by: Thomas D. Begley, Jr.

Years ago the difficult job of a personal injury attorney was to settle the case.  In recent years, a myriad of other issues has developed and the personal injury attorney is wise to address them in order to avoid malpractice claims later on.  Some of the issues that must be considered are the following:

  1. Liens.  It is important to determine at the outset of the case and then reaffirm at the conclusion of the case whether the plaintiff is receiving any public benefits.  Is the plaintiff receiving Medicare?  If so, there will likely be a Medicare lien and this must be satisfied from the settlement proceeds.  If the plaintiff is receiving SSDI, he will receive Medicare within two years after his Disability Determination.  It is good practice to obtain a Conditional Payment Letter prior to mediation, and later obtain a Final Payment Letter from CMS.
  2. Medicaid Lien.  If the plaintiff is receiving SSI, he automatically receives Medicaid in New Jersey.  Even if the plaintiff is not receiving SSI, he may be receiving Medicaid under a waiver program.  It is important to ascertain whether the plaintiff is receiving Medicaid and, if so, to obtain a Medicaid Payoff Letter.
  3. Other Liens.  Other liens  must be addressed.
  4. Medicare Set-Aside Arrangement (MSA).  If the plaintiff is receiving Medicare or has a reasonable expectation of receiving Medicare within 30 months, an MSA should be considered even in a third party liability (TPL) case.

Determine the following:

  • Is plaintiff receiving benefits from Social Security Disability Insurance (SSDI)?
  • Is plaintiff receiving benefits from Railroad Retirement Disability (RRD)?
  • Has plaintiff applied for SSDI?
  • Has plaintiff applied for RRD?
  • Is plaintiff appealing an SSDI denial?
  • Is plaintiff appealing an RRD denial?
  • Does plaintiff suffer from End Stage Renal Disease?
  • Does plaintiff suffer from ALS?
  • Will the plaintiff be receiving any further treatment related to this injury?
  1. Structured Settlement.  Has a structured settlement been considered?  Has a proper allocation been made between a lump sum and a structured settlement?  It is always good to have a lump sum if the plaintiff wants to buy a home, a vehicle, take a vacation, or buy personal effects as a television, etc.  It is ALWAYS wise to set aside an emergency fund in a lump sum.  Generally, a balance of 50% lump sum, 50% structure makes sense, but this ratio varies on a case-by-case basis.
  2. Investment Management.  If the plaintiff is receiving a significant lump sum for all or a portion of a settlement, have a recommended expert money manager to assist in investing the funds.
  3. Special Needs Trust.  If the beneficiary is receiving any means-tested public benefits including, but not being limited to, SSI, Medicaid, Medicaid Waiver, SNAP (formerly Food Stamps),  Section 8 Housing, or Group Home, a Special Needs Trust should be considered.  The plaintiff should be disabled and have a Disability Determination from the Social Security Administration.  If he does not have such a determination, could he apply?
  4. Settlement Preservation Trust.  If the individual is a minor, an incapacitated person, or a young adult, has a Settlement Preservation Trust been considered?  If there is a large settlement where money management is important, has a Settlement Preservation Trust been considered?  If there is to be a structured settlement, has a Settlement Preservation Trust been considered?  If the plaintiff has a structured settlement, he can sell it on the open market.  If the structured settlement is held by a Settlement Preservation Trust, it is much more likely that the structured settlement will not be sold.  The trustee of the Settlement Preservation Trust will manage the money in such a way to avoid needing to sell the annuity contract.  In addition, the trustee will withhold consent to the sale of the structured settlement in almost all instances.
  5. Tax Issues.  Have income, estate and gift tax issues been considered?
  6. Estate Planning Documents.  Does the injured plaintiff have a Will, Living Will, and Power of Attorney? Are all of his beneficiary designations on life insurance, annuities, and IRAs appropriate?
  7. Estate Planning Documents – Parents.  In the case of a plaintiff who has a disability, do the parents have estate planning documents including Wills, Living Wills, Powers of Attorney, and Third Party Special Needs Trust?  If the parents die and leave money to the child with a disability, he will lose his public benefits.  By utilizing a Third Party Special Needs Trust, the child’s public benefits may be maintained and the child can enjoy the inheritance from the parents.
  8. Medical Insurance.  Does the plaintiff have adequate medical insurance?  Even if the plaintiff has Medicaid and Medicare, better insurance may be available.  Not all providers accept Medicaid.  Medicare has deductibles, copayments, and maximums per spell of illness.  Any plaintiff having Medicare should have either a Medicare Supplement or convert to Medicare Advantage.  If the plaintiff has a pre-existing condition as a result of the injury, a Medicare Supplement may not be available, but a conversion to Medicare Advantage is possible during an open enrolment period.  A number of alternatives are available to obtain private medical insurance.
  9. Public Benefits.  Has the plaintiff applied for all public benefits for which he may be eligible?
  10. Probate.  Is probate necessary?  In a wrongful death case probate is almost always necessary.  In addition to qualifying as an executor or administrator, it is often necessary to file a federal or New Jersey estate tax return or a New Jersey inheritance tax return based on the amount of the personal injury settlement and any other assets the estate of the deceased plaintiff may have.