The workers compensation system in Massachusetts was created to provide
financial coverage for medical expenses and lost earnings to a person
injured while on the job. In some situations, the injured person may also
bring a separate simultaneous action against the negligent party (not
necessarily their employer) who caused the accident. This action is commonly
referred to as a
Massachusetts General Laws c. 152, Â§ 15 grants the workmen's compensation insurer a lien against any money
recovered by the injured party in the third party action equal to the
amount paid out by the insurer. However, the insurer's lien is only
for damages recovered on claims "for which compensation is payable."
This law is intended to prevent the injured party from receiving a double
recovery. For example if the workmen's compensation insurer paid $50,000
for the injured persons medical treatment they should be entitled to a
lien of that amount against any third party settlement or award for medical
expenses reimbursement. There is also a statutory one-third offset to
defray the cost on attorney's fees and costs to the injured party.
While this sounds fair, the workmen's compensation lien often complicates
the third-party litigation. As work-related accidents often result in
serious injuries, the liens are generally very high. The injured party
may be reluctant to settle a case unless the lien can be negotiated down,
and if the insurer refuses they may be forced to try a very difficult
liability case, resulting in a possible zero recovery for everyone.
In the recent Massachusetts Supreme Judicial Court wrongful death case of
Curry v. Great American
, the court decided that money recovered for
loss of consortium and conscious pain and suffering are not compensable injuries under the
workers comp statute, and therefore are not reimbursable.
Following the rationale in
Curry, we can manage the liens where there is an agreeable third party settlement.
We can allocate the bulk of the settlement proceeds to the claims that
are not reimbursable, such as pain and suffering and the spouse's
claim for loss of consortium. The remaining portion of the proceeds is
allocated for damages compensable under the workers compensation statute,
such as loss of wages and medical bills.