Four Common Deductions From A Maryland Personal Injury Settlement.
I think it's safe to say that most people are aware that there are amounts subtracted from a gross personal injury settlement. In other words, the full settlement amount does not end up in the injured person’s pocket. Most injured individuals have a general understanding that"
From the settlement proceeds there will typically be a deduction for attorney’s fees and the costs of litigation or case preparation.
I have a detailed process to move that level of understanding from the general to the specific. In my practice, every client has an opportunity to review and sign a written retainer agreement that sets forth these items in great detail. Of course, I am always happy to answer any questions about these documents as well. In addition to the agreed upon costs of legal representation, there may be other deductions as well. These are not shocking, or unexpected concepts. Nevertheless, I’m always surprised by the number of injured people that, in turn, say they are surprised to learn that they have to account for and reimburse amounts paid by a workers compensation insurance carrier, a health insurance carrier, or the government for their medical care.
Let’s look at each of those issues. The first involves a scenario where one is hurt at work, receives workers compensation benefits, and that work-related injury is caused by a negligent act committed by a third party outside of the employer's business.
The workers’ compensation carrier is going to have a lien, or a right of recovery, on the third party claim against any liable tortfeasor-the person that caused the injury.
The concept of reimbursement is confusing to many people. I think a lot of people misunderstand the limitations on the right of recovery held by an insurance company. Their right, although it is contained in substantive law, and is called subrogation, may also be typically found in contracts. An injured person does not have reimburse an insurance company for every claim. It is only where another person is determined to be at fault for an accident or loss, and there is indeed a recovery from that party, that a claim exits on that recovery for reimbursement [ not on other funds or assets of the injured person- only on the personal injury recovery] Where a health insurance provider pays for medical treatment in the wake of an accident:
That health insurance provider will have a right of recovery from any settlement or proceeds from an at-fault individual - or their insurance company and may assert a lien on any personal injury claim.
Medical care that is ultimately paid for by tax dollars, in whole or in part, through federally or state subsidized medical assistance and health programs will also have to be addressed. The provisions dealing with Medicare and Medicaid are different. In each of these scenarios, the amounts owed to the government will be deducted from the gross settlement proceeds.
If medical expenses are met by the Medicare or Medicaid program, the government is going to be entitled to reimbursement for amounts they paid.
I’ve heard injured individuals say they don’t believe they should have to pay back Medicare, or their health insurance. Keep in mind that is not the way these rights of recovery work. Its is not something based on the beliefs or desires of the injured party. Rather these concepts are firmly rooted in law. Moreover, the lien, or the claim, is on the personal injury award, be that a settlement or a verdict. If there is no award, there is no right of recovery.
Perhaps most importantly, the amount asserted or claim by a third-party payors [insurance companies or Medicare/Medicaid] are subject to statutory limits, and in any event are negotiable in most instances.The best personal injury attorneys in Maryland will address these liens and attempt to negotiate a lowered pay off.
I've been handling injury cases for 25 years. I routinely negotiate with health care providers and workers' compensation insurance companies, and with Medicare, to secure a reduction of any claims to the lowest possible amounts.
-This Article was updated by Eric Kirk on 8/13/20.