In a third-party recovery with a WC lien, does the lien reduce the net recovery payable to the employee?

• A. True.
• B. False.
• C. Only if the lien is greater than the recovery.
• D. It depends on the attorney's fees.

Answer: (A)

When a worker collects from a third party for a work‑related injury, the workers’ compensation insurer has a right to be reimbursed from that third‑party recovery. The WC lien is attached to the third‑party settlement and reduces the amount that finally goes to the employee. In practice, the third‑party recovery is first used to pay attorney fees and costs, then to satisfy the WC lien (to the extent benefits were paid or payable), and the remainder goes to the employee. This prevents double recovery for the same injury.

So the lien reduces the net recovery payable to the employee in all cases, even if the third‑party amount is smaller than the lien. Attorney’s fees affect how much the employee ultimately receives from the remainder, but do not negate the lien’s effect.