Vegas Personal Injury Law Blog

A few weeks ago, I was preparing jury voir dire questions for a short trial. Some of the questions that I prepared involved various issues of tort “reform” and other items currently in the media that dealt with negative events involving personal injury lawyers. One area that always has to be covered is the McDonald’s hot coffee case, because most potential jurors have been indoctrinated to believe that this case sets the standard for a frivolous lawsuit.

Recently, I viewed the HBO special- “Hot Coffee”.  This special starts off  by reviewing the details of the McDonald’s case.  If you have the impression that this was as frivolous suit, you should watch this one and one-half  hour special.  Stella Liebeck’s legs were scalded by coffee that was about the temperature of  the water in a car radiator (180-190 degrees).  This temperature is capable of causing third degree burns requiring skin grafting.  Ms.  Liebeck wasn’t the only one that was injured by this McDonald’s coffee. There were over 700 burn cases reported, because their holding temperature for coffee was so high.

The unanimous  jury found Ms. Liebeck to be 20% at fault and McDonald’s 80% at fault for the burns she sustained to her legs from the hot coffee.  The jury awarded Ms Liebeck $160,000.00 in compensatory damages and $2.7 million in punitive damages.  The purpose of punitive damages is to change behavior brought about by egregious conduct. The presiding judge reduced the total punitive damage award to $480,000.00.

The media picked up on the hot coffee case and made it the flashpoint for tort “reform”, which is an attempt to block civil lawsuits and the public’s right to get into court. The media never mentions that there are legal procedures in place that block any frivolous case from ever getting to trial. Nor do they attempt to provide the actual facts of the case.

After this case, big business, insurance companies, pharmaceutical companies, asbestos companies, oil companies, tobacco companies, health insurance companies and companies that insure doctors, tried to pass federal tort “reform” legislation. They banded together under an organization known as the U.S. Chamber of Commerce, which has its headquarters in Washington, DC.  This appears to be an agency of our federal government. It is not. Obviously, the U.S. Chamber of Commerce has  strong financial backing.  Carl Love and George Bush Jr. became the proponents of tort “reform.”  They advocated caps on compensatory, special, and punitive damages.  They preached  that frivolous malpractice suits were going to put our doctors out of business.

Bill Clinton vetoed federal tort “reform” legislation.

One of the purposes of tort law is to promote safety.  In order to do that, you have to hold entities that sell products and services accountable.  If we don’t, then those injured by the negligence of these companies must  look to state programs such as Medicaid to pay for support and medical care necessitated by their injuries.

Once the Chamber of Commerce was blocked from passing national tort “reform”, they centered their campaign  on providing financial support to elect candidates for the state courts that would be pro business and pro tort “reform.”  As a result of this state by state campaign, judges were put into place who were in favor of placing caps on punitive damages as well as caps on non-economic damages for pain and suffering, and even limitations on the recovery of medical expenses paid by insurance (Collateral source rule).

All of this was accomplished by taking snippets of information from cases where people were injured and using these negative aspects of these cases to make them look bad in the eyes of the public. All cases have some negative aspects.  In our state of  Nevada the aftermath of this tort “reform” campaign resulted in a $250,000.00 cap on non-economic damages on medical malpractice cases, a one-year statute of limitations, and restrictions on recovery of damages for medical bills that were  paid by insurance, obviating the collateral source rule on med-mal cases.  Some states have adopted caps on punitive damage, and other states have caps on the non-economic and/or entire amount of damages that a jury can award.

The bottom line is that our civil justice system needs tort law to maintain a civilized society and to pass the cost of damages caused by profitable injury producing products back to the manufacturers and companies that cause injuries to our friends and family.  This promotes safety in our society and protects the public from dangerous services and products.  The criminal justice system, to a certain extent, makes for a more civilized society, but it can’t control non-criminal conduct.  That’s where the civil justice system picks up.  Without access to the courts on tort cases, the public would be picking up the tab for damages caused by entities that should be held accountable for their actions.

A Structured Settlement allows a personal injury claimant to obtain cash over a period of time, rather than obtaining his settlement in a lump sum. Structured Settlements started in the late 1970′s, and they are a big business. Structured Settlements only apply to large personal injury cases, usually involving policy limits settlements of at least $100,000.00. A Structured Settlement is an annuity.

Voluntary Structured Settlements are used in personal injury cases in situations involving claimants that can’t manage their own finances.

In some instances involving minors and incompetents, a court will order that the client’s portion of a settlement must be placed in an income producing investment.

In the state of Nevada we have a Minor’s Compromise Statute which involves a form of Structured Settlement. The court must approve a minor child’s settlement and will enter an order that the child’s settlement must be placed in a FDIC insured bank account in the state of Nevada, until the minor child reaches the age of 18 years. These funds can only be removed from the block account by court order. The court will only order the release of these funds before the child turns 18 years of age, only for reasons involving the special educational or medical needs of the minor child.

As far as personal injury settlements are concerned, the client’s part of the personal injury settlement is usually divided into three types of compensation. One portion is for medical bills. Another portion is for pain suffering. These portions free from federal income tax. Compensation for lost income for IRS purposes is considered to be a gain and various IRS’s Codes apply. Also, some States have state income tax laws that also apply to these settlements. So, the income tax consequences of a settlement must be considered when establishing a Structured Settlement for a client, if a portion of his settlement is for loss of income.

Attorney fees can also be structured. If an attorney wants to defer paying income taxes on a portion of or all of his fees, he can use a Structured Settlement. One example would be if an attorney had a very large fee on a case, he could purchase a Structured Settlement that would pay him a fixed sum per month, or he could receive a lump sum after a fixed period of years. This may be a way for the attorney to defer some income tax to a point in time when he has a reduced tax exposure.

The pros of a Structured Settlement for a minor or incompetent involve avoiding exploitation of these settlement funds by individuals who are close to the claimant. Incompetents and minors may use a Structured Settlement as a vehicle to pay for ongoing medical needs resulting from their accidents.

If you have a client that can not manage his money; or, if a client’s age or socio economic status would indicate that he would blow a large lump sum settlement; or, if a client would make bad financial choices in investing his settlement, a Structured Settlement may be appropriate for these individuals. When a settlement involves an incompetent individual, there have been many prominent attorneys who have found themselves involved in a malpractice lawsuit, because they did not structure the client’s settlement and persons close to the claimant have taken off with their settlement funds.

The cons of a Structured Settlement are as follows:

1. As we all know bank accounts as well as other investments are currently paying low rates of interest at the present time. Therefore, this may not be the best time to opt for a Structured Settlement. However, most Structured Settlements will pay a much higher return than bank interest.
2. If a claimant chooses a Structured Settlement, there is no large chunk of cash for him to use for a down payment on a house, or to pay income taxes.
3. Structured Settlements can also be sold. The older Structured Settlements have a higher interest rate, and the company purchasing the Structured Settlement would receive an income stream higher than the current interest rates. Some states have restrictions on selling Structured Settlements.

Structured Settlements can be done in a hybrid form. The claimant can take some cash now and structure the remainder of the settlement.

Some factors to be considered in selecting an insurance company or investment company to write a Structured Settlement are as follows:

1. The financial strength of the insurance company should be considered. State Farm is the largest insurance company in the world, and State Farm writes reinsurance for most insurance companies. So a company like State Farm will be around long after other insurance companies have become insolvent, because of a catastrophic insurance event. Allstate, Farmers, CNA, and Geico are all solid companies that will write Structured Settlements. You should avoid any fly-by-night company because they may not be around in the future, or may not be solvent enough in the future to make the structured payments. We are all familiar with AIG. We almost lost this company due to their involvement with mortgaged backed securities.
2. A Structured Settlement is an annuity. As far as annuities are concerned, some can contain language of an assignment and release. These can be sold to a another insurance company which may be less solvent, because the original insurance company may not want long term payments on their books. Other Structured Settlements can’t be sold because they are designated as buy and hold.
3. Financial planners and bankers give us the impression that there is no fee on the Structured Settlements, however most brokers will receive a four percent commission that will be advanced by the insurance company, so that the original principal amount of the settlement stays the same.
4. One caveat concerning Structured Settlements is that it is unethical for a claimant’s attorney to take a kick-back from the person or entity that establishes the Structured Settlement.

Therefore, Structured Settlement annuities, even those that are mandated by a court order, must be carefully established to meet the specific needs and financial concerns of each client.

As a personal injury lawyer, I have seen how trends in personal injury claims handling and litigation have changed over the years.  In this electronic age, information and documents posted on social networks like Twitter, Facebook, and Myspace can potentially have a negative impact on personal injury claims.

Insurance Companies and defense attorneys are using these sites as a source to obtain damaging information about victims of personal injury accidents in their fight against compensating those victims for the personal injuries caused by their insureds.

If a person is involved in an automobile accident, he is likely to post some information concerning the accident, the injuries caused by the accident and how the injuries affected his life on a social networking site.  Insurance companies may find on these posts information that is favorable to them regarding how the accident happened, and/or they may find  information favorable to them concerning the development of injuries after an accident.  The more times that a story is told, the more likely that there will be inconsistencies.  Information posted on social networking sites may contradict subsequent accident and injury  reporting to insurance companies and to health care providers.  If contradictory information is obtained by an insurance company, this will certainly undermine the credibility of a personal injury claimant, and devalue his claim.

Credibility is an important factor to juries when they are asked to make decisions concerning an accident causing non-visible neck and back injuries. The general public has been well indoctrinated by insurance companies to get them to believe that all whiplash injuries are fraudulent.  A personal injury claimant’s credibility before a jury can be negatively impacted by photos and video of the claimant participating in physical or athletic activities after an accident. Any content that could portray a claimant in negative light should be taken off social media sites. The claimant should also have online friends refrain from posting this type of pictorial documentation from their own sites.

Posted information regarding illegal or immoral matters can be utilized by insurance companies and/or defense attorneys to put a personal injury claimant in a bad light and damage his character. A claimant must be very careful concerning what he posts. Google yourself to determine what content exists  that may compromise your claim. Think before your post, even on invitation-only sites. Don’t let anyone you don’t know become a friend after you make an accident claim.

Pictures or video of claimants riding motorcycles, motor boats, skateboards, bicycles or all terrain vehicles can undermine the value of their lawsuit or insurance claims.

The same guidelines should apply to the content of your e-mail accounts.

If you belong to 5 networks and have 100 friends on each network, potentially hundreds of thousands of people can view your posts; and, your posts may not be protected by privacy laws.

So,  personal injury claimants and litigants need to give sone thought to cleaning  up their social media pages after involvement in an injury producing accident.