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Workers' Compensation

United States: Bankruptcy Debtor Fails in Attempt Avoid Paying Med Providers

A U.S. Bankruptcy Court, construing Wisconsin’s property exemptions law, Wisconsin Statute § 102.27, held that the sum of $400,000, which had been paid by the workers’ compensation carrier of the bankruptcy debtor’s employer into the trust account of the debtor’s attorney following the settlement of a contested claim, was held in trust for those that had provided the debtor with medical treatment. As such, the money was not a part of the bankruptcy estate and could not be claimed as exempt under § 102.27. The Court acknowledged the arrangement in which the debtor agreed to compromise the contested claim for $120,000 paid to the claimant, $30,000 paid to his attorney, with the $400,000 paid to the trust account “for disbursement to medical providers and lienholders,” amounted to an express trust. Since it was not part of the bankruptcy estate, the debtor could not seek to claim it as exempt property.

Thomas A. Robinson, J.D., the co-Editor-in-Chief and Feature National Columnist for the LexisNexis Workers’ Compensation eNewsletter, is co-author of Larson’s Workers’ Compensation Law(LexisNexis).

LexisNexis Online Subscribers: Citations below link to Lexis Advance.

See Branko PRPA MD LLC v. Ryan (In re Ryan), 2021 Bankr. LEXIS 739 (E.D. Wis., Mar. 24, 2021)

See generally Larson’s Workers’ Compensation Law, § 89.07.

Source: Larson’s Workers’ Compensation Law, the nation’s leading authority on workers’ compensation law

For a more detailed discussion of the case, see

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