The gross amount of the LS is the total settlement minus any amounts that are not
subject to offset (e.g., inchoate amounts), but prior to any adjustment for excludable
expenses.
Liens (a legal device for securing payment of an underlying debt or financial obligation)
against a WC/PDB award settlement rarely affect the gross lump sum amount. Liens for
unpaid medical bills or payment of attorney fees incurred by the worker to obtain
the WC/PDB benefits are not deducted from the gross LS amount prior to proration,
but are instead treated as excludable expenses. Liens for back taxes owed, unpaid
child support, or unpaid alimony have no relevance to the offset calculation. Taxes,
child support, alimony payments, or other personal obligations of the worker do not
reduce the gross WC/PDB settlement amount.
Example: An entity other than a WC carrier, i.e., the Department of Public Aid, agrees to
assist the family and pays $20,000 pending a WC award. The disabled worker is subsequently
awarded a WC lump sum settlement of $100,000. The settlement stipulates that a lien
amount of $20,000 is due the Department of Public Aid. It is irrelevant whether the
settlement stipulates the claimant receives the entire $100,000 and then reimburses
the Department of Public Aid, or the claimant receives $80,000 and the remaining $20,000
is paid directly to the Department of Public Aid. In either situation, offset is imposed
based on the entire $100,000 WC settlement awarded the claimant.