The US Supreme Court decided US Airways v. McCutchen today, allowing insurance companies to write their way around the common fund doctrine and similar law, and taking money away from injured people.
Make no mistake – this is a big deal.
See, the world used to work like this:
- Step 1: Person gets injured.
- Step 2: Health insurance company pays medical bills.
- Step 3: Injured person hires attorney, spends time, money and effort to settle case with tortfeasor.
- Step 4: Injured person pays insurance company back, but keeps a fair percentage (typically 1/3 of the lien) for the time, money effort and attorneys fees spent in obtaining the settlement to pay the insurance company back. Without that effort, the insurance company would have gotten nothing.
Now things are different.
Step 4 now reads “Injured person pays insurance company back the full amount, so long as the insurance company requires them to do so.”
In some cases this won’t be a big deal. For many, many cases, liens and attorneys fees will eat up much or all of a potential settlement – especially in tougher cases, smaller cases, or cases with inadequate insurance. This is a lot of cases.
(Howard Zimmerle is a personal injury attorney in the Quad Cities of Iowa and Illinois. He has offices in Davenport and Rock Island. He can be reached at 309-794-1660 or hzimmerle [at] mjwlaw.com).
One of the great tools in a plaintiff lawyer’s arsenal in Illinois is the Health Care Services Lien Act, which reduces the amount of certain medical liens in some cases. It can really help increase the total amount your client ends up with in a settlement.
A new case from the 5th District, Stanton v. Rea, notes that the 40% of the settlement that goes to the medical lienholders should not be calculated until after costs have been subtracted from the settlement. In other words, the Act doesn’t mean 40% of the pie, it means 40% of the pie after costs. In some cases, that can make a big difference.
My partner, Mike Warner, just spoke on some new aspects of the Lien Act at the recent Rock Island County Bar Association Seminar. I think a thorough “how to” post is forthcoming.
(Howard Zimmerle is a personal injury lawyer in the Quad Cities of Iowa and Illinois, helping people who have been injured due to someone else’s fault. He can be reached at 309-794-1660 or hzimmerle [at] mjwlaw.com).
The Internal Revenue Service has shed some light on the taxability of tort damages. Attorneys typically have the kneejerk response that personal injury damages are not taxable. That is only true to a point.
The new regulation clarifies a few things, namely:
- Damages for personal injury or sickness are not taxable
- Damages for “emotional distress” are taxable unless they are attributable to a physical injury or sickness
- Punitive damages are taxable
The emotional distress language is important for people who handle employment law cases, false arrest, or other torts where emotional distress is recoverable but don’t typically involve physical injury or sickness.
(Howard Zimmerle is a trial lawyer from Illinois. He practices throughout western Illinois and Eastern Iowa. He can be reached at 309-794-1660 or at hzimmerle [at] mjwlaw.com.)