The first step in receiving the compensation for catastrophic injury claims is being able to prove the nature and extent of that injury. Not only is this the first step, but it can often be a challenging one. Your damages could include both present and future medical expenses, the cost of rehabilitation services, lost wages (both past and present), and compensation for disability, pain, suffering and mental anguish. For these reasons, structured settlements are often considered in these types of cases.
How Does the Law Define a Catastrophic Injury?
There is no specific legal definition for the term “catastrophic” as it relates to personal injuries. However, in legal terms, it is basically understood as a serious injury that results in long-term, maybe even permanent, disability or disfigurement. A catastrophic injury usually leads to a difficult recovery, multiple surgeries, and long-term medical treatment. It is not uncommon for victims suffering catastrophic injuries to be incapable of returning to work for an extended period of time. A catastrophic injury commonly makes some of the most basic daily tasks too difficult to deal with alone.
Issues Involved in Settling Catastrophic Injury Claims
Many catastrophic injury claims do not make it all the way to trial. Not because they lack merit, but because the parties are able to reach a settlement early on. This is usually a good thing for everyone involved. When a settlement is reached, the person who was injured (the plaintiff) agrees to dismiss the lawsuit in exchange for monetary compensation. Depending on the amount of the settlement, the payments are made either as a lump sum or a structured settlement.
The Need to Document Residual or Degenerative Injuries
Long-term and residual injuries are a crucial part of your personal injury claim and are unfortunately overlooked by some. Make sure that your health care providers make a notation in your medical records that you may have a residual or degenerative condition if that is the case. These notations in your medical records will be very important in supporting your claim for these types of damages. The simplest way to get your physician to include such a notation in your records is to simply ask.
What Is a Structured Settlement and How Does it Work?
A structured settlement is a type of payment arrangement where the plaintiff receives regular payments over an extended period of time, possibly for the plaintiff’s life. This type of payment arrangement is particularly appropriate in cases involving catastrophic injuries. The way it usually works is, the defendant’s insurer will fund an annuity policy for the benefit of the plaintiff. The annuity provides a continuous stream of income for the term of the structured settlement. As with everything, there are pros and cons of structured settlements. Before you make a decision, there are a few things to consider.
Advantages of Structured Settlements for Catastrophic Injury Claims
There are many benefits to receiving a structured settlement payment. Structured settlements provide substantial tax benefits to plaintiffs. Lump sum payments are considered income and are required to be included on tax returns. However, income received from an annuity is tax-free, as long as the plaintiff is not controlling that income.
Structured settlements also provide better management of the funds. It is all too common that, when plaintiffs receive a lump sum, it is spent within the first five years or less. At that point, because of the need for continued medical care, they become dependent on government assistance. On the other hand, a structured settlement will serve to preserve the funds, so they remain available throughout the plaintiff’s disability or lifetime. Another advantage is that annuity funds are managed by professionals. So, with proper financial planning, the plaintiff’s future expenses should be covered.
Disadvantages of Structured Settlements to Consider
Despite the tax advantages of an annuity, if the plaintiff retains too much control over the settlement proceeds, the IRS may not approve the tax break. Some plaintiffs are not willing to accept structured settlements because they fear that future inflation or a recession may significantly decrease the annuity payments. Another risk with an annuity is that it may be placed with a broker with insufficient protection against insolvency.
Another problem with accepting a structured settlement is the inability to make an accurate assessment of the appropriateness of the settlement. The reason for this is that insurance companies rarely disclose the amount they actually pay for the annuity. This type of arrangement often costs the insurance company much less than the lump sum payment would. Nevertheless, a settlement may ultimately be a quicker, less expensive and less stressful alternative to trial. Discussing your situation with your personal injury attorney will help you decide whether a structured settlement is your best choice.
If you have questions regarding catastrophic injury claims or any other personal injury matters in Arkansas or Missouri, please contact the Cottrell Law Office for a free consultation. You can contact us either online or by calling us toll-free at (888) 616-6356.
He is licensed to practice law in the United States District Court for the District of Kansas, eastern Arkansas, western Arkansas, and western Missouri. He was Deputy Prosecuting Attorney in Crawford County, Kansas from 1987-1989.
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