Initially I thought about titling this blog, "The Dangers of Settling Without Attorney Representation." However, about halfway through writing this blog, I realized that hiring an attorney doesn't always prevent uninformed settlements.
Sadly, there are many attorneys who only dabble in personal injury accident cases and have so little knowledge and experience in this area of the law that you can probably get the same result without them. So this blog is not a pitch to convince you to hire counsel but more a warning. If you are about to settle your injury accident case (with or without a lawyer) with the insurance company, Watch Out & Proceed with Caution.
A) SETTLING FOR WHAT YOUR BILLS ARE INSTEAD OF WHAT THEY LIKELY WILL BE:
Often times I hear from personal injury accident victims weeks or even months after their accident. They tell me that the insurance company offered them a thousand dollars over and above the current medical bills. My first question is always the same: "what do you know about your future medical needs?" Inevitably, their answer is always the same-they have no idea. The reason they don't know is because their doctor has said nothing this early into care about future medical needs and they haven't asked. I caution them and you that you should never settle any personal injury case until you have had a detailed and frank discussion with your doctor about what medical care you will likely need in the future. The insurance company makes early offers to tempt the weak at heart to cut and run. They continue to do it, because it has been very successful for them in cutting and minimizing their losses.
B) SETTLING WITHOUT REGARD TO THE MONEY THAT HAS TO BE PAID BACK
This is a huge problem. I am afraid that this mistake is happening time and time again. When the insurance company settles with you, it means they expect you to sign a release in exchange for a lump sum figure. These poor people often think that they picked up, say $7,500, for their settlement. Then six months later they get a letter from their own health insurance company, or worse, Medicare, saying that they owe $15,000 or more for their accident-related medical expenses. The consequences can range from being sued by these entities to the health insurance company revoking the person's insurance coverage, or both. Most injured victims don't realize that even though they have health insurance to pay for the medical expenses upfront, eventually those companies will demand to be reimbursed from any eventual settlement proceeds. When settling your case with the at-fault insurance company, you have to be aware of what has been spent on your behalf by other companies and who is expecting to be paid back.
1) Health Insurance: Health insurance generally has contractual rights to reimbursement for expenses that they paid related to the accident. This is called subrogation. If you get notice from the insurance company before settlement that they expect to be reimbursed, you need to take it seriously. You must consider their claim in reaching any settlement. Also, you should communicate with them regularly before settling. Don't just assume that your health insurance carrier is in contact with the auto insurance carrier.
2) Medicare/Medicaid: If your medical expenses were paid by either Medicaid or Medicare, understand that they have an automatic and very strong lien (right to be reimbursed) on any settlement proceeds recovered. They do not even have to give you notice of their intent to collect their money. The law presumes that you are on notice of their claim. If you fail to consider their lien when reaching a settlement, that very critical error will cost you in a very large way. They will sue you for the money they already paid related to the accident, and they will likely pursue attorney fees, and penalties for having to sue you.
3) Worker's Compensation: If your injury claim was paid for by your employer's insurance company through worker's compensation, expect to have to pay back the medical, wage loss and impairment compensation. There are some very notable exceptions that may save you some money when it comes to worker's compensation reimbursement, but again, the time to get informed is BEFORE settling with the auto insurance company.
Be careful when settling your case to know who is responsible to pay what. Also, make sure that the settlement is not only fair right now but also, that it makes sense in comparison to future medical needs and after proper analysis of what has to be paid back from settlement. The time to become educated on the pitfalls of an uninformed settlement is now.
At Anderson, Hemmat & McQuinn, we would be happy to provide you a free consultation for this or any legal concern.