Section 29 Lien Rights

Generally speaking, an injury that occurs at work is compensable under New York Workers’ Compensation Law. These cases are filed by the claimant against his/her employer and litigation ensues in the Workers’ Compensation Courts regarding the extent of benefits due to the claimant and corresponding medical benefits. This system provides a worker in New York the certainty of knowing that he can proceed against his employer if a compensable injury occurs at work while also providing the employer with the knowledge that, with very limited exceptions, he/she cannot be sued by his/her employee in Civil Court.  

 

However, there are work-place accidents that may involve another negligent party other than the claimant’s employer. The most common scenario is a motor vehicle accident which occurs during the course of someone’s employment, with a negligent driver who is not related to the employer in any way. In these types of cases, although the claimant cannot sue his employer, the claimant does have a cause of action against a negligent driver who caused an accident. These become general liability claims which are handled in Civil Court. 

 

The problem with these kinds of accidents, is that general liability claims tend to take a long time to resolve. These cases regularly take years to complete discovery and to proceed with trial. Even though there was a negligent party other than the employer involved in these kinds of accidents, the claimant was still injured during the course of his employment, and has a right to collect indemnity and medical benefits if the accident was indeed work-related. Since Workers’ Compensation claims run on the “rocket docket,” and can provide the claimant with much quicker benefits, the Workers’ Compensation carrier tends to become the primary insurer that pays for the claimant’s wage loss benefits and medical benefits as well during the pendency of the third-party claim in Civil Court. This is when Section 29 comes into play for Workers’ Compensation carriers who are paying out these claims. 

 

The claimant will eventually be able to recover in the third-party action for his damages either by way of settlement or by way of a jury verdict against the negligent party. However, the Workers’ Compensation carrier that paid the indemnity and medical benefits in place of the negligent party is entitled to recover up to 2/3 of what has been paid. Section 29 exists in order to provide carriers and self-insureds a specific mechanism in which to pursue the recovery of the benefits they pay out which can or should be the responsibility of the negligent party.  

 

Overall, the purpose of WCL §29 is to prevent a double recovery by the claimant, while shifting the ultimate burden for wage replacement and medical costs to where it should be, the negligent party. To fulfill that purpose, when a claimant commences a third-party action, WCL §29 confers two separate rights on the Workers’ Compensation insurance carrier to obtain reimbursement from the proceeds of the claimant’s third-party recovery. First, WCL §29(1) provides for a lien against the recovery for the amount of benefits already disbursed by the carrier. Second, WCL §29(4) gives the carrier the right to offset the claimant’s future compensation benefits by the amount of the claimant’s net recovery in the third-party action. 

 

Given these two clear pathways for Workers’ Compensation carriers to recover their Section 29 lien rights, it is incumbent on a carrier to reserve their rights under Section 29 when a case involves a third-party claim. This ensures that the carrier is able to recover what has been paid out after considering reasonable and necessary costs and also ensures that the claimant does not obtain a windfall from a third-party verdict or settlement.

 

If you or your company needs any assistance with asserting your rights to a Section 29 lien in one of your Workers’ Compensation cases, please contact Steven Bedoya at sbedoya@bhlfirm.com or (201) 880-9374, so we can guide you through the steps needed to insure proper recovery!