In a third-party case, what items must be subtracted to determine the net recovery for the IW?

In a third-party case, what items must be subtracted to determine the net recovery for the IW?

• A. Attorney fees only.
• B. Attorney fees, costs, and liens.
• C. Costs only.
• D. Liens only.

Answer: (B)

When a workers’ compensation claim has a third-party recovery, the self-insured plan has a right of subrogation to be repaid from that recovery. To figure out what the injured worker ultimately receives, you subtract the costs tied to obtaining the third-party settlement from the total recovery. Those costs include three things: attorney fees, costs of the litigation, and any liens. The attorney fees cover the legal costs of pursuing the third-party claim; the costs cover filing fees, depositions, expert fees, and other litigation expenses; and liens are amounts owed to medical providers or other entities that must be paid from the settlement. After subtracting attorney fees, costs, and liens, the remaining amount is the net recovery for the injured worker. For example, if the settlement is $100,000, with $20,000 in attorney fees, $3,000 in costs, and $5,000 in liens, the IW would receive $72,000.

When a workers’ compensation claim has a third-party recovery, the self-insured plan has a right of subrogation to be repaid from that recovery. To figure out what the injured worker ultimately receives, you subtract the costs tied to obtaining the third-party settlement from the total recovery. Those costs include three things: attorney fees, costs of the litigation, and any liens. The attorney fees cover the legal costs of pursuing the third-party claim; the costs cover filing fees, depositions, expert fees, and other litigation expenses; and liens are amounts owed to medical providers or other entities that must be paid from the settlement. After subtracting attorney fees, costs, and liens, the remaining amount is the net recovery for the injured worker. For example, if the settlement is $100,000, with $20,000 in attorney fees, $3,000 in costs, and $5,000 in liens, the IW would receive $72,000.