/>iIn fall 2024, Nevada’s Supreme Court overruled 38 years of precedent concerning how workers’ compensation liens are resolved in personal injury claims. Nevada’s Senate has now passed a bill to limit the amounts workers’ compensation carriers can recover and provides a system to decide the lien amount. The bill now goes to the Assembly for consideration.
Background
As discussed in a prior article, from 1986 through fall 2024 the Breen formula that the Supreme Court created governed how injured workers and their workers’ compensation carriers determine how much of a workers’ compensation lien needed to be repaid after a personal injury recovery. AmTrust North America, Inc. v. Vasquez overruled Breen because the formula conflicted with NRS 616C.215 and did not work. “Here, the Breen formula failed to provide a net positive recovery for AmTrust, demonstrating that it is mathematically flawed and unworkable.”
When applied in this case, it produced a “net negative recovery for AmTrust” while producing “a double recovery” for the worker. Instead, injured workers were instructed to follow NRS 616C.215(5), stating that the workers’ compensation carrier “has a lien upon the total proceeds of any recovery from some person other than the employer, whether the proceeds of such recovery are by way of judgment, settlement, or otherwise.” It also specifies that injured employees “are not entitled to double recovery for the same injury.”
Senate Bill 258 as Amended
On April 22, 2025, SB 258 as amended passed the Senate 21-0. As passed, SB 258’s primary change is to insert a new section to be labeled NRS 616C.215(7).
NRS 616C.215(7)(a) would limit the workers’ compensation carrier’s lien to the lesser of:
- The full amount of the lien or
- One third of the total amount recovered from the person other than the employer or person in the same employ. As used in this subparagraph, “total amount recovered” means the total proceeds described in subsection 5 including, without limitation, any attorneys’ fees or costs.
The expansive language in the proposed NRS 616C.215(7)(a)(2) does not limit the lien to just the verdict amount. If the injured worker recovers taxable costs, pre-judgment interest, or attorneys’ fees, those amounts increase the total subject to the lien.
But if NRS 616C.215(7)(a)(2)’s one-third limitation is triggered, NRS 616C.215(7)(b) would then reduce that one third by 50 percent “of the reasonable expenses incurred by the injured employee… in prosecuting or settling the claim….” NRS 616C.215(7)(b) then creates a procedure for determining those expenses. The expenses must be verified by a CPA, whose verified accounting must be provided to the insurer. The insurer can dispute the verified accounting by filing a petition for judicial review.
Potential Impact
At present, insurers have a lien against the total amount of damages recovered. There is no requirement that they reduce the lien at all. It is possible there are fact patterns where the revised NRS 616C.215(7)(a)(2) might still “result in the divestment of the insurer's statutory lien in favor of providing an insured with double recovery,” which is what the Supreme Court rejected in Vasquez. Insurers monitoring this legislation may wish to consider how NRS 616C.215(7)(a)(2) could affect their ability to recover.
