FAQ’s – Personal Injury Claims

We have created frequently asked questions (FAQ) sections for the various types of personal injury law matters.  There are some questions that are specific to the particular type of claim.  For instance, someone injured in a car accident will likely have a very different set of questions than someone injured through medical negligence.  However, there are some questions that apply more generally to personal injury claims as a whole.

We have attempted to set forth some of these more generalized questions regarding personal injury law.  For someone seriously injured in an accident, there are so many questions that will come up.  It is an incredibly stressful and sometimes downright scary situation to find yourself in.  It helps to know what to expect.

As mentioned, there are many many questions that you might have.  There will no doubt be questions that you have that are not answered here.  Though we will attempt to address as many as possible, we will focus on those that come up most frequently.  In addition, many questions you may have may be addressed in the other FAQ accident specific sections such as the FAQ‘s for Auto Accidents that we have created.   We will continue to add FAQ‘s to the site as they come up as time permits.

Having said all that, every situation is different as is yours.  And, every situation, including yours, deserves individual attention and analysis.  It would be near impossible to address every possible situation on these pages.  Moreover, even if it were possible, the issues are presented in a fairly general manner.  As they say, the devil is in the details.

In personal injury cases, there may lurk devils in every detail when dealing with insurance companies, corporations, the government and other such entities not particularly keen on parting with their money.  In short, though you may only be looking for what‘s fair and right, your goal is unlikely aligned with theirs.

In short, read these pages for what they are, generalized discussions of personal injury law meant to provide some insight on what to expect moving forward.  Then if you are seriously injured, contact an experienced personal injury law attorney.  There is simply no substitute for experienced legal guidance.


What are the Costs in a Personal Injury Case?

It is often asked, “What are the costs in a personal injury lawsuit?”  This question is typically asked in a little bit different way as “How much will it cost me to file a personal injury lawsuit?”  These are in fact two very different questions.

Contingency Fee – Costs Come Out of Recovery

This is really what most people are getting at when they ask the question of how much it will cost.  They want to know what is going to come out of their pocket since most people cannot afford attorney fees associated with a lawsuit.  This is even more so true in those that have recently suffered personal injuries in an accident.  More often than not, people who have been injured are in a very precarious financial situation due to the unexpected medical bills, lost income, and other costs related to their injuries.

Most personal injury attorneys charge on a contingency fee basis for personal injury claims.  This means that there are no attorney fees unless the attorneys recover money for their client.  It also typically means that costs are taken out of the recovery (money awarded in a settlement or at trial).

Many Costs in a Personal Injury Lawsuit

There are numerous costs in a personal injury lawsuit.  The type and amount of these costs will depend on the type of claim, and the nature and severity of the injuries.

General Costs

There are general costs that are incurred in virtually every personal injury case.  These would include fees for incident reports, police reports, autopsies and other official reports that must be collected to determine what happened.

Medical Records 

Medical records must be collected in every personal injury case.  The medical records are necessary in order to prove injuries from the accident or incident.  Medical records collection can be quite costly due to the charges by the providers and /or the records custodians.  On a related note, they can take a long time to collect.  It is typically faster and cheaper for the client to obtain medical records directly if they can.

Court Costs

There are nominal court costs associated with personal injury lawsuits.  In many cases, personal injury claims are settled without the necessity of filing suit.  In the event that a lawsuit must be filed, there would be court filing and jury fees.

Deposition Costs

Deposition costs are typically incurred only when a lawsuit has been filed.  There are occasions where depositions might be taken prior to filing suit but these are fairly rare.

Where necessary, deposition costs can mount pretty quickly.  There are a number of reasons for this.  First, court reporters are expensive.  Their time is expensive and the transcripts are expensive.  Second, many depositions are now videotaped which entails videographer costs, which can also be quite high.

The bigger part of deposition costs will occur when the depositions involve out of town witnesses and must be taken of out of town or out of state.  This then requires all the typical deposition costs along with travel, lodging, and rental of deposition facilities among other costs that might come up related to out of town depositions.

Expert Witness Costs

Depending on the type of case and the nature of injuries, expert witness costs can be very large.  There are numerous different experts that might be needed depending upon the circumstances.  The possibilities for expert witness needs are too expansive to name them all.  This is probably not necessary for an understating of expert witness needs.  A few examples will probably suffice for a general understanding.

Medical experts are most frequently needed to prove injuries.  Costs will also arise related to the deposition of the other side’s expert who will be trying to disprove injuries or the cause of injuries.  These experts require hourly fees for their depositions.  They are typically doctors so you can imagine how these might mount.

Medical experts play an even more important role in medical malpractice claims.  Suffice it to say that an expert is required in a medical malpractice claim and these claims are expert intensive.

For accidents, it may be necessary to hire accident reconstruction experts.  This would be the case where the cause of the accident is disputed.  This might be true in work injuries, auto accidents, highway accidents, construction accidents and the like.

There are other areas that are very expert intensive.  The best example is a products liability suit for a defective product or piece of equipment.  These suits may require a host of engineering and scientific experts.

In a Nutshell!

The costs of a personal injury suit can be very high depending on the nature of the suit and the severity of the injuries.  However, these costs come out at the end in recognition that very few injured persons could afford to advance these costs.

Can I Recover Lost Overtime in My New Mexico Personal Injury Case?

There are a number of different damages that may be recovered in a personal injury lawsuit. Damages refer to the injuries and losses that you have suffered as a result of the accident.

Lost wages are among the damages that may be recovered. Recovery of damages just means that you are compensated for the damages that you have suffered. Just as lost wages are recoverable, so too is lost overtime pay. After all, overtime pay is simply an element of wages.

Like any lost wages claim, the loss of overtime must be proven

Like any lost wages claim, the loss of overtime must be established. In other words, you must prove to the insurance company that indeed you did suffer a loss of overtime pay.

With any lost wage claim, you must document your wages. Typically, you will need to document your wage history for at least 3 months prior to the accident. It is helpful to provide longer wage histories if you can so there is no dispute over the history and consistency of your wages.

The same would hold true for overtime. In order to show a loss of overtime pay, you will need to show that the overtime pay was reasonably expected. Like any lost wage claim, this would require a history or pattern of overtime pay.

This may be problematic in case of new or recent employment. In other words, there may simply be no history of wages or overtime due to the brevity of employment. The same would hold true in case a new project was started with your current employer with the anticipation of overtime pay.

A history of overtime pay is helpful but not absolutely necessary

The lack of an overtime history will not bar your claim for loss of overtime pay. It will simply require additional documentation.

In case of an absence of overtime history due to recent employment, you will need to prove that you would have been earning overtime pay if not for the accident. You would also need to prove the expected duration of overtime pay.

When you have an established history of overtime, it may be reasonably expected to continue indefinitely into the future. Without such a history, this will be slightly more challenging.

In this case, you would need to establish that overtime pay would have been earned regularly following the accident due to the nature of the employment or industry. In other words, there are jobs where overtime is simply expected and it does not matter whether you are a longtime or brand new employee.

There may be other cases where your employer has begun a new project, which will require overtime from the workers. In this case, it should not be too difficult to prove lost overtime. You would simply need to prove the existence of the project, your assignment to the project and the duration of the project. This could readily be done through your employer.

As with all personal injury claims, or any other legal issue for that matter, there will be countless and sometimes unexpected variations on these issues. Proving damages is extremely important. After all, if you cannot prove that you have suffered injuries or damages, you will not be entitled to recover on your claims.

If you have suffered serious personal injuries with significant damages, it is highly advisable that you seek the guidance of an experienced personal injury attorney. Documenting and proving your damages is a rather simple concept which like many legal issues because vastly more complex in practice.

Do I Have to Repay Medicare from my Personal Injury Settlement?

Failure to Repay Medicare Results in Extraordinary Fines and PenaltiesThis is question that we get all the time.   In short, the answer is a very resounding “Yes, you do have to pay back Medicare for medical expenses associated with a personal injury claim.”  In fact, the Medicare lien is perhaps the most critical lien to address in the settlement of a personal injury claim.

Penalties can be Enormous

The penalties for not paying back the Medicare lien are significant.  There are penalties for both the Medicare beneficiary as well as the attorney and insurance companies for failure to properly address a Medicare lien.  As such, among the first questions most personal injury attorneys will ask is whether or not you received any medical treatment through Medicare.

Many potential personal injury clients are not too pleased to hear that they must repay Medicare.  Some simply do not believe it.  Others still take the position that they will not repay Medicare since they believe these benefits have been earned over a lifetime.  Unfortunately, Medicare does not view it that way and can be very aggressive in both enforcing the lien as well as imposing penalties.

$1000/day in penalties!
 Failure to properly pay or account for the lien can result in $1000/day penalties.  As such, few attorneys would be willing to distribute personal injury funds without properly accounting for Medicare.  Even for those that might take that risk, the insurance companies generally will not allow it.  The Medicare reporting and accounting burdens on the insurance companies are enormous.   Consequently, many insurers will either refuse to issue a check or hold the total amount of the potential Medicare lien until such time that it has been addressed.

Addressing Medicare Liens No Easy Task

So you may now wonder, “How does one address the Medicare lien?”  Sometimes, it is no trivial task.  It can be quite difficult to work through the lien negotiation process with Medicare.  At times, it may take months to get a response on the amount Medicare claims as a lien.  Along with the stated lien, Medicare will provide detailed billing histories associated with the claimed lien.  Once you have the amount and billing history, the negotiation of the lien will begin.

Liens Often Overstated
There are a number of possible avenues for negotiating down the Medicare lien.  First, and most common, the billing statements are over inclusive.  In other words, the billing statement and history will often have medical expenses completely unrelated to the accident.   You are not responsible for repaying medical expenses unrelated to the accident.

Medicare Will Negotiate the Liens! 
Next, like most insurance and/or medical liens, Medicare will often agree to negotiate down its lien.  It is pretty standard for medical providers or insurers, including Medicare to reduce the lien by percentage equal to attorney fees. For instance, if you are paying your attorney a 1/3 attorney fee, then medical providers/insurers will reduce their liens by 1/3.

Once you do finally get the attention of Medicare, which some may find quite frustrating, Medicare is often significantly more reasonable that a private medical providers and insurers in the negotiation of liens.  The fact is that without the personal injury settlement, Medicare would be stuck with the entire bill.  As such, it is often possible to get a greater reduction in the lien than the standard reduction for attorney fees.

Things To Do to Properly Address Medicare Liens

So finally, the question is what should you do in case of a personal injury settlement and medical treatment through Medicare?  There are a few simple things you need to do: 1) Let your attorney know that you received treatment through Medicare, 2) Be prepared to repay Medicare, 3) Be alert to billing items unrelated to your accident, and perhaps most importantly, 4) Start early in addressing these issues.

If you start early, the rest will fall into place and there will be much room for negotiation.  If you start too late, such as after settlement and worst case after distribution of funds, there is little room for negotiation and significant potential for penalties.

Albuquerque Attorneys, Collins & Collins, P.C., can be reached at (505) 242-5958.

Can the Insurance Company Request All My Medical Records in my Personal Injury Case?

Past Medical Conditions and Injuries Can Affect a Current Personal Injury ClaimThe answer to this question is little bit tricky but you should understand that the basic rules of discovery allow for very broad request for medical records, both past and present.  In short, your medical records are for the most part discoverable in a personal injury case.  You should understand and be prepared for this as you decide whether or not to pursue your claims.

Discoverable Evidence?

Your next question may be, unless you have been involved in litigation previously, what does “discoverable” mean?  Discoverable means that not only can the other side request information such as medical records, you must provide them.  Failure to provide legally requested discovery (i.e. documents, records, and so on) will likely result in a Motion to Compel Responses from the other side.  In most cases, the court will order the discovery.  In some cases, the court may also award attorney fees and costs associated with the Motion.  Again, this is due to the broad rules of discovery.

Overly Burdensome Requests by Insurance Company

Though the rules of discovery are very broad, this does not mean that the other side can make burdensome or overly broad requests.  What “overly broad or burdensome” means will depend on the circumstances.  In personal injury cases involving a request for medical records, it is fairly common for the opposing insurance company (or its attorney) to request 10 years prior medical history.  And in most cases, the records will just be provided.

Many injured persons are very upset about this and in many cases for good reason.  Giving the insurance company or its attorney the benefit of the doubt, a medical history is helpful in determining the extent of injuries and whether or not the current injuries pre-existed the subject accident.  This makes perfect sense where the medical records and history are somehow possibly indicative or related to the current claimed injuries.

There are some insurance companies that routinely request far more than what is reasonably necessary to assess claimed injuries or pre-existing conditions.  Instead, they will often go fishing for obviously unrelated records in order to burden, intimidate or embarrass the injured person.  Though discovery is broad, obviously abusive behavior will not generally be allowed.

Rules Give Benefit of the Doubt to Party Requesting the Evidence

At times, there can be good faith disagreements between what is abusive and what is discoverable.  Keep in mind that where it is not clear whether the tactic is abusive or the documents and records are discoverable, the broad rules of discovery will allow it.

Keep in mind also that whether or not the material is relevant is not the test for whether it is discoverable.  The test is whether it is likely to lead to discoverable evidence. What this means is in most instances open to valid dispute.   As such, much arguably irrelevant evidence can be requested and gathered so long as it may lead to discoverable evidence.

As a practical matter, this means that the insurance company within reason can and often does make very broad requests for medical records.  In turn, they are generally entitled to those records under the rules of discovery.

Must Have Very Good Reason for Refusing to Provide Records

Though you may not wish to share this personal information, you should understand a couple of things.  First, unless there is very good reason under the rules of discovery not to share them, you will likely have to provide them.

Second, even the most atrocious insurance company or adjuster will not share your medical records with anyone else.   It is actually a criminal offense to share protected health information.  In addition, should an outrageous breach of privacy would lead to claims directly against the insurance company.

Having said all this, if you have valid reasons for not wanting others to see some of your medical records, you should discuss these matters with your attorney as soon as possible.  This can head off problems down the road.


How Long Will My Personal Injury Case Take?

This is unusually one of the first questions that come up with a new or potential client.  The short answer is that personal injury cases can take a long time.  There are a number of reasons for this.  Some are within the attorney’s control and others are not. 

The most important factor in any personal injury claim is injuries.  The degree and nature of your injuries, in the absence of abusive insurance company tactics or other such obstacles, will be the chief determinant of how long it takes your case to settle.  
Before an attorney can or should even begin to contemplate settlement, the full extent of your recoverable damages should be determined.  Damages are the losses that you have suffered from the accident.  There are several elements of damages beyond the actual physical injuries but the physical injuries in most cases will serve as the baseline for all other damages.

As such, the first and most important element of damages is medical expense (both past and future) associated with your injuries.  These are the medical expenses associated with treatment for your injuries.  These are in large degree a measure of your physical injuries and damages.  However, they are not the full measure.

In many personal injury cases, medical treatment does not completely correct the physical injuries.  In these cases, the injuries are permanent.  It may take many months or even years of physical therapy, rehabilitation, surgery and other treatment before it is known for certain that the injuries are permanent.  This delay in determining the degree of physical injuries will above all else delay settlement. 

The delay can and often is worsened by a lack of insurance.  Where there is no insurance, it is often possible to get a letter of protection for medical providers for some types of treatment.  In cases of very serious injuries requiring specialized care, it is far more difficult.  For instance, orthopedic care is most frequently required in personal injury cases and at least in New Mexico, orthopedic doctors do not as a rule accept letters of protection.

This can lead to a Catch 22 situation where you do not want to settle your case without knowing the full extent of your injuries but at the same time cannot get the medical care, treatment and diagnostics necessary to make the determination.   For example, it may be clear that you need surgery for an injury for an injury but you cannot get the surgery without the settlement due to lack of insurance. 

In these cases, your personal injury settlement demand package will reflect the fact that you have reached maximum medical improvement (MMI).  The settlement demand will factor in the future costs of surgery or surgeries, the risks of surgery, the success rates of that type of surgery, possible individual complications to you personally and so on.  The problem is that not everything goes as planned and sometimes despite the best efforts at predicting the outcome; things turn out worse than expected. 

There are too many individual variables to medical treatment and damages to cover it all here.  If you are in this situation, there is no substitute for the guidance of an experienced attorney.  Having said that, suffice it to say that medical care and recovery usually present the greatest challenge and consequent delays in settlement. 

And even once you have them nailed down, you are not done.  You have in most cases just set the baseline for the calculation of other damages such as lost income, pain and suffering, and so on.  These are topics for another FAQ.  

What is My Personal Injury Case Worth?

This is frequently the first question we get from clients or potential clients.  It is really Two Questions:
     1.    What is the Value of My Case?
     2.    How Much Can I Expect to Recover?

Question Number 1 is Dictated by the New Mexico Uniform Jury Instructions.  Question Number 2 Will in Large Part Turn on Insurance Coverage. 

This post addresses only Question Number 1. However, keep in mind that the entire discussion presumes insurance coverage.  Without insurance coverage of some kind, the discussion is largely academic.  This discussion also does not include damages that your spouse or children may recover.  Finally, it does not include discussions on comparative negligence.  Each of these affect the potential recovery but are issues best addressed on their own.

To address the calculation of recoverable damages, we will just go in the order of the New Mexico Jury Instructions (UJI).  

Lost Income:

The first Jury Instruction on damages is UJI 13-1803 which addresses the loss of earnings or income.  Obviously, the loss of earnings must be related to the accident.  If it is, then you are entitled to recover for both past lost wages as well as future lost wages.  The calculation of future lost wages usually comes into play with permanent injuries.  It can be complicated and will often require an expert economist.  

Medical Expenses:
The second element of damages is medical expenses as set forth in UJI 13-1804.  All medical expenses necessitated by your injuries are recoverable.  This again allows for the recovery of both past and future medical expenses related to the accident.  Like future lost wages, the calculation of future medical expense can be complicated.  Often, an expert medical opinion will be necessary to estimate these costs.

Nonmedical Expenses:
The next element of damages under UJI 13-1805 relates to nonmedical expenses. Nonmedical expense can be fairly broad. They might include travel and lodging necessary for medical treatment.  They might also include a wide variety of expenses that would not exist but for the accident.  One example would be the need for paid labor to do what you would have otherwise done in the absence of the injuries (i.e. yard work, gardening, household chores, and so on).  Once again, you may recover for past and future nonmedical expenses associated with your injuries.

Permanence and/or Disfigurement:
The next element of damages relates to the permanence of the injuries under UJI 13-1806 which is entitled “Nature, extent, duration.”  The title captures the essence of the rule.  The rule includes a calculation for permanent injuries such as disfigurement,  scarring and loss of use of a limb.  Permanent disfigurement such as scarring can be huge portion of damages.  The amount awarded for disfigurement will depend on a variety of factors such as the nature of the scarring, the visibility, your age, your occupation, your gender and other considerations that would reflect on the personal harm of disfigurement.

Pain & Suffering:
The next element is one that gets the most attention and most heat; pain and suffering under UJI 13-807.  Pain and suffering is deserving of its own discussion.  Suffice it to say that you may recover for past and future pain and suffering and that the calculation of pain and suffering involves many consideration.  The calculation is quite complicated and generally rather hotly contested.  

Aggravation of Preexisting Conditions or Injuries:
The next element is the aggravation of preexisting condition under UJI 13-1808.  The rule is clear that you may recover only for the aggravated or worsened portion of the condition not for the preexisting portion.  This one too is deserving of its own discussion mainly because many injured people will try to conceal preexisting conditions.  Keep in mind that preexisting conditions will not bar recovery for the but concealing them will often harm your claim.  

Punitive Damages:

The next element of damages is punitive damages under UJI 13-1827.  Though you might have a different impression from all the rancor in the media concerning abusive awards of punitive damages, they are really quite rare.  Punitive damages are worthy of their own discussion but generally they are awarded only of outrageous conduct on the part of the defendant “indifference to or a reckless disregard of the health or safety of others.”

Why is My Personal Injury Case Limited by Insurance Coverage?

Another way this question might be asked is, “Why can’t I get a lawyer to take my case when there is no insurance coverage?”  The answer is pretty straightforward.  If there is no insurance coverage, there may be no good way to recover money at end of a lawsuit.

If there is insurance coverage, it is often possible to settle your claims without a lawsuit and protracted litigation.  If there is no such coverage, this is likely not a possibility.  The reason being is that most people that have no insurance have no assets or other financial resources with which to settle a claim.

So you may then ask, “Well, then why can’t I just sue them?”  The answer is that you can sue them.  However, you may have problems getting an attorney to represent you unless you are willing to pay hourly attorney fees and costs.   This means that you will be assuming the full costs of the litigation.  In addition, it means that you will bear the full risks of losing.   If you are willing to assume these risks, you can always find an attorney to help you.  

Most personal injury attorneys will work on a contingency fee basis.  If there is no possibility of recovery at the end of the line, the contingency fee is worth little to the attorney.  As such, the attorney may end up having both worked for free and expended significant costs on the litigation with no possibility of recovery due to the lack of insurance and assets.  As you might imagine, few attorneys are willing to do this except in very rare situations.  

To understand the issue more clearly, you have to understand the difference between winning a lawsuit and collecting on the lawsuit.  If you win a lawsuit, you will get an enforceable judgment.  However, “enforceable” does not necessarily mean enforceable the way you may think.  It just means that you can collect if there is anything to collect against. 

If the person has no insurance and no assets (which you can verify with an asset search), what will you enforce against?  In addition, even if you do get a judgment, the defendant may simply file bankruptcy.  Bankruptcy would apply to your judgment in which case all the attorney fees and costs are lost.  

There is an exception for punitive damages which are not dischargeable in bankruptcy.  However, punitive damages are very rare requiring fairly outrageous behavior.  In the rare case where punitive damages are awarded, then you will likely get paid out over many years as there are limits to the amount that can be garnished each pay period from a defendant assuming the defendant has and keeps a job.  If no, you are back to square one, an uncollectable judgment.

Even in the case of punitive damages, though you have a judgment immune to bankruptcy, it could require a huge amount of effort to enforce the judgment.  For instance, each time the defendant changes jobs, you would have to get a new garnishment order for the new employer.  You would also have to keep an eye on the person to figure if they have acquired new assets against which you could enforce the punitive damages award.  Then you would have to lien those assets and so on.  This could require years of monitoring and efforts for what could be very nominal payments.  Again, most attorneys are simply not willing to take cases on this basis.

In short, though you may have a very good case on liability (responsibility) and you may have suffered significant recoverable damages (injuries), there may be no good way of recovering money through a lawsuit in the absence of insurance.  This is extremely disappointing and unfair to someone that is injured but it is a reality and there is often no way around it.  

What is a Release of Claims and Do I Have to Sign One to Settle My Personal Injury Case?

Signing Release of Claims Ends All Rights to CompensationThe short answer to the question is “Yes, you do have to sign a release of claims when you settle your case.”  But you should be very careful in signing such a release because once it is signed, it is game over and there will be no more money coming!

This question comes up eventually in every personal injury settlement.  Any time you enter into a settlement agreement with an opposing party (more likely their insurance company), you will be required to sign a full release of claims before the insurance company will issue a check on the settlement.

A Release of Claims Ends Your Rights

A full release of claims is just what it sounds like.  It means that the case is over and you cannot come back later and make additional or even different claims arising out of the same incident.  In other words, you are getting all the money you will ever get on the case no matter what happens in the future.

The Full Extent of Injuries are Not Always Immediately Apparent

Why is this important to understand?  It means that even when your injuries get worse over time or lead to new conditions or injuries, you cannot go back for more money.  This can come up in many ways.  For instance, a knee injury may get worse over time despite a successful surgery.

Beware the Secondary Conditions

Similarly, a knee injury can lead to secondary injuries later on that are caused by the original knee injury.  Secondary conditions are actually quite common.  Sticking with the knee example, a knee injury can lead to injuries to the other knee, ankles, hips and back.  A knee injury can even lead to psychological issues such as depression resulting from the inability to do the things you love.

Similar worsening of injuries and secondary injuries can be associated with almost any serious physical injury.  The same holds true of emotional and psychological injuries.  Likewise, there may be a combination of a few or many physical, emotional and psychological injuries that worsen or cause all manners of secondary issues over time.

Medical Expense Mount Up!

Why I am telling you all this?  Because with each such condition, there can be medical expenses.  No matter how big these medical expenses get and no matter whether you expected them or not, you cannot reopen your claim except in very rare situations such as fraud on the part of the insurance company.  This means you will bear the full financial burden of these expenses.

So again, you should not sign a release until you have obtained a full recovery.  This too comes with qualifications.  A full recovery in many cases may not be “full recovery” as you would define it.  Instead, it may simply mean getting all the money that is available through insurance coverage.

Uninsured and Underinsured Motorists in New Mexico

Sadly, in many cases, this will not come close to fully compensating you for your injuries if you are seriously injured in a car accident.  The best example is the case of uninsured or underinsured motorist.  As an auto accident attorney, we know that New Mexico has one, if not the highest, rate of uninsured motorists.  Many more are underinsured.

This means that unless you have your own and sufficient underinsured motorist coverage, you likely will not be fully compensated.  The underinsured or uninsured problems arise in all manner of personal injury cases.  And it is not always possible as in the case of car accidents to protect yourself against negligent and uninsured parties.

Your Insurance Provider Must be Notified in Advance of Release of Claims or You Will Waive Your Underinsured Coverage

So what does this discussion have to do with a release of claims?  Everything!  If there is no more money to recover, then there is no real risk of signing the release since you have gotten everything that is available.  On the other hand, where there is greater insurance coverage or other available assets, you would be wise to understand your injuries, possible future complication and possible future medical expenses.

In these cases, you must then fully assess the value of your case, the agreed upon settlement amount, and the risks and costs of going to trial.  A fair assessment may dictate settlement and release of claims but it is not something that should be rushed into blindly.

Seek the Guidance of an Experienced Personal Injury Attorney

In cases involving serious personal injuries, it unwise to deal with an insurance adjuster alone.  The insurance adjuster is not your friend or your ally.  They serve only the insurance company whose mission is to minimize payouts.  Simply put, you cannot count on honesty and fairness without a fight.  You will likely need an experienced personal injury attorney on your side.


What is a Personal Injury Settlement?

Sometimes, as lawyers, we assume too much.  For instance, we assume that normal people talk as we do and understand terms that we frequently use.  “Settlement” is among those terms.  It is often assumed that non-lawyers know what this is and what it means when in fact most non-lawyers would have no reason to have this knowledge. 

Though settlements are common to lawyers, they are not so common to those who have been hurt in an accident. In fact, most people hurt in accidents have never been involved in a lawsuit before much less entered into a settlement.

So if you have been injured, and the insurance company is talking settlement, you may be asking “What is a personal injury settlement?”  The question is really best answered in explaining how it is happens in terms of the personal injury settlement process.  However, the gist of a settlement is fairly straightforward and easy to understand.

Simple Definition of “Settlement”

In simple terms, a settlement of personal injury claims is an agreement between the parties that the  lawsuit and claims will be dismissed or given up in return for some amount of money paid to the injured person (the plaintiff).   This leads to the related question many have of “What is my personal injury case worth?
The amount of the settlement will depend on many variables unique to each case.  Essentially, the settlement is based upon an evaluation of the value of the personal injury claims.  The valuation of the claim will turn on the damages or injuries suffered by the plaintiff. 

 Risks and Costs Assessment

However, the value of the claim as determined by damages or injuries may be the subject of honest disagreement.   As such, the settlement amount will also reflect the risks and costs of going to trial to either side of the claim. 

The risk assessment is basically an assessment of what might happen with a jury verdict.  In other words, both sides are trying to assess the risks of losing.  This is often hard to predict since it is hard for either side to predict what a jury might do.  Often, the assessment is more of a prediction of a worst case outcome versus a best case outcome. 

The costs are a little easier to predict.  The costs will vary depending upon the type and complexity of the case.  Certain types of cases are much more expensive than others.  For instance, medical malpractice and products liability cases are far more expensive as a rule than auto accidents.  However, even a simple auto accident case can get pretty expensive if it goes all the way to trial.  These costs will be weighed into the decision on both sides whether to settle and for how much. 


In order to make these calculations, it is necessary to conduct discovery.  Discovery is basically the collection of evidence by both sides to support their position.  However, despite the seemingly simple definition, discovery concepts and rules can be quite complex.  In fact, discovery can be the biggest and most expensive part of the personal injury claims process. 

The thing to keep in mind is that your case probably will not settle until discovery has been completed or at least completed sufficiently for both sides to determine the value of the case along with the risks and costs of going forward with litigation.   Depending on the type of case, this could take many months. 

 Pre-Trial Settlement

Even once discovery is completed, the case may not settle even though it seems a settlement would be in order  It is not uncommon for cases to settle very close to or even on the eve of trial.  And again, this is the whole point of settlement which is to avoid the costs and risks of a jury trial on both sides of the dispute.

 Talk to a Lawyer

Keep in mind that these issues are very complicated.  In fact, each question and issue related to settlement could lead to many branches of other issues and questions.  In addition, every case is different and unique, including yours. 

In short, if you have been injured due to the negligence of another, you should talk to an attorney experienced in personal injury law.  There is no substitute for the guidance of an experienced attorney.


Do I Have To Pay Taxes On My Personal Injury Settlement?

Personal Injury Settlement Partially Taxable
Personal injury settlements are partially taxable. Due to the complexity of the issues, it is important to run the settlement by your tax advisor.

It is important for plaintiffs in personal injury cases to understand the exact amount that they will receive after a case is resolved.  The funds that a plaintiff will actually take home and be able to use for their recovery will be lower than the actual settlement or verdict, because attorney fees and costs are generally taken out of the settlement or verdict amount.

Similarly, a common concern is whether or not taxes are taken out of the personal injury settlement funds that a plaintiff receives.  Everyone knows the significant bite that taxes take out a paycheck.  Does the same apply to a check received following an injury settlement?  Fortunately, for the most part, personal injury settlements are tax-free, though there are exceptions that need to be understood.

Purpose of Personal Injury Settlements

The purpose of a personal injury settlement is to make you whole again, and taxing the settlement would detract from that purpose.  In other words, a settlement is viewed as a re-couping of losses, not a windfall of extra income upon which you need to be taxed.

Tax Free Recovery

When you receive an award, it is generally broken up into components which indicate what portion of the overall award is being paid for each specific “loss”–lost income, medical expenses, pain and suffering, etc.  This breakdown determines which portions of the award might be subject to tax.

Settlements received for a physical injury are not taxed. If you receive money earmarked for medical expenses, like out-of-pocket medical costs or unpaid medical bills, those payments are not taxed.

Lost wages are typically not taxable either if they arise out of the personal injuries.    This includes both past and future lost wages.   This one can get tricky so it is important to run it by your accountant.

Taxable Recovery

Funds received for emotional injuries and punitive damages merit special discussion.  First, punitive damages are always taxed in full.  Emotional damages are tax free to a degree but are taxable in certain situations.

Settlement payments for emotional distress caused by the physical injury are tax-free as well up to the point.  Emotional distress is treated as arising out of the physical personal injuries.  This one too can get a little dicey since there are limits to the amount of emotional damages that are tax free.  Specifically, the emotional damages are probably only tax free up the amount of medical expenses expended on treating those emotional injuries and are only tax free to the degree they were caused by the physical injuries.

It is important to discuss these issues with your attorney.  You don’t want to underpay but neither do you want to overpay.   As such, it is equally important to discuss them with your accountant to make sure that they are properly accounted for on your taxes.

Can I Get Money Right Away Without Settling My Personal Injury Claims?

This among the most frequently asked questions in personal injury cases.  Often times, the injured person is in a serious financial bind as a result of the accident and needs money immediately.  Unfortunately, the answer to the question is a qualified “no, you cannot get money immediately without settling your personal injury claim.”

The answer is qualified because it presumes that you are referring to the negligent party’s insurance company as the source of the money.   If this is the case, the answer may seem very unfair but the insurance company in most cases has no obligation to pay you any money without a full and final settlement.    There are a few rare exceptions for payment of medical bills such as in a slip and fall claim where the owner of the property has no fault coverage.  However, the exceptions are few and far between.

Property Damage

Moreover, the exceptions do not included payments for what are generally the greatest financial needs in a serious accident.  For example, in an auto accident, the injured person’s car may have been badly damaged or destroyed.  There is no obligation on the insurance company to pay on the property damage claim without a final settlement and release of claims. 

Settlement on property damages can happen before and much more quickly than the settlement of your personal injury claims.  Keep in mind that the release should apply only to the damage to the vehicle and not for the personal injury damages.  Settling your property damages should not and must not interfere with your rights to recover on your personal injury claims.

Lost Income and Other Losses

In cases of serious injury, there is always a need for medical treatment.  There may be an equally or more critical financial need.  In serious injury cases, the injured person is often unable to work following the accident.  The person may be out of work for days, weeks, month or years.  In very serious cases, the person may never get back to work at his or her chosen employment and sometimes not at all.  

Once again, the law can seem very unfair in these cases since the insurance company has no obligation to pay for any of these losses (or any others) until the case has settled and a release of claims is signed.  The release of claims basically says you are settling all your claims and there will be no other claims arising out of the accident against that insurer.   Sadly, a personal injury case can take a long time to settle and much longer still to go to trial.  In the meantime, the financial strain can be enormous.  

Few (No Good) Options for Early Recovery

In short, you will not receive any payment for lost income or any other losses until the case is settled.    There is often no way around this.  It is considered to be a very serious ethical violation in New Mexico for an attorney to loan client money.   This leaves only two options.  The first is to settle your claims quickly and cheaply which is rarely if ever advisable.  The second is to get a loan against the settlement.  However, this is not advisable since the interest rates on these loans are extraordinary.    This may in a time of need seem like a good solution but in the end, the decision to get such a loan is often sorely regretted.  

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