While your legal case may be settled, your settlement check often must travel through an extensive process before it is in your hands. The release of the check only occurs after your lawyer has verified possible liens, outstanding paperwork, and health insurance. Every case is different and depends on the type of case, whether personal injury or workers’ compensation.

This article is not going to discuss whether a case should settle or what is to be included in settlement documentation. It is merely a basic overview of what occurs from the time a client reaches an agreement to settle with the employer and insurance company and when they get a check in their hands.

A case is usually settled in two different ways either with a mediator or through the insurance company. For a mediation, a mediator will draft a mediation agreement outlining the basic terms of the settlement. For the insurance company and/or their counsel, the settlement occurs outside of any formal event.

x First, we will discuss a personal injury settlement. These are relatively similar whether the injury was caused by a motor vehicle accident, a slip and fall accident, or a wrongful death. 

Personal Injury Steps:

1. Reaching an agreement on an amount to settle

Cases can never settle if both parties do not reach the same number for settling the case.

2. Signing releases

Insurance companies and other responsible parties will almost always have the injured party sign a release before giving money for the damages. The release outlines specifically what is being exchanged by the settlement. Typically, it is one party, the responsible one, giving money to the other party, the injured one, in exchange for never filing or continuing a lawsuit regarding the accident. It also usually includes language about the injured party being responsible for any liens on the money.

3. The lawyer receives the check and deposits it into a trust account. The lawyer must put the money in their trust account and verify a few things before releasing monies to the client. The things they check for are as follows, but not exhaustive:

• o Health insurance liens including Medicare and Medicaid. Federal health insurance programs like Medicare and Medicaid have an absolute right to recover monies when they have paid and another party is responsible. [1]
• o Letters of Protection. If you and your lawyer signed a letter of protection, a portion of the settlement money must be allocated to resolving the outstanding balances with those providers.
• o Lending companies. If you have decided to use a lending company, a lawyer could be obligated to pay off the debt for the company before releasing any funds as well.
• o The money has cleared. Most people are unaware of how long it takes a bank to verify that money has actually been transferred from the insurance company to the trust account. Even if funds have been “cleared” to withdraw, that does not mean they have actually been received by the bank. Banks will allow money to be withdrawn before that time based upon a level of trust that they have with their account holders. However, each lawyer must use discretion and judgment when deciding how long they have to wait before issuing money to their clients. 

Second, we will discuss the different steps involved in a workers’ compensation settlement.

Workers’ Compensation Steps:

1. Reaching an agreement of an amount to settle. 

This is the same step that first must take place as in any personal injury case.

2. Liens on the recovery:

Typically, only two liens on a workers’ compensation case settlement: attorney and representation costs or outstanding child support and arrearage. Every single settlement seeking approval must include a statement of whether or not there is any outstanding child support owed and if so, how much.[2] If there is an arrearage, the Judge will allocate some of the settlement proceeds to paying off the arrearage. There is also the chance in some cases that an ERISA health insurance policy, Medicaid, or Medicare have paid for some of the medical treatment caused by the work injury. If so, they are entitled to recover a portion of the settlement proceeds as well.

3. Medicare consideration:

Every single settlement must take into consideration the injured worker’s status relative to receiving Medicare benefits. Depending on a few factors, Medicare will review a Medicare Set Aside Arrangement. This arrangement is a report that estimates what future medical treatment will be needed for the work injury that Medicare would normally pay for. These reports are only needed if the injured worker falls within two categories:

• They are a Medicare beneficiary and the settlement is greater than $25,000.00; or
• They have a reasonable expectation of Medicare enrollment within 30 months of the settlement date and the settlement amount is over $250,000.00. [3]

4. Settlement paperwork:

Workers’ compensation cases typically require more release language than in a personal injury case. Once these documents are signed, the next step is to request approval from the Judge.

5. Judge of Compensation Claims approval:

The Judge has a set number of documents they require to approve a settlement. They only approve two things: the reasonableness of the attorney’s fee and costs and child support allocation.

6. The lawyer receives the check.

This step is similar to personal injury cases, except typically there are no liens, LOPs, or lending company concerns. They can exist, but not typically.

Following the clearing of funds, it should be that a check is ready to issue for the net remainder of the settlement to the client. Clients should be aware that just because it has cleared the lawyer’s bank, does not mean that it will be cleared instantly when they deposit it into their own bank. Each bank has rules about how long of a hold they will place on a check once it is deposited, and the lawyer has no control over those rules.

Dealing with a workers’ compensation case or personal injury case, we can help! Reach out to Carrillo Injury Law today for a free consultation by emailing office@carrilloinjurylaw.com.

[1] https://www.cms.gov/Medicare/Coordination-of-Benefits-and-Recovery/Beneficiary-Services/Liability-No-Fault-and-Workers-Compensation-Reporting/Liability-No-Fault-and-Workers-Compensation-Reporting
[2] https://www.jcc.state.fl.us/JCC/rules/#60Q-6.123
[3] https://www.cms.gov/Medicare/Coordination-of-Benefits-and-Recovery/Workers-Compensation-Medicare-Set-Aside-Arrangements/WCMSA-Overview