By Douglas Allen, Allen Accident Law
A personal injury lawyer will always try to settle your car accident case out of court, or before a lawsuit is filed. This usually saves both sides time and money. A lawsuit can take a few years and end up costing the injured victim more money than the eventual recovery or settlement. As a specialist in personal injury cases, I always do my best to try to settle a case before the need to file a lawsuit. This removes the risk for everyone, including the insurance company. An insurance company does not want to pay a defense attorney and then risk having to pay a higher jury verdict so an insurance company is also motivated to settle a case, pre-suit.
What are the steps involved in settling a personal injury case? First, a personal injury lawyer must wait until his or her client has finished treating with the treating physicians (these may include chiropractors, physiatrists, psychologists, physical therapists, orthopedic surgeons, etc.). While you are treating, it is very important not to miss your doctor’s appointments. Your doctors have a certain treatment plan designed to get you better and if you miss 1 week or 2 weeks of treatment then that can be very detrimental to your personal injury case and to your recovery. Again, do not miss your doctor or therapy appointment or you and your case will suffer!
When you go to the doctor, remember that they record and write everything down in daily office notes. So, when you come into your appointment and the doctor asks how you are doing, most of us will say–“oh, I feel fine or I feel good”. This is a general statement that we are all used to repeating but when you are seeing a doctor, you want to remember you are injured and you do not want to downplay your injuries. If your back hurts, don’t say you are fine, tell the doctor that your back hurts. If you have pain in your neck, tell your doctor that your neck hurts. It is very important to fully complain about your injuries when at any doctor’s office as the doctor or physical therapist will record what you are saying in the daily office notes. This can later have a bearing on proving your personal injury case to the insurance company and claim’s adjuster. Many clients are surprised that a doctor said something in his notes that indicated they were improving when the client was not improving.
A treating doctor cannot release you until you have reached MMI (maximum medical improvement). What does this mean? A doctor will release you when he or she feels you have improved to a point where the attorney can begin settlement negotiations with the insurance company. This usually will be between 4-6 months, depending on one’s injuries and the need for surgery or no surgery. Once you have reached MMI, I will request that the doctor or that an independent doctor performs a final evaluation with an impairment rating. An impairment rating is an exam by a doctor where the doctor measures your range of motion compared to normal and puts a number on his evaluation according to a book called the American Medical Assn. Guide to the Evaluation of Permanent Impairment. I will use this evaluation as an aid in settling your case with the insurance company. It is important that you do this final evaluation and that you fully complain about all your pain and symptoms.
Every personal injury case is different so there is no way to predict the amount of a pre-suit settlement. If a lawyer promises you he can get you a certain amount of money, then run! He is lying to you. There are no charts or guidelines as to how much a certain injury is worth. Settling a car accident case is much like buying a house. The owner of the house wants a certain amount of money, and the buyer has a certain amount of money that he wants to pay. There is no set amount of money or chart for buying a house. The house will sell if the buyer and seller reach an agreement on price. It is the same when dealing with insurance companies. If the attorney reaches an agreement on a settlement figure, then your case will be settled. The insurance company wants to pay out the least amount possible, while your attorney or myself want to get you the most money possible. An attorney will normally start high in negotiations and the insurance company adjuster will start low with their offer.
For example, let’s say a person was injured in a rear-end car crash. The at-fault driver is insured by State Farm. When the injured client reaches MMI, the attorney asks the claim’s adjuster for a settlement figure in writing by sending by mail a pre-suit settlement package. A package that I normally send to the insurance adjuster will include the accident report, photos of the car damage, photos of the injuries, all medical records, all medical bills, etc. Let’s say the policy limits carried by the at-fault driver are $25,000. I will ask the insurance company for the entire $25,000 bodily injury limits. The insurance company may say that the case is not worth $25,000 for such and such reason and offers $8,000. I will normally decline the first offer as I know that the first offer is usually not the last offer. If I believe your case is firmly worth more than $25,000, then I will stick to my $25,000 offer and I will not negotiate anymore (I will file a lawsuit). But, if I believe your case is worth less than $25,000, then I may counter-offer at say $18,000. Then, the insurance company comes back with an offer of $10,000 and we do this until we can reach a reasonable settlement where everyone is reasonably happy. We cannot all be happy at all times and sometimes the insurance company pays more than they should and sometimes we have to take less than we should in order to avoid the time and expense of a lawsuit.
Let’s say the case settles for $15,000. In Colorado, the personal injury lawyer will normally work for you on a 1/3 contingency. This means that if an attorney recovers settlement money for you, then the attorney’s fee is 1/3 of the total gross settlement. If I do not recover any money for you, then you owe me nothing. In this example, the settlement would resolve as follows:
$15,000 Gross Settlement from State Farm
– $5,000 1/3 attorney’s fee, equals
From the $10,000, the attorney will have to pay any and all of your medical bills and liens. If your health insurance company pays any of your medical bills, then they will have a lien on your case for what they paid. If Medicare or Medicaid paid out anything from your accident, then they will have a lien on your money. If Tri-Care, the military insurance pays anything out on your case, then they will have a lien. So, it is important to remember that all medical bills and liens will be paid out of the recovery.
In the example above, let’s assume that you owe a chiropractor money and that you owe your health insurance company as they paid your ER bill. Thus, the final settlement would look like this:
$15,000 Gross Settlement from State Farm
-$5,000 1/3 attorney’s fee
-$2,000 owed to chiropractor or physical therapist
-$1,000 owed to Anthem health insurance co.
$7,000 net recovery to You, the client
So, in the above example, after everyone is paid, including the liens, attorneys fee and medical bills, you would get $7,000 in your pocket. This is just an example and will vary substantially depending on the facts and amount of your medical bills. Some people also carry medical payments coverage on their car insurance. Normally in an amount of $5,000, although it is not required to be carried in Colorado. This $5,000 will go towards paying your medical bills and does not have to be paid back out of your settlement! So, when your own car insurance company pays some of your medical bills, that is like a gift to you and puts more settlement money in your pocket. Always use your med pay coverage if you have it! It can save you money and you do pay a monthly premium to your car insurance company for this benefit, so use it-without question! This will not make your car insurance rates go up as it is coverage that you paid for and you were not at fault for the accident.
Your attorney or myself is required to put the $15,000 settlement money in his or her attorney Trust Account. This is required by Colorado law so that the attorney can protect any liens and protect the medical bills. The attorney will write checks from this Trust Account to pay your medical bills, liens, himself and you. It usually takes 5-7 days for the insurance company check to clear and then the attorney can write all the checks to you and the other parties, depending on if any liens or medical bills are owed by you. The attorney is also required to have you sign a Closing Statement which shows the receipt of the settlement money from the insurance company and who is paid what.
If you have any questions about how a personal injury case is settled, please contact me, Douglas Allen, Allen Accident Law, and I will help you. I can be reached anytime at (970) 364-6830.