In a third-party recovery, which lien condition gives the first right of recovery to the Employer?

• A. Employer, if lien doesn't exceed the amount of recovery
• B. Employee
• C. 1/3 to employee; 1/3 to employer; 1/3 to attorney
• D. Employer

Answer: (A)

In a third-party recovery, the employer’s lien gives it priority to be repaid from the employee’s third-party settlement, but only to the extent of what is actually recovered. This means the employer has the first right to the recovery, up to the amount obtained from the third party. If the settlement or judgment is large enough, the employer is paid first and the remaining funds go to the employee (and, if applicable, to a attorney under the fee rules). If the third-party recovery is smaller than the lien, the employer receives what is recovered. This conditional priority explains why the best choice is that the employer has the first right to recovery up to the amount recovered.