Published in Personal Injury on June 22, 2017
The overwhelming majority (between 90-95%) of personal injury cases settle without a trial (http://thelawdictionary.org/article/pre-trial-settlement-percentage-statistics-on-personal-injury-settlements/). Personal injury cases can include car accidents, slip and falls, premises liability cases (where a person is injured because of some danger at a specific location), medical malpractice, and defective products. Because so many cases settle outside of a trial, it is important to know how the settlement process works and what damages are included in a settlement.
The Settlement Process
Settlement can occur at any point in time from the time of the injury until after a case has been tried and appealed. Insurance companies make offers shortly after injuries to limit the amount of money they have to pay for expenses you incur. You should resist the urge to accept the first offer from the insurer as they almost always have more funds available to pay you. Additionally, if you settle too soon, you may never be able to recover repayment for future expenses you incur because of your injuries.
If you decide to hire an attorney to represent you (and you should), the attorney will handle the settlement process for you. Generally, this occurs in phases. Once you are finished receiving medical treatment (or you know what your future medical treatment will entail), the attorney requests copies of your medical records and bills from the hospitals, doctors, therapists, pharmacies, and any other medical provider who treated you. The attorney also collects copies of accident reports, incident reports, police reports, witness statements, and other evidence that shows or explains how and why you suffered your injuries.
The attorney then prepares a demand package to submit to the party who injured you or their insurance company with a specific demand for money. This demand package will include copies of your bills and records and other evidence that may be important to your case. In Missouri and other states, if certain rules are followed, this demand letter may permit you to recover prejudgment interest if you recover more than your demand at trial. The insurance company assigns the claim to an adjuster who evaluates the demand letter and will usually make a settlement offer. While it is possible that insurance company could accept your first demand, it is unlikely.
Your attorney will negotiate directly with the adjuster to see if the two sides can reach a compromise on the amount of the settlement. Your attorney should consult with you before making any settlement demands or before accepting a settlement offer from the insurance company. If the parties agree to a settlement figure, the insurance company will prepare a settlement agreement and release for your signature which will forever bar you from bringing claims against the person or entity that caused your injuries. It releases the at-fault party from all liability upon payment. If the parties cannot reach an agreement, the attorney may file a lawsuit on your behalf and begin to prepare for trial.
One other option if the parties cannot negotiate a settlement is mediation. Mediation is a voluntary and informal process in which a neutral third party acts as an intermediary. The parties meet with the mediator who discusses the case with each side, helps to identify strengths and weaknesses in the case (for both sides), and works to facilitate a settlement. The mediator is generally a current or former attorney or judge. Mediation is a non-binding process, which means that the mediator cannot force you to accept any offer that the insurance company or responsible party makes.
When you receive an offer to settle your case, the following types of damages are generally included:
Medical bills and out of pocket expenses
Settlements include compensation for medical bills and other expenses. This includes money paid out of your own pocket and amounts paid by your health insurance company. Insurance companies put great weight on the amount of your medical bills in calculating a settlement offer. From their perspective, serious injuries require lengthy (and expensive) medical treatment. Less serious injuries do not require much medical treatment. As a general rule, the higher your total medical bills and other expenses, the higher the settlement.
If your injuries were serious enough to cause you to miss work, you can be paid for the time you were off. This includes base pay and benefits. In some tragic cases, an injured person may never be able to return to work. In such cases, economists assist in calculating the total value of a person’s lost wages. Be aware that any amounts paid as lost wages may be taxable. I recommend that my personal injury clients consult with an accountant or tax attorney to determine the tax effect of any settlement
Pain and suffering/disfigurement
Your injuries may have caused you to experience pain and suffering. The nature, source, and duration of that pain can increase the amount of money you should receive. For example, if a defective lawn mower you are riding bursts into flames and you suffer third degree burns to your legs, the responsible party will likely pay a large amount of money to compensate you for the intense pain you suffer. Conversely, if you slip and fall on a wet floor at the grocery store, but you are only sore for a few hours, the store is likely to pay very little for your pain and suffering. Scars and other permanent disfigurement should also be considered in determining how much your case is worth.
A lack of familiarity with the settlement process can impede your ability to receive fair compensation for your injuries. Arming yourself with information about the process will ensure that an insurance company does not take advantage of you.
A brief word about hiring an attorney to represent you in your personal injury case—I am often asked whether it is worth hiring a lawyer to represent someone who has been injured where the insurance company has already made a settlement offer. In most personal injury cases, attorneys are paid on a contingent basis, which means that they only get paid if they recover money for their client. Payment is a percentage of the client’s recovery (usually between 25-40%). Even though attorney fees are generally not paid as part a personal injury settlement, all of my personal injury clients during my 10 years of practice have received settlements greater than what they were being offered even after paying attorney fees. In short, it pays to hire an experienced personal injury attorney. They can get more from the insurance company than you can on your own.