While the long-term expense resulting from an injury can be significant, it’s impossible to
generalize and each case must be assessed separately in terms of severity and expectations for
recovery. Once the injury’s “time span” has been determined, it’s necessary to evaluate the likely
effect on long-term earning capacity and the rest of the family. Are they the primary
breadwinner? Are there dependent children or elderly parents they help out financially?
Any claims for future expense must be supported by experts, whether or not the case goes to
trial, and there are guidelines concerning who is a qualified expert. For instance, a life care
consultant can attest to diminished life expectancy. Others will need to evaluate earning capacity
or the need for future medical treatment or assistive devices.
Even assessing existing claims against the settlement can get tricky when hospitals, physicians or
private insurers are involved. A hospital, for instance, may not eventually assert its total claim
because of fee structures previously negotiated with Medicare or a private insurer. Or the
hospital may reduce its claims so that they won’t consume so much of the settlement that the
plaintiff has no incentive to pursue a personal injury suit at all.
From their differing perspectives, both the plaintiff and defendant may need to understand the
role that public benefits (Medicaid, Medicare, Supplemental Security Income, Social Security
Disability Insurance) or private insurance could play in deferring future costs.
While the defendant’s attorney obviously wants to limit the size of the settlement, many
jurisdictions consider such funding sources to be “collateral sources,” inappropriate for limiting
liability.
On the other hand, if the defendant has limited resources, it may be important to the plaintiff’s
negotiating strategy to understand other funding possibilities. If a personal injury attorney can
show the client that they can be made whole through additional means, they may agree to a
smaller settlement.
In complex personal injury cases, it can take years to come to settlement and, during that time,
significant debt may be incurred for living expenses. Personal savings and investments may have
been drained, credit cards maxed out and loans undertaken to “tread water” while awaiting
conclusion of the suit. These expenses must be given priority when negotiating the settlement,
because they won’t be covered by public benefits.
The reality is that, in most cases, the defendant’s ability to respond to liability claims is limited
to their insurance. Claims concerning pain and suffering, future earnings and future medical bills
are tough to get covered, making it important to negotiate down existing liens. Medical expense
is the major cause of bankruptcy in the U.S., and this can result if the defendant lacks resources to make the plaintiff whole and the plaintiff doesn’t have their own medical insurance to fill the gap.
