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It may have taken some time and some dedication, but you did it. You stood up to an insurance adjuster and skillfully negotiated a settlement. Now you can finally put this whole unpleasant experience behind you and move on with your life, right?
The good news is that, yes, most of your work is done. However, as you wrap up your personal injury claim, don’t let your guard down. Until all the paperwork is completed and the money is in your hands (or bank account), the final stages in the process of settling your claim still require your attention. If you make a mistake during these last, crucial moments, it could still cost you hundreds or thousands of dollars.
Remember when you were calculating the value of your claim, and you had to consider whether a health insurance company paid your medical bills and whether you would have to reimburse the company for that payment? That’s a common type of lien, known specifically as a health insurance lien. The official definition of a lien is a legal claim against another’s property as security for a debt. In terms of your claim, liens refer to money that you owe – money that must come out of your settlement.
Unfortunately, if you haven’t done your homework, you could suddenly get hit with an unexpected lien once you begin wrapping up your claim.
Not every claimant will encounter a health insurance lien, even if a health insurance policy paid for the expenses. Policy-specific language could affect whether or not you get hit with a lien. You need to check with the health insurance carrier directly to find this out. Usually, the company will first contact you with a questionnaire asking whether or not the bills they received are related to an accident. If so, and you recover money, the company is technically entitled to be reimbursed in most circumstances, unless the language in the policy says otherwise.
If the insurance company does notify you that it is asserting a lien, don’t just take it at its word. Request to see the policy and protocol regarding liens in writing, and take the time to actually read the paperwork. Some policies may not allow the insurer to recover money from your settlement, but even policies that do allow liens vary. Do you owe the full amount that they paid on your behalf, or only a partial amount? Can you negotiate with this insurance company, too? Always ask for an itemized list of bills the insurance company is seeking reimbursement for, to make sure that you’re not paying them for bills not related to the accident.
Note: In New Jersey and Pennsylvania, only a health insurance company, not your auto insurance company, can impose a health insurance lien on your settlement. In other states, the rules are different. If a Personal Injury Protection (PIP) portion of your auto insurance policy paid for your medical bills in either of these states, you shouldn’t have to reimburse them. However, if Medicare, Medicaid, or any worker’s compensation program makes payments on your behalf, expect to see them assert a lien on your settlement.
You may be subject to other liens, too, depending on your individual circumstances. If your out-of-pocket medical costs and your income loss forced you to seek funding from other sources, you might have a funding lien. If you owe child support payments and you’re behind – which is understandable if your injuries have kept you out of work – you will have a child support lien.
When our office represents clients, we gather together all of the information regarding their liens. We make sure that those liens are paid so that the money claimants receive is theirs to keep, free and clear. Unfortunately, if you’ve handled your claim alone this far, you’re on your own here. It’s a good idea to find out who you might owe money to (and how much money you owe) before submitting your demand and negotiating a settlement. This way you can make sure your settlement compensates both you and any party you owe. If you didn’t calculate liens into your claim value earlier and you now have any doubts regarding your responsibilities to pay back another party, hold onto enough of your settlement to pay any debts that could pop up. You may not know immediately that you owe money, but unfortunately, that doesn’t excuse you from having to pay once you find out. If a party does assert a lien on your settlement and has legitimate legal grounds to do so, paying it is unavoidable. Your insurance company could even sue you for failing to pay.
Notice that taxes aren’t included on the list of reasons you could owe money. Money recovered from a personal injury claim is considered compensation for your damages rather than actual income. You won’t be taxed on your settlement.
After you both agree to a settlement amount, the insurance adjuster handling your claim will send you a release, an official form that you sign that indicates your acceptance of the settlement amount. When you sign this document, you agree not to pursue further action against the defendant. In other words, you release them from involvement in any other claims or lawsuits stemming from this accident.
Make no mistake – when you sign a release, you are waiving your right to pursue further compensation from this company. If you settled your claim too early and find that your doctor recommends an expensive, invasive surgery a couple of months down the road, you can’t call the insurance adjuster back and ask for more money. As long as you followed our advice and waited until after the end of the treatment phase to submit a demand package and begin negotiating your claim, you shouldn’t have to worry about this possibility. However, that doesn’t mean that signing a release is something you can take lightly. All releases involve some waiver of rights, but some seek to unfairly strip you of rights that you shouldn’t have to give up.
It may sound contradictory that you’ve been working toward getting the money you deserve from the beginning, and we’re now telling you not to rush off to cash the check. Unfortunately, fine print and technical jargon are constants in the insurance industry. You should never sign anything from an insurance company, especially a release, without reading it thoroughly. In fact, the consequences are so serious that every lawyer in our office recommends getting professional help here. That’s right, even if you are able to handle researching liability, gathering evidence, drafting a demand letter, and negotiating a settlement on your own, the big concern of lawyers is that you’ll ruin your claim by signing a piece of paper.
Carefully reading the document before you sign it applies to all types of releases, even those compensating you for property damage.
So even if you handled your entire claim without an attorney, this is one part of the process in which you may want to consider paying an attorney a small sum – figure $50 to $100 – to go over the document to make sure you aren’t signing away any important rights. This amount is nowhere near the cost of paying the attorney’s fees that result from having a lawyer actually represent you in your claim, and it could protect you from the headaches and financial costs that come with unreasonable restrictions. Keep in mind, though, that attorneys aren’t likely to advertise this as a service they offer. Law firms typically don’t market for small-value jobs like this. You may have to make a few calls to find an attorney who will help you.
A release is a binding document, so it’s important that you know what you’re signing. Don’t just gloss over the fine print – make sure you read and comprehend every line of text on the release. You will find language that states that you are releasing the company from liability. You should not – but very well could – find language that restricts your right to pursue “any and all claims” relating to the accident. The problem with this wording is that such a broad release could affect your eligibility to pursue other claims.
At our office, we’ve seen insurance companies try to pull some unbelievable stunts when sending releases for claimants to sign. Some could be interpreted to make the claimant legally ineligible for continuing medical treatment benefits, even if the insurance company issuing the release isn’t the one paying for the medical treatment. Others undermine claimants’ opportunities to seek underinsured motorist benefits through their own auto insurance company, even though they have paid for the privilege of having this optional coverage. The bottom line is that there is a major difference between an insurance company protecting itself from further, unwarranted legal action stemming from this accident, and the company trying to take away rights that have little or nothing to do with them.
Once you’re absolutely sure that the release isn’t asking you to waive any unnecessary rights, you can sign the release and cash your check. The money is yours. With your claim settled and your damages finally compensated, you really can put the accident behind you.
Hopefully, you have successfully negotiated a settlement and wrapped up your claim. However, if you’ve tried every one of our tips for building your claim and negotiating a settlement but the insurance adjuster you’re dealing with simply won’t be reasonable, check back for the next installment of How to Handle Your Own Personal Injury Claim. You’ve worked hard and accomplished a lot, but it might be time for a professional to step in.