Massachusetts Workers Compensation Liens

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 third-party action.

Massachusetts General Laws c. 152, § 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.

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