A question many people ask early in their personal injury cases is “How much will I receive?” or “What is my case worth?”
Beyond the fact that it is next to impossible to predict the value of a case, due to dozens of factors that cannot be controlled or are not known at the onset, the question being asked is not “What is my case valuation?” but rather “How much money will I actually get in my pocket at the end?”
The answer to that second question is dependent upon what amounts need to be repaid during the denouement of the case.
Many people assume that when they read about a settlement or verdict that is $300,000, it means the injured party receives that amount.
Not even close.
In a typical personal injury case, the contingent fee retainer agreement provides for a fee of one-third of the total gross proceeds to be paid to the attorney in the event of a settlement or verdict in the plaintiff’s favor. Some agreements are for 40% in the event of a lawsuit being filed, although I have never done that.
Additionally, plaintiff’s lawyers advance and pay for costs of pursuing their clients’ cases. This cost might be as minimal as $6 to obtain a police report, to a few hundred dollars to obtain medical data. However, in some complex cases involving retaining experts to testify, costs can easily reach into the 6-figure range.
And, yes, upon resolution, the plaintiff agrees to pay the attorney’s fees and to repay the attorney for the costs advanced.
But we are not done yet!
Most health insurance has a provision that requires the insured to repay it for any amounts expended, if the insured receives compensation from a third party—like in a personal injury lawsuit.
The advantage here is that if your health insurer pays your $5,000 hospital bill, it likely does so at a discounted rate. Let’s assume that it pays about $1,800. On completion of your case, you would owe the insurer that money. But your lawyer can do you a favor and, at least in most cases, reduce that amount quite a bit. You might only have to pay back $1,200 on that original bill. While many insurance policies contain provisions limiting any reductions (legally), it pays to have an attorney familiar with applicable laws on ERISA, liens, and similar issues, so they can obtain the best result for you.
Then, there may be hospital or physician’s liens. Each provider may attach a lien to your case. This allows them, provided they do it properly, to prevent you from receiving your settlement money unless you pay them what is owed.
Without getting into the complex weeds that are Illinois lien laws, these providers generally are entitled to receive the full value of their bills. Even if lien law works in favor of the patient/plaintiff to reduce that amount, the provider can always sue the plaintiff/patient directly for the full amount of the bill.
This is another area where having a lawyer who understands the law is advantageous for the client. A lawyer knows how to negotiate, reduce, and compromise unpaid bills and liens.
My policy is almost always to negotiate a global settlement with lienholders, so that whatever amounts are paid out of the settlement end any and all duties from that client to pay for any services. In short, I settle the amount due and the lien simultaneously.
Yes, you will!
Your auto policy contains a provision that requires you to repay contractually (similar to your health insurance policy) any time you receive compensation from a third party.
For example, if you get in a crash and get hurt and get taken to the emergency room by ambulance, you are looking at expenses of about $5,000. If your auto policy has a medical payments or PIP provision, you can submit bills up to the dollar limit on your policy. Many policies have a med pay limit of $5,000, although some are as high as $25,000 or as low as $1,000. Read your policy.
If your auto carrier pays those $5,000 in bills, you have to pay it back. Some carriers adhere to the legal fiction of the “common fund doctrine,” which states that since you had an attorney “create” this “fund of money” from which to pay back your insurer, it will in turn reduce that amount by the percentage of the attorney’s fees charged to you. It’s as if your insurer “hired” your attorney to get money from the at-fault party in order to pay your insurer back. Like I said, it’s a legal fiction, but it’s one that is helpful to you. Again, if your lawyer knows how to work this, it saves you a lot of money and puts more in your pocket.
Not so fast.
Medicare has a “super lien,” or an automatic lien upon all personal injury proceeds. You can be sued directly (so can your lawyer) for these amounts and more if you fail to adequately protect Medicare’s interests!
This is a very complex area of the law, but the process should work as follows:
Your lawyer informs Medicare early in your case that you were injured due to another party’s negligence and that you are a Medicare recipient. Medicare then informs your lawyer of a conditional payment at the end of the case, the amount it seeks to be repaid. Again, this is at a steep discount, because Medicare doesn’t pay dollar for dollar.
Your lawyer reviews the conditional payment and ensures all amounts are related to your case, then issues a final settlement sheet to Medicare. Medicare then issues a final demand. This is the amount you pay out of your settlement. If you are involved in a crash or slip and fall and Medicare pays your bills, you and your lawyer are violating the law if your lawyer does not pay Medicare out of the final settlement.
Be sure you are provided a final settlement summation that you sign at the end of the case. It should detail all payments.
As in all cases involving injury and potential liability, if you have been hit by a vehicle, you should immediately get medical treatment, report the crash to police and your own insurance company, and contact a lawyer with expertise in your type of case, such as auto accidents, bicycle accidents, or pedestrians hit by cars.
If you've been in an accident and have questions, contact Chicago personal injury attorney Stephen L. Hoffman for a free consultation at (773) 944-9737. Stephen has nearly 30 years of legal experience and has collected millions of dollars for his clients. He is listed as a SuperLawyer, has a 10.0 rating on Avvo, and is BBB A+ accredited. He is also an Executive Level Member of the Lincoln Square Ravenswood Chamber of Commerce.
Stephen handles personal injury claims on a contingency fee basis, which means you don’t pay anything upfront and he only gets paid if you do. Don’t wait another day, contact Stephen now.