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Court Won’t Reduce Statutory Lien

A Fairfax Circuit Court says it has no statutory or equitable authority to reduce a workers’ comp carrier’s $50,479 statutory lien on a settlement by a plaintiff of a work-related automobile accident claim.

Plaintiff pursued a workers’ comp claim against Zurich, her employer’s carrier, prior to filing a case against the tortfeasor. Zurich settled the comp claim for a lump sum of $42,500 and paid $7,979 in medical benefits. Zurich’s entire lien is for $50,479.04. The settlement order entered by the Workers’ Compensation Commission expressly states that the carrier is entitled to subrogation and the lien.

In 2009 plaintiff filed a third party liability suit against Singleton Electric Company, the party that caused the injury, and it settled for $50,000 The suit was filed seven days before the statute of limitations ran and according to plaintiff’s counsel, it was unlikely to succeed on the merits.
The settlement with Singleton is subject to Zurich’s workers’ comp lien.

Plaintiff argues that reducing the statutory workers’ comp lien held by defendant Zurich American Insurance to pay other medical expenses and still receive some pain and suffering recovery is just and reasonable. Plaintiff asserts there would have been no third party recovery without her efforts, which should be compensated. Plaintiff argues she has not recovered anything for her pain and suffering and this results in a windfall for Zurich.

Zurich responds that a $9,000 reduction results in Zurich being paid $23,500 which is less than half of the total amount of the lien ($50,479.04). Zurich also argues that the subrogation lien is purely statutory and not subject to equitable principles that might allow reduction by the court.

Zurich had a valid lien, and plaintiff does not contest this. Thereafter, plaintiff entered into a settlement with a third party. The settlement does not exceed the lien, and plaintiff is not entitled to receive any additional recovery by virtue of a court-ordered reduction of the workers’ comp lien.

The motion to reduce the lien is denied because the court does not have the statutory or equitable authority to grant the relief sought.

Escobar v. Zurich American Ins. Co. (White) No. CL 2010-8066, Feb. 2, 2011; Fairfax Cir.Ct.; Daniel P. Barrera for plaintiff; Dana L. Plunkett for defendant Zurich. VLW 011-8-036, 4 pp.

VLW 011-8-036

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