Let’s jump to conclusions: a personal injury case is ultimately about fair monetary compensation for any injuries caused. While many people unfortunately cannot return to the condition they were before an injury occurred, the most proximate relief our legal system has found is to compensate victims with a certain dollar amount. When an injured person receives a settlement, the settlement is intended to cover any and all “damages”, meaning the injured party must pay any obligations/bills out of that settlement. The injured person, then, has a responsibility to satisfy any outstanding debts.
There are several types of parties which can have an interest in a personal injury settlement. To start with the most obvious: the injured party. The sole cause why there is a case in the first place is because someone was injured. As such, the person suffering from an injury has a great interest in the claim. The victim is interested in regaining health, paying those medical providers which assisted in this goal, and if the case warrants it, covering pain, suffering, mental anguish, and any other miscellaneous damages which the incident caused. It is important to mention that although the victim’s interest in a settlement is high, their share of the settlement comes out only after paying every other party first. That is why a good personal injury attorney will do everything in his/her power to protect the settlement and only pay reasonable/necessary charges or claims against it.
The next important party in a personal injury case is none other than the attorney. An injured party in distress consults with an attorney and ultimately chooses to enlist him/her to assist with the injury claims. Attorneys are the ones that ultimately do the most in a case, and as such, their services depend on the settlement. I believe it is safe to say that, sometimes, without an attorney, a claim may not be successful or as successful as it could.
After the attorney fees have been satisfied, portions of the settlement must be paid out to the next interested parties: health insurances and/or Medicaid/Medicare. When an injured party uses their health insurance, Medicaid/Medicare to cover some of the bills for injuries caused by someone else, these insurances have a right to assert an interest against the settlement. Analyzed objectively, this is a fair approach given that they paid money out of their own accounts to cover some injuries which were caused by another party. In the case of Medicaid/Medicare, the attorney must pay every single cent back to these programs since they are government, tax-payer funded. Under very specific circumstances, these programs may consider a reduction, though a thorough disclosure of the settlement amount and case must be made.
Health insurances are a bit more flexible in some instances. For the most part, any commercial policy bought by the injured party directly will reduce their recovery by 1/3, acknowledging the fact that the attorney fees need to be satisfied often in the same amount of 33.33%. If, however, the health insurance is privately funded, for example through a job program, and if the plan qualifies under specific federal guidelines, then they have the right to recover the entire amount originally paid.
After the health insurance liens are resolved, an attorney must face any medical liens attached to the settlement. In the State of Texas, for a lien to be valid, it must be filed with the County Clerk. Further, the lien must come from an emergency services provider who treated the injured party in the first 72 hours after an accident occurred. If these standards are not met, the lien is not valid and the attorney does not have to honor it. When the lien is valid however, it means the attorney must negotiate a settlement amount with the medical provider before paying any other bills, which in turn will mean the lien holder will release the lien and accept the agreed-upon amount.
Another category of lien, which is not too often seen, is a legal financing loan lien. When injured parties are in need of money before a case settles, they can seek the aid of lending programs. These programs will provide funds with an agreed upon interest, and the ultimate amount to be paid will be taken from the settlement.
As the review above shows, settling a case is not the final step in a personal injury case. The question remains as to who is entitled to the funds, and whether they should reduce the amount they are attempting to recover. An experienced attorney, like a personal injury attorney Arlington TX relies on, will be knowledgeable on the law involving these liens, as well as whether there is room for negotiation and therefore room to secure a bigger settlement for the client.
Thanks to our friends and contributors from Brandy Austin Law Firm, PLLC for their insight into personal injury settlements.