Agreeing to a settlement in personal injury cases is the heaviest lifting that you and your attorney will do. You may have been through a difficult personal injury trial or a grueling negotiation with the insurance company.
Before you can receive your settlement funds, there is a process that you must go through. Your attorney will still be there helping you until you receive your personal injury settlement check.
Here is the process that must be followed before settlement proceeds will hit your account (some of the same steps must also be taken for a jury verdict to be paid).
Agreeing to a Settlement Amount
The hardest part of your case is the negotiations that happen that lead to a settlement. Your personal injury lawyer has likely engaged in some extensive back-and-forth with the insurance company to settle your personal injury claim.
They will have also engaged defense attorneys to reach the settlement. You may have received a settlement offer that was worth far less than your claim and rejected it.
You may even have had to file a personal injury lawsuit to put pressure on the insurer to engage fully in the settlement process.
Either way, your personal injury attorney and the defense attorney have now, at least, reached an agreement. You will sign the settlement agreement, and that constitutes acceptance of the terms.
Agreeing to the Type of Settlement
Besides the amount of money, you will also need to decide how you want to receive it.
You have two primary options for receiving a settlement check:
- A lump sum payment
- A structured settlement
A structured settlement is when you do not receive all of the money at once. You may do this when you have high future costs and want to ensure that the money is there for you in the future.
Another reason for a structured settlement is when the money is to benefit a minor child, and you do not want them to have a large check that they could spend recklessly when they turn 18.
The money is placed into a trust account, and it is distributed in accordance with the terms of the structured settlement.
Timely Payment of Your Personal Injury Claim
The biggest frustration for clients is when their settlement check is delayed. However, there is a process that must be followed before you can receive a settlement check.
Personal injury attorneys can help you keep the process on track to avoid any unnecessary delays that could keep you from getting your settlement check in time. If there any holdups on your end, your lawyer could help minimize any roadblocks.
Settlement Papers Include a Signed Release
The reason why an insurance company will settle your claim is that they want to be released from any further liability.
They do not want to have to pay additional settlement money in the future if what they have paid out now proves not to be enough.
What is in it for them is that they will get a signed release from you agreeing that they will not need to pay anything else in the future for your claim. You have agreed that this will be the final settlement of your claim against the other party.
The Terms of Your Settlement Agreement
Of course, the payment of your settlement will be dictated by the terms of the agreement. A settlement agreement will resolve the key parts of the case. It may also have supplemental terms as well.
Here are some things that can be terms of a settlement agreement:
- The legal issues that are settled by the agreement
- The rights and obligations of both parties to the agreement
- Provisions to protect sensitive or confidential information
- How payment is to be made
- Ways to resolve disputes under the agreement
Signing the Personal Injury Settlement Documents
A personal injury settlement is a contract between you and the insurer. Each side has roles and responsibilities. For your part, your agreement is noted when you sign the agreement. This binds you to the terms.
Your signature will be witnessed by a notary public, who will attest to it with their own signature and seal. The insurance company will also need to sign and execute the document for it to be binding on both sides.
If the settlement comes after you file a lawsuit, your personal injury lawyer and defense attorneys will notify the court that you have reached a settlement agreement.
The judge will issue an Order of Settlement in the case, specifying steps that must be followed.
The Role of the Insurance Company
The insurance company that provides coverage for the at fault party will usually be the one responsible for paying the settlement (so long as it is within policy limits).
After you have signed the documents and the release form, the insurance company will issue the check. Once they have the release in hand, they cannot do anything else to hold up your check.
However, since you have the obligations that are described below, the money does not go directly to your account. The check will not be made out directly to you. It will be made out to both you and your attorney.
Settlement Checks Then Go to Your Attorney
Before you can cash and deposit the check, the total settlement will first be sent to your attorney.
The first thing that the attorney will do is deposit the check in their escrow account. This is an account that the attorney is required to maintain to keep client funds separate from their own.
Funds in this account are necessarily secure, as that is a requirement when any attorney accepts client funds.
The check must clear first in the escrow account before the attorney can begin the process of distributing the funds.
The Health Insurance Company Can Place a Lien on Your Case
Your health insurance provider has likely laid out money for your medical treatment. When you are paid for your medical expenses, you are not able to keep all of this money.
You can retain your out-of-pocket healthcare costs because they are part of your economic damages. However, the insurance company will have first priority on your settlement payment for unpaid bills and the amount that they have paid.
If there is a lien, it needs to be satisfied, and the health insurer may need to provide consent for you to cash your own check.
Healthcare providers and insurance can place medical liens on your settlement or jury award for the costs of medical treatment. This is a demand for repayment that the law allows health insurers and other doctors to place on your money.
You cannot receive payment until they are paid back. You may have even signed a lien letter when you received treatment at a hospital. The medical liens must be placed in accordance with the law, and they must reflect the treatment that you received.
Your attorney may review medical records to ensure that these liens are valid and reasonable.
Other Liens on Personal Injury Claims
There may be other ways that third parties can collect for medical bills and the cost of your treatment. For example, Medicare and Medicaid also have a right to be reimbursed for the costs of your care.
The Veterans Administration is another government agency that may have a right to reimbursement. Personal injury attorneys can advise you how these liens work.
In addition, if you received workers’ compensation benefits before settling a lawsuit, the insurance provider can also place a lien on your settlement funds to compensate them for the lost wages that they paid you and the medical bills that they covered.
How Attorney’s Fees Are Handled
When you hired a personal injury attorney, you signed a representation agreement that specified how they are to be paid. You did not have to pay them anything upfront, nor did they send you any bills for their services while the case was pending.
A personal injury attorney is paid on a contingency basis. The contingency that obligates you to pay them is receiving settlement funds or a jury award. Then, they have the right to receive a percentage of the money that you are given or awarded.
After the liens are taken (for example, unpaid child support or income tax could mean that there is a general lien against you), the attorney will be able to take their percentage from your check.
If there are any other fees, these will also be deducted. Sometimes, the attorney will advance certain fees on your behalf during the case, such as court costs and fees for expert witnesses.
What Happens with Your Settlement Check
After all of the above are deducted from your settlement check, the money will then be transferred to you. The attorney will have asked for your payment instructions, and they must have them before they can transfer the money to you from their escrow account.
Once they have an account number and routing information, you will receive your settlement check. This would conclude your settlement check process. It is important that you have financial advice ahead of time, especially if you are receiving a large amount of money.
Will I Need to Set Aside Money from My Settlement Check for Taxes?
As one of their few questions after getting money, many clients will ask us if they need to put aside a portion of their settlement check to pay income taxes to their state of the IRS. The answer to this is no.
Even if your check covers lost wages for money that you could have earned, settlements from personal injury cases are not taxable.
This also includes the money that you receive from pain and suffering. The only exception is that punitive damages are taxable, but you would only be receiving these in a jury verdict and not in a settlement check.
How Long Does the Settlement Check Process Take?
We are also asked how long it will take to get your check once all of the settlement documents have been executed. This depends on your case, but the insurance company is not allowed to unreasonably delay your payment.
Usually, this can take up to a few weeks, depending on the insurer’s processes. If there are liens, the settlement check process could take longer. If it is a less complicated claim, the settlement check can clear and you can have your money in less than a week.
Like everything else in a personal injury case, everything depends on your own facts.
If the personal injury settlement check is part of an estate after the accident victim has died, there could be additional delays to the probate process and the settlement of the estate.
Contact a Personal Injury Lawyer for a Free Consultation
At Rosenfeld Injury Lawyers, we work with our clients at every step of the way to guide them through the legal process after they have suffered personal injuries such as injuries from products, a car accident or a slip and fall.
We are compassionate yet aggressive personal injury lawyers that know how to take on insurance companies. Our law firm can make a difference in your case.
Call our law firm today for a free evaluation of your case. The call is free, and we are not paid any legal fees unless you receive a settlement check or a similar outcome that pays you money.
Contact us to begin our attorney client relationship and receive legal advice about your case.