Before this recent update if you took lethal damage while in Lich form it would turn you back into human form at full HP, just as the skill describes.
Currently, if you take lethal damage in Lich form, you just die.
From the limited testing I have done it APPEARS (I could be wrong) that it just combines your life total as Lich form and Human form and if you take enough damage in total to equal the combined health, you just die.