"Post Settlement" Issues

In recent years, a myriad of “post settlement” issues have arisen in the field of personal injury settlements. Many of these issues have such far reaching consequences that defense and plaintiff attorneys alike believe it wise to affirmatively address them in order to avoid potential legal malpractice claims. What could raise concerns to this level of attention?

Well, “post settlement” is a pretty broad term and it could refer to a great many things. Let’s examine a few:

Liens – Is the plaintiff receiving Medicare, Medicaid or SSDI benefits? If so, there will likely be a Medicare and or Medicaid lien for past expenses and these must be satisfied out of the settlement proceeds. Other liens and interested parties can exist as well.

Future Medical Care - Will the plaintiff be receiving any future treatment related to this injury? If so, who will be paying for that care?

• If the plaintiff is receiving Medicare or has a reasonable expectation of receiving Medicare within the next 30 months, a Medicare Set-Aside arrangement may be advisable even in a third-party liability case, depending on the circumstances.
  
  
• If the plaintiff is receiving any means-tested public benefits such as SSI, Medicaid, Medicaid Waiver, SNAP (formerly “Food Stamps”), Section 8 Housing, or a Group Home, then the advisability of establishing a special needs trust should be considered.
  
  
• Does the plaintiff have adequate medical insurance? Even if the plaintiff has Medicaid and Medicare, better insurance may be available. Not all providers accept Medicaid. Medicare has deductibles, copayments, and maximums. A fund to pay these uncovered expenses should be considered.

Remaining Settlement Funds – Is the plaintiff receiving a significant sum from the settlement? Have proper measures been taken to prepare them to receive it?

• Have taxes been considered? Income, estate, and gift?
  
  
• What about dissipation risk? If the individual is a minor, incapacitated person, or young adult, protection measures may be advisable. Has a settlement preservation trust been considered? Duly appointed trustees can conserve and preserve the recovery for its intended purpose.
  
  
• What about living expenses? Has the injury impacted the claimant’s ability to work? Significant injuries not only disrupt but can also permanently impair a claimant’s ability to earn a living. Section 104-qualified structured settlements are the perfect vehicle for income replacement because they are guaranteed and non-taxable.

Still, some thought has to go into the allocation of settlement proceeds to meet future vs. immediate needs. Claimants have debts to pay down, they need reliable transportation and should establish a cash reserve for emergencies. A balance of 50/50 cash at settlement to structure seems to work for most people, but this ratio will vary case-by-case.

While many of these arise only after hard negotiations have taken place, many of them could and would be more properly addressed in the months and weeks leading up to the settlement.

When should you ask? Ahead…of…time is the best time to be asking.

• Is the plaintiff receiving SSDI? If so, they will qualify for Medicare within two years after the Disability Determination. Has anyone seen the “Conditional Payment Letter?” Not knowing an actual lien amount can potentially prevent an otherwise settle-able case from settling. (After settlement it’s also good practice to obtain a “Final Payment Letter” from CMS).
  
  
• Is the plaintiff receiving SSI (different from SSDI)? In some states this means they will automatically qualify for Medicaid. But even if the plaintiff is not “on SSI”, you need to keep digging and asking about any and all other programs they rely on because they might also be on something known as a Medicaid “waiver program”. 
  
  You simply have to know which parties have a legitimate interest in the settlement because the debt owed does not go away just because someone didn’t know about it (or the claimant did not reveal it).

Plan ahead. Be thinking: how will a settlement affect this particular plaintiff’s future? Knowing the answers ahead of time going into the mediation works much better than trying to figure it out on the fly.

As a settlement consultant, I am sometimes introduced to clients as “the guy who handles all the post settlement issues.” While I welcome such praise, I wonder if this isn’t a misnomer. As I see it, my role is to help my clients navigate the myriad of issues that arise both pre and post settlement. I will be most effective for you when I have the opportunity to research the plaintiff’s past, current and future needs and obligations. That way I can devise the best possible plan to address them.

Do you have a case involving both pre and post issues? Want help resolving them?
Call an expert: Frank C. Kilcoyne, CSSC, at 800.544.5533 or email me at: frank.kilcoyne@jmwsettlements.com. I am here to help.