                                 CODE OF VIRGINIA

LIEN AGAINST SETTLEMENT PROCEEDS OR VERDICT IN THIRD PARTY SUIT; SUBROGATION OF
EMPLOYER TO EMPLOYEE&#8217;S RIGHTS AGAINST THIRD PARTIES; EVIDENCE; RECOVERY;
COMPROMISE (§ 65.2-309)

A. A claim against an employer under this title for injury, occupational
disease, or death benefits shall create a lien on behalf of the employer against
any verdict or settlement arising from any right to recover damages which the
injured employee, his personal representative or other person may have against
any other party for such injury, occupational disease, or death, and such
employer also shall be subrogated to any such right and may enforce, in his own
name or in the name of the injured employee or his personal representative, the
legal liability of such other party. The amount of compensation paid by the
employer or the amount of compensation to which the injured employee or his
dependents are entitled shall not be admissible as evidence in any action
brought to recover damages.

B. Any amount collected by the employer under the provisions of this section in
excess of the amount paid by the employer or for which he is liable shall be
held by the employer for the benefit of the injured employee, his personal
representative, or other person entitled thereto, less a proportionate share of
such amounts as are paid by the employer for reasonable expenses and
attorney&#8217;s fees as provided in &#xA7; 65.2-311.

C. No compromise settlement shall be made by the employer in the exercise of
such right of subrogation without the approval of the Commission and the injured
employee or the personal representative or dependents of the deceased employee
being first obtained.

D. If an injured employee, his personal representative, or a person acting on
behalf of the injured employee receives the proceeds of the settlement or
verdict and the employer&#8217;s lien pursuant to subsection A has not been
satisfied, the employer shall have the right to recover its lien either as a
credit against future benefits or through a civil action against the person who
received the proceeds.

E. Any arbitration held by the employer in the exercise of such right of
subrogation (i) shall be limited solely to arbitrating the amount and validity
of the employer&#8217;s lien, (ii) shall not affect the employee&#8217;s rights
in any way, and (iii) shall not be held unless:

   1. Prior to the commencement of such arbitration the employer has provided the
   injured employee and his attorney, if any, with an itemization of the expenses
   associated with the lien that is the subject of the arbitration;

   2. Upon receipt of the itemization of the lien, the employee shall have 21
   days to provide a written objection to any expenses included in the lien to
   the employer, and if the employee does not do so any objections to the lien to
   be arbitrated shall be deemed waived;

   3. The employer shall have 14 days after receipt of the written objection to
   notify the employee of any contested expenses that the employer does not agree
   to remove from the lien, and if the employer does not do so any itemized
   expense objected to by the employee shall be deemed withdrawn and not included
   in the arbitration; and

   4. Any contested expenses remaining shall have been submitted to the
   Commission for a determination of their validity and the Commission has made
   such determination of validity prior to the commencement of the arbitration.

HISTORY: Code 1950, § 65-38; 1960, c. 89; 1968, c. 660, § 65.1-41; 1991, c.
355; 2004, cc. 914, 941; 2017, cc. 81, 288.