A workers’ compensation lien is created when the compensation insurer pays off the injured person’s medical bills or disability benefits. When that happens, the workers’ compensation is entitled to a lien against any recovery or judgment sustained in any personal injury case arising out of the same accident/set of circumstances. In exchange for a full and final settlement of the compensation case, the employer/insured may agree to waive all or a portion of the workers’ compensation lien and may even put some new money in the form of a lump sum on the table. A waiver of the workers’ compensation lien also allows the injured worker to obtain a higher net recovery in the personal injury case.
The attorney’s fee (which is regulated by the Commission), expenses, and doctor fees are deducted from the final settlement amount, and all of this is memorialized in a Full and Final Settlement Agreement, which is signed by the attorneys, the parties, and the Workers’ Compensation Commission.