Successfully defending third party litigation and providing value to our clients requires imagination, resourcefulness and plain hard work. Defense counsel are constantly discovering and exploring the weaknesses and vulnerabilities of cases brought by injured plaintiffs who typically bank on “jury sympathy” to trump logic and reason. One idea recently applied at the suggestion of a valued client involved buying the comp lien.
Worker's Compensation Lien
How many times has settlement or trial been complicated by the negotiations relative to the workers’ compensation lien? Plaintiff’s counsel, usually representing the lien, reports that the “comp carrier won’t budge” or “I can make the numbers work, you need to increase your offer.”
Strategically, plaintiff’s counsel is positioned between two natural allies, the employer and third party defendant(s). Both the workers’ compensation carrier and third party carrier want to defeat plaintiff’s claims on damages.
The employer wants to return the claimant to work as soon as possible and limit time lost from work. Similarly, the third party carrier seeks expert testimony that the plaintiff is medically recovered and is able to do his previous job. The comp carrier is holding a lien and the third party carrier is attempting to avoid or limit damages.In the right case, a win-win situation can be crafted.
Workers' Compensation In Action
Assume that the workers’ compensation carrier has attempted long and hard to return claimant to work. It obtained a favorable Independent Medical Examination ("IME") and vocational report. The third party carrier also has a favorable medical report (albeit a year or two later), but no vocational expert. A Petition to Terminate, Suspend or Modify is pending, but the outcome is uncertain.
The lien is represented by the workers’ compensation carrier’s law firm (although plaintiff’s attorney is entitled to a statutory fee). The third party carrier approaches the workers’ compensation carrier with an offer of 50-cents on the dollar in return for an assignment of subrogation rights of compensation benefits paid to date. Who wins, who loses, why?
Buying the Lien
The third party carrier is a winner. They pick up the probable cooperation of the IME doctor and the vocational expert. This testimony almost certainly pre-dates the third party IME. They effectively own the lien and might well recover some or all of this value in a settlement reduction. The third party carrier can certainly file a Motion in Limine at the time of trial to preclude the amounts of medical bills and lost wages that they have now extinguished by buying the lien.
The workers’ compensation carrier is a winner. They pick up 50-percent of the lien without facing the uncertainties of trial. In a poor liability case, this might be found money. Also the comp carrier can turn around and use the money to potentially settle any future exposure to the claimant.
Third Party Carrier in Control
The plaintiff loses. By buying the lien, the third party carrier has control of a financial piece of plaintiff’s case. Any settlement is reduced at least by the amount of the cost of buying the lien. In the event of a trial, plaintiff’s boardable damages are probably reduced by the lien assignment. If the case goes to judgment, some or all of the lien is credited or returned to the third party carrier.
This proposed strategy is not suitable in every case involving a workers’ compensation lien. The scenario plays out better if the lien is represented by workers’ compensation defense counsel, although consider the conflict of interest situation faced by plaintiff’s counsel representing the lien who receives an offer to settle the lien and not plaintiff’s case!
Creativity is the key to quality litigation defense tactics. Here is one more idea for you to consider.