Tuesday, February 16, 2010

Statutory Breakdown of Third Party Workers Compensation Claims

I previously discussed Workers’ Compensation and Third Party Workers’ Compensations claims. This blog’s purpose is to explain the statutory breakdown of Third Party Workers’ Compensations claims.


Assume a person, "Jimmy," works as a delivery driver. While on the job, Jimmy is rear-ended by another driver, "Marty." Essentially, Jimmy has two claims. The first is a Workers’ Compensation claim since Jimmy was on the job at the time he was injured. The second is a claim against Marty directly.

Workers’ Compensation pays for Jimmy’s accident related medical expenses and 2/3 of his lost wages. Within 60 days of the injury, Jimmy will have to make an election regarding how he wants to proceed. Jimmy can elect to have Workers’ Compensation pursue Marty, seeking reimbursement of what it paid out. Or, Jimmy can hire an attorney making sure Marty pays Workers’ Comp and pays the additional 1/3 of Jimmy’s lost wages plus pain and suffering (Workers’ Comp does not pay pain and suffering).

Assuming Jimmy hires an attorney to pursue Marty and a settlement is reached or the case is tried to judgment, below is how the breakdown works.

Pursuant to Oregon law, the attorney takes the first 1/3 of the settlement or judgment. The attorney’s costs are then reimbursed. Of the balance remaining, the injured worker gets the first 1/3. Next, the Workers’ Compensation carrier is reimbursed up to the amount of its lien (what it paid out). Finally, if there is a balance, it goes to the injured worker.

Let’s assume Worker’s Compensation paid $10,000 in accident related medical expenses, plus $5,000 (out of $7,500) for lost wages. This means the Workers’ Compensation carrier has a lien on the case for $15,000. Now, assume a settlement is reached in the amount of $50,000. Thus, below is the statutory breakdown:

Settlement amount:      $50,000

- Attorney fees (1/3):   $16,666.67

- Costs:                        $300

= Balance:                    $33,033.33

- Injured worker (1/3): $11,011.11

= Balance:                   $22,022.22

- Comp lien:                $15,000

= Balance:                   $7,022.22 (to injured worker after Comp lien is paid back).

Total to Jimmy:           $18,033.33

Here, the remaining balance of $7,022.22 goes to Jimmy, making his total $18,033.33. Of note, Jimmy received $5,000 in lost wages from Workers’ Comp that he does NOT need to pay back, so he actually recovers $23,033.33 and all of his medical expenses are paid.

-Arne Cherkoss
Dwyer Williams Potter Attorneys, LLP
Your Oregon Personal Injury Attorneys

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