05/27/2022
Liens under the Kansas Workers Compensation Act:
Protecting Your Benefits
The Kansas Workers Compensation Law is designed to provide benefits to workers who are injured at work. It is a no-fault law which means that the employee does not have to prove that the accident occurred due to the negligence or fault of another person. At the same time benefits are limited.
The Kansas Workers Compensation Act (Act) provides protections against creditors who want to file a lien against workers compensation benefits. This is an important section of the law since injured workers are trying to live on- at most- two-thirds of their normal wage while they are under medical care and cannot work.
MEDICAL PROVIDERS:
K.S.A. 44-510j(h) states in part:
“Any health care provider…which accept the terms of workers compensation act by providing services or material thereunder shall be bound by the fees approved by the director and no injured employee or dependent of a deceased employee shall be liable for any charges above the amounts approved by the director…. No action shall be filed in any court by a health care provider or other provider of services under the act for payment of an amount for medical services or materials provided under the workers compensation act and no action to obtain or attempt to obtain or collect payment shall be taken by a health care provider or other provider of services under the act, including employing a collection service, until after final adjudication of any claim for compensation for which an application for hearing is filed…”
Therefore, medical providers cannot take collection actions against the injured employee for medical services while the workers compensation claim is being litigated. They cannot take a lien against workers compensation benefits to satisfy the debt.
CREDITORS:
The Act also prevents workers compensation benefits from assignment. This is covered under K.S.A. 44-514. Generally, no claim for compensation, or compensation agreed upon, awarded or adjudged, or paid, shall be assignable or subject to levy, ex*****on, attachment, garnishment or any remedy or procedure for the recovery or collection of a debt, and this exemption cannot be waived.
If the workers compensation benefits are kept separate from other funds-so that they do not lose their identity- these benefits cannot be executed upon in payment of a debt. This is true even if the injured worker has signed a contract to assign his workers compensation benefits such as frequently seen in litigation financing companies.
At times this provision causes conflict between the injured worker and his attorney. The injured worker is desperate for funds and wants to sell his workers compensation claim to a litigation financing company. These companies will not advance funds without the claimant’s attorney signing an agreement to hold the settlement in repayment. However, under K.S.A. 44-514 the attorney cannot ethically sign this type of agreement. (This is probably best for the client since these agreements charge absorbate rates of interest.)
CHILD AND SPOUSAL SUPPORT:
There is an exception to this rule pursuant to the “income withholding act” K.S.A. 23-3101. Weekly compensation checks and lump sum settlements are subject to an order for enforcement by means of assignment of a portion of the compensation. There are procedures that must be followed to enforce the order for child support.
• Any involuntary assignment shall be obtained by motion filed within the case which is the basis of the existing order of support.
• The motion shall be served on the claimant and the claimant’s counsel to the workers compensation claim and shall include-if known- the amount of the current support order to be enforced and the amount of any arrearage.
• The motion needs to specify whether the assignment requests seek to attach compensation for current support or arrearages or both.
These motions shall be granted. Current support is enforceable from benefits paid on a weekly basis but shall not exceed 25% of the workers gross weekly compensation. This excludes medical compensation. Past support shall be collectable from lump-sum settlements and awards. This is not to exceed 40% of the lump sum, excluding any medical costs or compensation.
Remember that each month that support comes due creates a separate judgement. If the injured workers is off work this does not change the amount of support due. The claimant should consult his family law attorney to see if modification of the support order should be obtained.
The support order applies to the gross proceeds, not to the net compensation due after deduction of the 25% due to claimant’s attorney. See Moore v. Cattle Empire, LLC, Docket No. 1,063,869 (WCAB 7/2014).
MEDICARE SUBROGATION RIGHTS
Medicare is a secondary payor. This means that if a medical bill is incurred due to a work-related accident, the workers compensation insurance carrier is primarily liable. There can be a delay between when a bill is filed for a work-related injury and when the work comp insurance decides if they will pay the bill. Medicare will not pay for medical services that the work comp insurance carrier pays promptly-generally 120 days. Medicare may make a conditional payment if the workers compensation insurer denies payment for the medical bill pending review of the claim that takes generally 120 days or longer. Medicare may also mistakenly pay a bill that should have been paid by the work comp insurance carrier. Conditional payments need to be resolved as part of any Award of workers compensation settlement.
THIRD PARTY ACTIONS AND THE SUBROGATION RIGHTS OF THE EMPLOYER
When an employee is injured at work, the Kansas Workers Compensation Act is the exclusive remedy against both the employer and any co-employees. See K.S.A.44-504. However, when the injury or death is caused under circumstances creating a legal liability against some person other than the employer or any person in the same employ, the injured worker has the right take compensation under the Act and pursue a remedy by action in a court of competent jurisdiction against the other person.
In the event that a recovery is made against the third party, the employer has a subrogation right to the extent of compensation and medical aid provided by the employer to the date of such recovery. The employer is granted a lien against the entire amount of such recovery, excluding any recovery determined by the court to be loss of consortium or loss of services to the spouse.
The employer shall receive notice of the action, have the right to intervene and may participate in the action. The district court shall determine the extent of participation by the employer.
Whenever workers compensation benefits continue to be owed after the conclusion of the third-party action, the employer is granted a “credit” against the judgment or settlement to the extent that judgement continues to exceed the amount paid by the work comp insurance carrier.
Under K.S.A. 44-504(d) if the negligence of the workers’ employer or those for whom the employer is responsible, other than the injured worker, is found to have contributed to the party’s injury, the employer’s subrogation interest or credits against future payments of compensation and medical aid shall be diminished by the percentage of recovery attributed to the negligence of the employer or those for whom the employer is responsible, other than the injured worker.
This is an important provision, in that the negligence of the employer or co-employees may substantially reduce or even eliminate the subrogation lien. For example, if the “recovery” in the third-party case is $200,000.00 and the employer and co-employees are determined to be 50% at fault, the subrogation lien is reduced by $100,000.00.
Remember this has to be determined as part of the third-party case, not as part of the workers compensation case. The injured worker cannot settle the third-party case and then try to reduce the lien in the workers compensation proceedings.
Workers Compensation benefits are limited. Rarely is the injured worker “made whole” for the damages and losses resulting from the work accident. As such, it is important that those benefits paid are not further reduced by liens and subrogation interests.
Contact the attorneys at McCullough, Warehiem and LaBunker for more specific information or help in protecting your workers compensation benefits.
Jan L. Fisher
McCullough, Wareheim & LaBunker.
