Workers' Compensation Lien Recovery

The Supreme Court of Indiana issued a decision in the case of Depuy v. Farmer, 847 NE 2d 160 (Ind. 2006) in which the lien and subrogation provisions of I.C. 22-3-2-13 have been amended and/or clarified. Traditionally, I.C. 22-3-2-13 has universally been applied to terminate all workers' compensation benefits in the event of a third party settlement. In the Depuy case, the Indiana Supreme Court has limited the employer’s right to terminate benefits in the event of a third-party claim. The Supreme Court has suggested, but NOT RULED that when a third-party settlement is obtained before a workers' compensation claim has been resolved, and is in an amount less than the anticipated workers' compensation benefit, than the third-party settlement may not operate as a bar to the payment of future workers' compensation benefits.

Unfortunately for employers, the Court did not specifically rule that, as the case was able to be decided on other grounds. However, the case is representative of a trend in Indiana in which the courts have sought to limit the absolute provisions of I.C. 22-3-2-13 in terminating future workers' compensation benefits. Prior cases that have limited an employer’s ability to terminate benefits upon a third-party settlement are Ansert v. Mechanical Contractors, Inc., 690 NE 2d 305 (Ind. Ct. of Appeals 1997) and Calvary Temple Church, Inc. v. Paino, 555 NE 2d 190 (Ind. Ct. of Appeals 1990).