In a third-party subrogation, which lien is limited to the net recovery amount?

• A. The employer's lien
• B. The employee's lien
• C. The insurer's lien
• D. The attorney's lien

Answer: (A)

In third-party subrogation, the employer’s lien is the one that is capped by the net recovery amount. Here’s why this matters: when benefits have been paid to a worker, the employer (or its workers’ comp insurer) has a right to be repaid from any money recovered from the third party responsible for the injury. The amount that can be recovered from the third party is the net recovery—the total third-party recovery after deducting reasonable attorney fees and costs. Limiting the employer’s lien to that net amount ensures the employee’s actual net recovery isn’t eroded beyond what’s left after those fees, and it prevents the employer from taking more than the worker ultimately receives from the third-party settlement or judgment. The employee’s lien and the attorney’s lien deal with securing payment of the employee’s costs and attorney fees, and the insurer’s lien relates to benefits paid; those do not operate under the same net-recovery cap in the way the employer’s lien does in this context.