BEWARE OF WORKMAN’S COMPENSATION LIEN IF YOU ARE A FEDERAL EMPLOYEE AND WERE IN A CAR ACCIDENT.

Michigan has a very unique No-Fault system in many ways. There are different levels of priority for auto insurers, there are coordinated benefit options with health insurance, there are exceptions to coordinated benefits with health insurance, there is workmen’s compensation that takes priority over PIP benefits, and the list goes on and on.

One very rare circumstance is when a federal worker is injured in a motor vehicle accident while on the job. The general law in Michigan is that a car accident victim who was injured on the job must look to their workmen’s compensation carrier to pay medical benefits and wage loss. The PIP carrier is still responsible for wage loss differential (if applicable) and other benefits include household replacement services. However, in situations where that injured car accident victim is a federal employee hurt on the job, there may be a lien coming your way.

The U.S. Department of Labor will assert a lien for workmen’s compensation benefits they have paid to a federal employee injured in a car accident on the job. There is no exception to this. Even though Michigan Law states that workmen’s compensation carrier is primary, the Federal Employees’ Compensation Act (FECA) preempts state law under The Supremacy Clause. In these situations, FECA will claim on a lien. However, this lien is not on the first party claim as it typically would be with Medicare/Medicaid. It is, instead, a lien on any third party liability claims. Therefore, it is extremely important not to settle your third party case, until you are aware of the amount of the lien.

Furthermore, you want to make sure not to settle any first party claims (assuming you have a pending lawsuit) until you receive this lien either. This is because your first party carrier is required to reimburse you for the lien that you pay on your third party case. The authority for this can be found in the Michigan Supreme Court’s holding in Sibley v. Detroit Auto. Inter-Insurance Exchange, 431 Mich 164 (1988).

Therefore, the lesson to take from this is two-fold. First, if you are a federal employee injured in a car accident and receiving federal workmen’s compensation benefits, there will be a lien on any third party liability cases. So do not settle until you know that amount. Second, even though there is a lien on your third party pain and suffering case, you can be reimbursed for what you paid on that lien by your first party insurance carrier.