Getting Reimbursement for Workers' Compensation Liens in New York.

The workers’ compensation law provides two separate ways for a compensation carrier to obtain reimbursement from the proceeds of a claimant’s third-party settlement:

  1. Assert a lien against the recovery for the amount of benefits already disbursed by the carrier. N.Y. Work. Comp. Law § 29(1); or
  2. Offset the claimant’s future compensation benefits by the amount of the claimant’s net recovery in the third-party action. N.Y. Work. Comp. Law § 29(4).

Asserting a Lien for Past Benefits Conferred

The workers compensation carrier “shall have a lien on the proceeds of any recovery from” a third party settlement less reasonable and necessary expenditures, such as attorney’s fees. N.Y. Work. Comp. Law § 29(1). The employee may apply on notice to the lienor to the court for an order apportioning reasonable and necessary expenditures including attorneys fees. The court shall apportion such expenditures equitably between the employee and the lienor. Id.

Offsetting Future Compensation Benefits

The carrier must affirmatively preserve its right to offsets, or it may involuntarily waive such right. See Hilton v. Truss Systems, Inc., 82 A.D.2d 711, 444 N.Y.S.2d 229 (3d Dep’t 1981), order aff’d, 56 N.Y.2d 877, 453 N.Y.S.2d 428, 438 N.E.2d 1143 (1982). The claimant’s third-party settlement recovery less the carrier’s lien is credited by the carrier against future compensation payments. The net amount the claimant receives offsets future compensation payments, and no future payments will be made until the credit is exhausted. The carrier may waive the lien or the offset. N.Y. Work. Comp. Law § 29.

Greg Lois is the managing partner of LOIS LLC, a 19-attorney law firm dedicated to defending employers and carriers in New York and New Jersey workers' compensation claims. Greg is the author of a popular series of "Handbooks" on workers' compensation, and is the co-author of the 2016 Lexis-Nexis New Jersey Workers' Compensation Practice Guide. Greg can be reached at 201-880-7213 or glois@lois-llc.com