Short Answer

Yes. In North Carolina, workers’ compensation insurers have a lien on your third‑party settlement, but the lien can be reduced by agreement or by a Superior Court judge. Attorney’s fees and case costs come off the top before the lien is paid, and a judge can further reduce or even extinguish the lien when fairness requires it.

Understanding the Problem

You want to know if you can reduce the workers’ comp lien before disbursing your personal injury settlement. In North Carolina, the injured worker (you) must address repayment of comp benefits paid by the employer/carrier when there is a third‑party recovery. Here, you already received workers’ comp benefits and are finalizing a settlement, so the immediate issue is whether, and how, the lien can be negotiated or reduced.

Apply the Law

North Carolina law gives the employer/carrier a lien on your third‑party recovery for the workers’ compensation and medical benefits it paid. When you settle or win your personal injury case, the money is distributed by statute: costs and a reasonable attorney’s fee are paid first, then the lien, then any remainder to you. If there is disagreement about the lien, a Superior Court judge can decide the amount and may reduce it in the interest of fairness. The Superior Court is the forum for any lien‑reduction motion, and this should be resolved before settlement funds are disbursed.

Key Requirements

• Valid lien: The employer/carrier paid workers’ comp benefits tied to the injury that produced your third‑party claim.
• Third‑party recovery: You obtain a settlement or judgment from someone other than your employer/co‑employee.
• Statutory distribution: Costs and a reasonable attorney’s fee are paid first; the lien is paid from the net; any remaining balance goes to you.
• Agreement or court decision: The lien amount can be set by agreement among the parties or by a North Carolina Superior Court judge.
• Judicial reduction available: On motion, the judge may reduce or extinguish the lien after weighing fairness and the circumstances of the case.
• Notice to lienholder: The employer and its insurer must receive notice and an itemized accounting when you seek approval or reduction.

What the Statutes Say

• N.C. Gen. Stat. § 97-10.2 (Third-party liability and lien) - Creates the workers’ comp lien, sets the order of distribution, and allows a Superior Court judge to decide and reduce a lien.

Analysis

Apply the Rule to the Facts: You received workers’ comp benefits, so the insurer has a lien on your third‑party settlement. Your attorney can first deduct approved costs and a reasonable fee, then address the lien from the remaining funds. If negotiation does not yield a fair compromise, you can ask a Superior Court judge to reduce the lien before any money is disbursed.

Process & Timing

1. Who files: The injured person (through counsel). Where: North Carolina Superior Court, typically where the third‑party case is filed. What: A motion/petition to determine and, if needed, reduce the workers’ compensation lien under the third‑party lien statute; include the itemized lien ledger, settlement terms, and proof of notice to the employer/carrier. When: File before disbursing any settlement funds.
2. Obtain a hearing date before a Superior Court judge. Be prepared to present the total benefits paid, settlement amount, fees and costs, available insurance, and any liability or collection risks. Timing varies by county; courts often set hearings within a few weeks.
3. After the hearing, the judge enters a written order setting the lien amount and distribution. Then disburse funds according to the order.

Exceptions & Pitfalls

• Attorney’s fees and costs come off the top, but the court must find the fee reasonable; bring your fee agreement and time/cost details.
• If there’s limited insurance or disputed liability, ask the court to weigh fairness; do not assume the full lien must be paid.
• Give written notice and an itemized accounting to the employer/carrier; lack of notice can delay or derail approval.
• Expect a potential “future credit” against ongoing comp benefits if you net money after reimbursement; account for this when planning medical care and income needs.
• Other liens (e.g., Medicare/Medicaid) are separate and must be handled too; keep them distinct from the workers’ comp lien.

Talk to a Personal Injury Attorney

If you're resolving a third‑party settlement and need to handle a workers’ comp lien, our firm has experienced attorneys who can help you understand your options and timelines. Call us today at 919-341-7055.

Disclaimer: This article provides general information about North Carolina law based on the single question stated above. It is not legal advice for your specific situation and does not create an attorney-client relationship. Laws, procedures, and local practice can change and may vary by county. If you have a deadline, act promptly and speak with a licensed North Carolina attorney.