The settlement of a traumatic brain injury case is far more complicated than resolving the claim with the responsible party. A traumatic brain injury attorney’s duties go far beyond dealing with the defendant’s insurance carrier but traditionally extend to negotiating hospital bills, investigating alternatives to lump-sum settlement, and the potential creation of a special needs trust. Contact an Eason and Tambornini brain injury attorney today if you have any questions about brain injury settlements.
How much should you settle a traumatic brain injury case?
Surprisingly, we get phone calls regularly from people asking how much we think a brain injury settlement should be. That is a lot like asking how much a painting of a woman’s head sells for. Just like the value of that painting will differ dramatically, whether it is the Mona Lisa or is it an art student’s first attempt. Brain injuries run the spectrum in value from a case where there was a quick and complete recovery from a mild concussion to whether the person can care for themselves in the future. What is probably as important as knowing how to handle the hospital and medical bills and liens, how to structure or set up the settlement so as not to interfere with possible government support programs such as Social Security, and how to ensure the money is managed correctly.
What happens to the hospital and medical bills in a settlement for a traumatic brain injury?
If a victim of an accident suffers a traumatic brain injury and has hospital bills from that injury, there are a myriad of complex ways that a skilled traumatic brain injury attorney can assist in handling those bills.
For starters, the face value of that hospital bill needs to be analyzed to confirm that it is in conformance with the standard and reasonable billing practices. Some hospitals and medical providers are very reputable and charge what should be charged. Others may be charging excessive amounts to try and compensate for cases in which there is no insurance or program to provide for payment.
In addition to analyzing the bills themselves, a skilled traumatic brain injury attorney can assist in seeing if there are strategic advantages to having those bills paid through a health insurance policy, a medical payment policy, and government assistance. Most importantly, they can tell you when those bills should be paid. There are some instances where the statements should be tendered as soon as possible to allow for a potential reduction. There are other times when the bills should be shorter to allow for negotiation strategies.
If the bills were paid by an insurance company or a government agency, a skilled traumatic brain injury attorney could assist in negotiating any possible subrogation or repayment obligations that the insurance plan or law may mandate. These negotiations in a brain injury case can often see the subrogation rights waived or reduced to the proverbial pennies on the dollar.
Should you settle a traumatic brain injury for a cash sum, or should it be structured over time?
Brain injury settlements are tax-free, and because of that, tax-free status annuities can create a tax advantage. If you were to settle the case for a lump sum and then invest it, the gains or interest on the investment would be taxable. If, instead, you settled the case through the purchase of an annuity by the defendant, the inherent interest that it earns in that annuity is traditionally tax-free!
In economic periods where interest rates are high or historically at least average, annuities were a fantastic way to settle a case. It provided not only a tax-saving investment vehicle. As of the writing of this article, interest rates are at historic lows and, in some cases, barely more than negligible. As a result, the structuring of a settlement over many years with a meager return is usually a bad idea. Until interest rates increase to be at least in line with inflation expectations, annuities do not make sense for most people who have suffered a traumatic brain injury.
Should you start a special needs trust as part of a brain injury settlement?
A special needs trust may make a tremendous amount of sense for someone who has suffered a traumatic brain injury and may need to rely on government funds such as Supplemental Security Income (SSI), Medi-Cal, in-home support service, or HUD housing assistance.
Most government assistance programs limit the amount of assets or income that a person can have and still qualify for those programs. Consequently, if you suffer a significant traumatic brain injury and receive a lump sum settlement or an annuity, that asset or income could disqualify the person from government assistance until the assets or income is gone.
A special needs trust is better described as a Supplemental Needs Trust. In a settlement involving a special needs trust, the money is not given to the victim of the traumatic brain injury as part of the settlement. Instead, the money is paid to a trustee to hold in trust for the victim, and the stated purpose of that trust is to supplement government benefits as needed, but only to the extent to avoid disqualifying that person from government benefits. A special needs trust may also be helpful to protect people who have an addiction or mental illness and consequently get themselves in trouble with creditors.
It can be a great way to rely on government benefit programs to take care of the day-to-day necessities of life but also have some extra funds to make a living a little more comfortable. A critical element to this trust, however, is having someone that the victim can rely upon to be the trustee.
The settlement of a traumatic brain injury case for the correct amount is just one aspect of a traumatic brain injury lawyer’s role. Negotiation of the victim’s medical and hospital bills and liens can be equally important, as well as consideration of payment alternatives such as annuities or special needs trusts would be beneficial.
If you have questions about an accident that results in a traumatic brain injury, please get in touch with one of the Eason and Tambornini Sacramento brain injury attorneys for a free consultation.
