A settlement is an agreement between an injured party and another person or company for compensation to resolve a claim. It results in the voluntary waiver or dismissal of pending litigation.
For instance, a student of Georgia Tech will receive approximately $3 million in a settlement agreement. The truck accident caused physical injuries, such as multiple fractures and loss of cognitive skills. Moreover, the city of Yakima has agreed to a settlement amount of $3 million with the family of Mario Garcia, a man injured due to a collision.
Such agreements may also apply to a class action settlement. Affected owners of Hyundai and Kia vehicles may receive compensation for faulty brake systems in their cars, which can cause fires.
Aside from car accidents and defective products, other causes of action may involve medical malpractice, animal bites, and intentional harm. For example, a person attacked by a dog can demand settlement money from the pet owner.
A victim of assault and battery suffering from bruises and broken bones can also receive a settlement check in a successful negotiation. A personal injury lawyer can negotiate on your behalf during the settlement process.
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Inclusions in a Personal Injury Settlement
A personal injury settlement echoes the typical compensation you might get in a lawsuit. The settlement check in a personal injury case or negotiation may include the following:
- past and future medical expenses,
- repair costs,
- lost wages,
- loss of earning capacity, and
- pain and suffering.
For instance, if a person sustains brain injuries from a car accident, the at-fault party must pay for surgery and rehabilitation costs. The medical bills may also include medications, including coma-inducing and anti-seizure drugs. If the patient’s vehicle was damaged, they might also demand repair costs.
Suppose a sedan’s faulty fuel tank led to third-degree burns of its occupants. In that case, the auto manufacturer might compensate the injured parties. The medical treatment may involve skin grafts, which can cost significantly. Moreover, the passengers may also take time off work. In such cases, the company must pay for lost wages.
Since dog bites also cause personal injury, they may also be the subject of a settlement. Under the strict liability principle, the owner will be responsible if their dog attacks someone. For example, suppose the victim lost their arm due to the vicious attack. In that case, the owner may be liable for loss of earning capacity.
A person who inflicts battery and assault on another may compensate the victim for pain and suffering. In case of bone fractures, they must also pay for diagnostic tests, including X-rays, CT scans, and bone scans. Some victims of assault also demand payment for future medical expenses for long-term rehabilitation.
A patient may also receive compensation in case of medical malpractice. A sample scenario involves a man left paralyzed after a standard surgical procedure. The at-fault doctor might agree to settle the case if they violated their legal duty to the patient. As a result, they will pay for loss of earning capacity, lost salary, and loss of enjoyment of life.
Settlement Check Process
Before receiving your settlement check, you must first sign the necessary documents. After receiving a settlement check, your attorney will deduct liens and legal fees before giving you the proceeds.
Sign documents and release forms
All parties in a claim must comply with the terms of the settlement agreement. After reaching an agreement with the at-fault party, the claimant must sign the release form containing the settlement terms. This document states that you will not demand any damages arising from the present cause of action.
The defense attorney will prepare the release form, and your lawyer will review the paperwork. They will ensure that all conditions agreed upon are in the document. If your attorney notices changes in the terms, they will contact the other party for a new release form.
Several state laws address the issue of settlements. For example, Section 42.003 of the Texas Civil Practice and Remedies Code provides the requisites for a valid settlement offer. It must be written, stating that the parties made the offer according to the applicable law.
Moreover, it must state the terms of the agreement and the deadline by which the claimant must accept the offer. The provision also mandates that the claimant receive the settlement offer for notification purposes. It does not require the parties to file the settlement agreement with the court.
Section 735 of the Illinois Compiled Statutes also addresses settlement procedure. Within 14 days, the defendant must issue a release to the plaintiff regarding the settlement’s confirmation.
Suppose a personal injury case requires court approval for a settlement. In that case, the plaintiff must send a copy of the court order to the defendant. Paragraph d of Section 735 also instructs the defendant to pay the plaintiff within 30 days after signing the release form.
Release of check
The other party will issue the check once they receive the release form. However, internal issues may delay this process. After the insurer resolves such problems, the at-fault party or their insurer will send the check to your attorney.
The check will typically be payable to you and your lawyer, but you will only receive part of the amount. Your personal injury lawyer may make certain deductions, as discussed in the next section.
Deposit checks and pay liens
After your attorney receives the settlement check, they will deposit it into an escrow account. Putting it in escrow enables the lawyer to settle all outstanding accounts before disbursing the balance to you. You may ask to see the statement of account, but you do not have direct access. The purpose of an escrow account is to promote transparency in the disbursement of the settlement money.
For example, your attorney may delay your payment if you have a medical lien. States have passed legislation regarding medical liens on a personal injury settlement. One example is Section 360-7.11 of the New York Codes, Rules and Regulations. It recognizes the imposition of liens against claims and suits for personal injuries.
Another example is Section 3045.2 of the California Civil Code. It acknowledges the application of a hospital lien in damages recovered by settlement. However, a lien shall only be effective upon the issuance of a written notice with the following details:
- Name and address of the injured person
- Date of the accident
- Name and location of the hospital
- Amount claimed
- Name of the alleged at-fault party
Section 3045.4 also states that the liability to pay liens is on the defendant or their insurance company. In case of non-payment, Section 3045.5 allows the healthcare provider to institute a civil action to enforce the lien.
Section 3411 of the Maine Revised Statutes includes an interesting provision. The law provides that a hospital lien is not prioritized over attorneys’ claims for their legal services. It also allows the reduction of lien based on just and equitable grounds. Hence, a hospital that enters a lien agreement must assume these risks.
Like California’s provisions, Maine also requires a written notice to be sent to the individuals alleged to be liable and their insurance company. Under this section, the hospital shall present hospital records to prove the actual amount of healthcare costs.
Pay legal fees
After deducting liens on the settlement funds, your legal counsel may deduct their fees as per your contingency fee agreement. It is a form of payment for their attorney’s fees, which they only receive if you win your case.
The fee may be anywhere from 20% to 50% of the total settlement. Other types of legal fee agreements include flat rates and hourly basis. In a flat rate agreement, the lawyer will offer a fixed rate regardless of the number of hours they will spend on your case.
On the other hand, an hourly fee considers the length of time that a lawyer needs for tasks such as drafting documents and negotiating with insurance companies. Additional costs that a lawyer may demand are filing fees, travel expenses, and postage costs.
Receive the settlement check
After your legal counsel deducts liens and attorney’s fees, you can receive the balance of the settlement proceeds. It may take about six weeks to get your money, and it will be significantly less than the settlement amount.
You should also expect that crediting the settlement check to your account may be subject to bank delays. For instance, it may take them several days to clear your check if there is a holiday. They may also hold a larger payout longer to verify fund sufficiency.
Ways To Expedite the Settlement Check Process
A personal injury attorney can help you receive the settlement payment more quickly. First, they can ensure you have all the documents a defense attorney or insurer may request. The papers may include the accident report, a summary of facts, and medical bills. They may also draft the release form in advance, containing your desired terms.
Law firms can also choose expedited shipping, so you can swiftly receive the paperwork. It also prevents the defense attorney or other party from saying they have been waiting for the documents to arrive. Hence, expedited shipping can streamline the exchange of paperwork.
Your lawyer can also help track your check. They will contact the other party to inquire about its status. Hence, it is best to have an expert oversee the settlement process.
Class Action Settlement Process
The typical civil action only involves one claimant, but a class action has several. Moreover, the government imposed stricter rules in class actions, provided in the Federal Rules of Civil Procedure’s Rule 23.
In case of settlement, the court must analyze four factors:
- The legal counsels and representatives adequately represent the class members.
- The parties negotiated at arm’s length.
- The settlement amount is adequate, considering the costs of trial and attorney’s fees.
- The offer equitably treats class members.
Rule 23(e)(5) presents the guidelines in case of objections to a settlement. The objection must indicate to whom it applies. For instance, the class must state whether only one person, a subset, or the entire class denies the offer.
Moreover, not everyone can participate in a class action. Rule 23(a) determines that the following justifies allowing representatives to act on behalf of a class of people:
- Class members are so numerous that it would be impractical for all of them to participate
- Commonality of questions of law or fact within the class
- Member claims and defenses are similar or the same as the class
- Representative parties will adequately protect the class’ interests
The amendment also clarified the notice requirement. Rule 23(c)(2) mandates that the parties may send the notice through US mail, electronic means, and other appropriate ways. It must include certain information, such as:
- Nature of the class action
- Definition of the class
- Claims, issues, and defenses
Did you know?
Section 61 of the Internal Revenue Code exempts settlement proceeds and court awards from tax. Under the law, the amount received for personal injury is not included in an individual’s gross income.
Streamline the Settlement Check Process
A settlement check compensates you for your losses. However, you must know your rights before entering an agreement. It will also help if you know the average timeline of the settlement process.
Visit The Personal Injury Center for free legal information about personal injury settlements. We can also match you with a reliable personal injury attorney to help you. Tell us briefly about your case to get started.
Are you planning to enter a settlement agreement? Schedule a free consultation with The Personal Injury Center to know how the settlement process applies to your case.
FAQs on Settlement Checks
Under a structured settlement, you will receive a series of scheduled tax-free payments for medical bills and other expenses. Hence, you will not get the compensation in one lump sum.
Checks usually expire after six months, but some become stale after one year. Remember to cash in your check before it expires.
After the trial, a court grants an award if the claimant wins the case. A settlement typically arises from out-of-court negotiations between the claimant and defendant. Moreover, you will only receive an award after a court order. You can get a settlement check without waiting for a court verdict.