in a motor vehicle accident that isn’t your fault while driving your employer’s vehicle during the course of a workday, you would be entitled to workers compensation benefits under Massachusetts law. Now, add to this scenario a second vehicle that was the cause of the motor vehicle accident — you may be able to sue the other driver in a third-party lawsuit. This means you could collect your workers’ compensation benefits AND you could bring a lawsuit for damages not covered by workers’ compensation such as pain and suffering, future lost wages, damage to your vehicle, etc.
When an employee recovers damages from a third-party, the workers’ compensation insurer has a right of recovery in the amount the insurer paid to the employee in worker’s compensation benefits. For example, if the workers compensation insurer paid to the employee $10,000.00 for lost wages and $15,000.00 for medical expenses, the insurer would be entitled to reimbursement of this $25,000.00 from any third party recovery.
While it is a common practice to attempt to negotiate a reduction in the amount owed to the workers compensation carrier, there exists a possibility the workers compensation lien will significantly impact the amount of the third-party recovery. This is why it is vitally important that you and your attorney are aware of precisely how much the workers compensation insurer is entitled to take from your third party recovery and why.
The workers compensation insurer is entitled to reimbursement for money paid as compensation for medical bills, lost wages, scarring (as limited in the statute), and loss of function. These insurers have also maintained a right of entitlement to money paid by the third-party to the employee for pain and suffering.
The recent Supreme Judicial Court decisions in DiCarlo v. Suffolk Construction Co., Inc., et al. and Bernard J. Martin et al. vs. Angelini Plastering, Inc., et al. address the issue whether the workers compensation lien attaches to damages paid by a third-party for the pain and suffering of an employee.
In the DiCarlo case, the employee suffered serious injuries to his back while working as an electrician at a construction site. The workers’ compensation insurer paid medical expenses and lost wages in the amount of $281,819.11. A third-party settlement was reached in the amount of $100,000.00. After reaching this agreement, the parties presented a proposed settlement agreement to the court as required by law. This agreement allocated thirty-five percent of the settlement for pain and suffering indicating on the settlement petition that this amount would not be subject to the insurer’s workers compensation lien. The workers compensation insurer objected to this allocation arguing the lien should attach to the award for pain and suffering. The judge agreed with the insurer and declined to approve the settlement.
In the Martin case, the employee was injured in August 2010 while working as an electrician at a construction site. The workers’ compensation insurer paid the employee $566,392.94 in benefits. Following the filing of a tort action against a third-party, an agreement was reached to settle all claims for one million dollars. In the subsequent petition for settlement the parties requested that thirty percent of the settlement be allocated to pain and suffering and this amount be excluded from the insurer’s lien. A different Superior Court judge approved the settlement, over the objection of the workers compensation insurer that the award for pain and suffering should be included in its lien.
Following an exhaustive analysis of the relevant statute and paying close attention to the legislative intent when drafting the statute, the Supreme Judicial Court held that allocations in a settlement petition for pain and suffering are not subject to recovery by the workers compensation insurer. What is of particular interest is the absence of a bright line between what amounts will be considered a proper allocation of the third-party award for pain and suffering and what amount will be deemed excessive. In fact the Supreme Judicial Court in this opinion stated that a settlement amount allocated entirely or in large part allocated to pain and suffering will “be eyed by the court with a healthy dose of skepticism”. (emphasis included).
The lesson to be drawn from this decision is that every attempt should be made to reach a fair and equitable resolution of the worker’s compensation lien prior to settling the third-party claim. One should not assume the settlement petition presented to the court with an allocation for pain and suffering will be rubber stamped by the Court.
If you or a loved one has suffered a work-related injury, you need an experienced lawyer to help you investigate all possible sources of compensation. Fortunately, the attorneys at Ananian & Rodibaugh have successfully handled thousands of personal injury, workers compensation, and third-party claims, and have the experience to help you get the compensation you deserve.
Contact the Law Office of Ananian & Rodibaugh, PC online or call (617) 855-7389 to schedule a free initial consultation.