Your Case Value and the Amount You Put in Your Pocket Are Two Different Things

One of the first questions people ask after a serious car or motorcycle accident is:

“How much is my case worth?”

It is an important question, but after more than 30 years of handling personal injury claims, I believe there is another question that can be even more important:

“How much of my case value can you actually recover for me, and how much of that recovery will I ultimately put in my pocket?”

Those are very different questions.

You could have injuries that justify a $500,000 personal injury claim, but if the person who caused the wreck has only $25,000 in liability insurance, recovering the full value of your case becomes much more complicated.

Similarly, an attorney could recover a $100,000 settlement for you, but if substantial medical bills, health-insurance reimbursement claims, case expenses, and attorney’s fees have to be deducted from that settlement, you are obviously not putting $100,000 in your pocket.

So, when I handle a car or motorcycle accident claim, I look at my job as having three equally important parts:

  1. Maximize the value of your personal injury claim;
  2. Find every available source of insurance or recovery to pay that value; and
  3. Minimize the amounts that have to be deducted from your recovery.

All three matter.

That is why I tell my clients:

The value of your case, the amount we can recover, and the amount you ultimately put in your pocket are three different numbers.

Step One: How Much Is My Car Accident or Motorcycle Accident Case Worth?

The first step is determining the value of the injury claim itself.

There is no legitimate calculator or mathematical formula that can tell you what every personal injury case is worth.

The value depends upon such things as:

  • The nature and severity of your injuries;
  • The amount and duration of your medical treatment;
  • Whether you suffered fractures or required surgery;
  • Whether your injuries are permanent;
  • Future medical treatment;
  • Lost wages and diminished earning capacity;
  • Pain and suffering;
  • How the injuries affected your daily activities and quality of life;
  • The strength of the evidence establishing the other person’s fault; and
  • Numerous other facts unique to the particular accident and client.

Generally speaking, the more serious and permanent the injury, the greater the potential value of the personal injury claim.  But there is a problem.  Having a valuable personal injury claim does not necessarily mean there is enough money available to pay it.

Step Two: Where Is the Money Going to Come From?

This is the part of personal injury law that I believe consumers often do not hear enough about.

Let’s use an extreme example.

Assume a negligent driver causes a motorcycle accident and the motorcycle rider loses a leg.

There is little question that the rider has suffered a catastrophic, life-changing injury worth far more than $25,000.

But now assume the at-fault driver has only $25,000 in liability insurance and no meaningful assets.

The injured rider may have a very valuable claim against the driver, but how do you collect the full value of that claim, if you can?

So, my next question is:

Where else can we legally recover money to compensate my client?

Depending upon the facts of the accident, I may investigate:

  • Additional liability insurance covering the at-fault driver;
  • Insurance covering the vehicle involved in the wreck;
  • Whether the driver was working for an employer or company;
  • Whether another person or company shares responsibility for causing the accident;
  • Umbrella or excess liability insurance;
  • Uninsured motorist coverage, commonly called UM coverage;
  • Underinsured motorist coverage, commonly called UIM coverage;
  • Other potentially applicable automobile or motorcycle insurance policies; and
  • Any other legitimate source of recovery created by the particular facts of the accident.

This is especially important in serious car, truck, and motorcycle accidents because Kentucky and Indiana permit drivers to carry relatively low amounts of liability insurance.

A person can therefore suffer a million dollars in damages without the at-fault driver having anything close to a million dollars of insurance.

That is why I don’t stop my insurance investigation simply because an adjuster tells me:

“Those are our policy limits.”

My next question is:

Are those really all the insurance benefits available from everyone and every policy that may apply to this accident?

What If My Injuries Are Worth More Than the Other Driver’s Insurance?

This is where underinsured motorist insurance can become extremely important.

Underinsured motorist coverage, commonly called UIM, is insurance you purchase to protect yourself when the person who injures you does not have enough liability insurance to compensate you for your injuries.

For example, assume your injury claim is reasonably worth $150,000, but the person who caused the accident has only $25,000 of liability insurance.

The fact that the liability carrier offers its $25,000 policy limit does not necessarily mean your case is over.

Before resolving the liability claim, I want to know whether UIM coverage or some other source of recovery is available.

This is one of the reasons I tell seriously injured people not to accept a policy-limits settlement without first determining whether additional insurance exists and what procedures must be followed to preserve any additional claims.

Step Three: How Much of the Settlement Does the Client Actually Receive?

Finding the money is still not the end of my job.

Now we have to protect it.

Assume two lawyers each settle an injury case for $100,000.

At first glance, you might think the results are identical.

They aren’t necessarily.

If Client A ultimately receives $35,000 after everything is deducted while Client B receives $55,000, those clients did not obtain the same financial result even though both lawyers can advertise a “$100,000 settlement.”

That is why I focus on the client’s net recovery—the amount the client actually receives after the claim is resolved.  This is why reserving your PIP, no-fault, or med-pay coverage immediately after a wreck AND using your health insurance to reduce your medical bills can be so important!  Yes, I understand you may not know how to do these things, but that’s why you can reach me on my cell phone!

What Gets Deducted from a Car Accident Settlement?

Depending upon the particular case, deductions can include:

  • Attorney’s fees;
  • Case expenses;
  • Unpaid medical bills;
  • Health-insurance reimbursement or subrogation claims;
  • Medicare or Medicaid reimbursement claims;
  • VA or other governmental reimbursement claims;
  • Workers’ compensation liens; and
  • Other valid claims that must be resolved from the settlement.

Not every case has all of these deductions.

But when they exist, dealing with them can be just as important as negotiating the settlement itself.

Can a Personal Injury Lawyer Negotiate My Medical Bills and Liens?

Often, yes, although the ability to reduce a particular bill, lien, or reimbursement claim depends upon the facts and applicable law.

Suppose a hospital has an outstanding bill that will be paid from the settlement. If I can legitimately negotiate that bill downward, every additional dollar saved can potentially mean another dollar available to my client.

The same concept can apply to certain health-insurance reimbursement claims, medical-provider balances, and other claims against a settlement.

This is why I don’t view my job as finished when the insurance company agrees to write the settlement check.  Rather, it’s finished when we have my client’s medical bills paid, and I have minimized any amounts that have to be paid out of their personal injury settlement.

Why Using Health Insurance After a Car or Motorcycle Accident Can Matter

People sometimes believe they should not use their health insurance for accident-related medical treatment because somebody else caused the accident. That can be a costly, incorrect assumption.  A good personal injury lawyer understands that health insurance, med-pay, and no-fault insurance are all tools that allow them to maximize the net settlement, i.e., the amount a client puts in their pocket.

Think about this example. Your Emergency Room treatment generated a $30,000 medical bill. We let your health insurance pay this medical bill, and they do so by paying the hospital $10,000, requiring the hospital to write off the $20,000 per the contract they have with the health insurance. So, your health insurance now claims a subrogation lien for $10,000.  Since this is a Kentucky wreck, we have $10,000 of PIP or no-fault coverage that you wisely told your insurance company to RESERVE immediately after the wreck.  So, pursuant to KRS 304.39-241, we tell the PIP carrier to pay the health insurance lien back their $10,000, which thereby exhausts your PIP coverage.  Why? Because if I can get the health insurance lien paid under the PIP coverage, I don’t have to deduct that lien from your personal injury settlement; i.e., I put more money in your pocket that way.  But there is one beautiful piece of the puzzle left, isn’t there?

KRS 304.39-070 says that for Kentucky car or motorcycle wrecks, if the policy limits of an at-fault driver are ever offered, the subrogation rights of the PIP carrier (i.e. the right of the PIP carrier to recover the money they paid out), are extinguished by law.  What does that mean? That means when the policy limits are offered on an injury case from a car wreck in Kentucky, the PIP carrier’s rights are gone.  They lose all right to recover the amount they paid out to you, the injured person, as PIP, from the at-fault driver.

So, for the above example, assume the at-fault driver only has $25,000 in insurance.  Recall that I said your hospital bill was over $30,000, though. We got that hospital bill paid by your health insurance, and we made the PIP carrier reimburse the health insurance carrier. In that case, the liability carrier would tender their $25,000 in coverage.  The client would pay a one-third attorney’s fee or $8,333 thereby netting $16,667 from the $25,000 settlement.  There would be no deduction for the health insurance lien, as that was paid by the PIP carrier, and pursuant to KRS 304.39-070, the PIP carrier’s right of recovery was extinguished by law since the policy limits were offered. Hopefully this illustrates clearly that how you have to pay out a personal injury settlement is just as important as how much you recover from the at-fault insurance carrier.

Lastly, the above is not just an illustration. This example was pulled from a true-life example of one of my past cases.

Does a Bigger Settlement Always Mean the Client Gets More Money?

No.

A bigger gross settlement is obviously desirable, but the gross settlement number does not tell you how much money the injured person actually receives.

Consider a simple hypothetical example.

One client settles for $100,000 but has $40,000 in medical bills and reimbursement claims that ultimately have to be paid from the settlement.  The client would pay a one-third, 33.33% fee off of the $100,000, or $33,333.  $100,000 less the $33,333 attorney’s fee and the $40,000 in medical bills would mean the client’s net settlement would be $26,667.

In contrast, if that case was handled properly and the client’s health insurance was used to pay their medical bills, then the same $100,000 can put more money in the client’s pocket. If those medical bills are paid by the health insurance, the health insurance might pay $20,000 to satisfy those charges, and therefore, they would have a lien against the case for $20,000.  $100,000 less than the $33,333 attorney’s fee, less another $20,000 for the health insurance lien equals $46,667.  In other words, we just put more in the client’s pocket even though the total settlement amount was the same, $100,000.

Now, if you want to make that last scenario even prettier, it will go like this. We use the no-fault coverage or the med-pay coverage towards that $20,000 health insurance lien, thereby lessening the amount of their lien and putting more money in your pocket.  The no-fault lien is extinguished by statute; see KRS 304.39-070.  The med-pay lien is still against the personal injury settlement, but we contact the med-pay carrier and request a waiver of their subrogation rights. They don’t have to give us a waiver, but, the worst they can do is say “No”.  The idea is that a smart, well-versed car wreck attorney can find a lot of ways to maximize the amount you receive as a personal injury settlement. The settlement numbers are identical.

The results for the clients are not.

This is why I believe lawyers should talk to clients about net recovery, not simply gross settlement numbers.

How Can a Personal Injury Lawyer Increase the Amount I Actually Receive?

This is where all three parts of the job come together.

My goal is to:

Maximize the value of the claim.

That means properly documenting your injuries, medical treatment, lost income, pain, limitations, permanent injuries, and future damages.

Maximize the available recovery.

That means identifying every legitimate insurance policy, responsible party, and source of compensation that may apply.

Minimize the deductions.

That means properly addressing medical bills, reimbursement claims, liens, expenses, and other amounts that could reduce what you ultimately receive.

I sometimes explain it to clients this way:

With my right hand, I am trying to recover every dollar I legally can for your injury claim. With my left hand, I am trying to minimize what legally has to come out of that recovery.

Both hands should be working toward the same goal:

Putting as much of the recovery as legally possible in the client’s pocket.

Why Communication with Your Personal Injury Lawyer Matters

This is also one of the reasons every client of Desmond Law Office receives my personal cell phone number.

How medical bills are handled, what insurance is available, whether health insurance should be used, whether additional coverage needs to be investigated, whether a settlement should be accepted, and whether additional claims need to be preserved are issues that can arise throughout a personal injury claim.

The game plan can change as the medical treatment progresses and new information becomes available.

I believe the lawyer handling your injury claim should therefore be communicating directly with you throughout the case.

At my office, that lawyer is me.

The Question I Think Every Injured Person Should Ask a Personal Injury Lawyer

Before hiring a personal injury attorney, most people understandably want to know:

“How much do you think my case is worth?”

I would ask another question too:

“What are YOU, MY ATTORNEY, going to do to maximize how much money I actually receive?”

Listen carefully to the answer.

Does the lawyer talk only about obtaining a settlement?

Or does the lawyer also discuss insurance coverage, UM/UIM benefits, medical bills, health insurance, reimbursement claims, liens, expenses, and your ultimate net recovery?

To me, obtaining the settlement is only part of the job.

The Desmond Difference: What Matters Is What You Ultimately Put in Your Pocket

I am Louisville personal injury attorney Jim Desmond. For more than 30 years, I have represented people injured in car, motorcycle, and other motor-vehicle accidents.

I believe a good personal injury lawyer should be thinking about your case from both directions: maximum recovery and minimizing deductions from your injury settlement.

Because at the end of your case, what matters to you and your family is the amount you actually receive.

That is why my goal is not simply to maximize your settlement but rather, my goal is to maximize your net recovery.